Fortescue’s $1.5 Billion Senior Notes Offering

Simpson Thacher represented the initial purchasers, led by J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Morgan Stanley & Co. LLC, in connection with a 144A/Regulation S offering of $750 million aggregate principal amount of 4.75% Senior Notes due 2022 and $750 million aggregate principal amount of 5.125% Senior Notes due 2024 by FMG Resources (August 2006) Pty Ltd, an Australian corporation (“FMG”), and a direct wholly owned subsidiary of Fortescue Metals Group Ltd (“Fortescue”).

The notes are guaranteed by Fortescue. The deal closed on May 12, 2017. FMG intends to use the net proceeds from the offering (i) to prepay the remaining US$976 million of borrowings outstanding under its Senior Secured Credit Facility, (ii) to redeem the remaining US$478 million of outstanding 2022 Senior Unsecured Notes and (iii) for general corporate purposes. The final offering was upsized from $1 billion due to strong investor demand and the notes represent the cheapest capital markets debt ever issued by FMG.

Fortescue is engaged in the production and export of iron ore in the Pilbara region of Western Australia. Fortescue is the third largest iron ore producer in Australia and the world’s fourth largest exporter into the seaborne iron ore market. Fortescue is listed on the Australian Securities Exchange.

The Simpson Thacher team included David Azarkh (Picture), Rodrigo Surcan dos Santos, Sung Jin and Madeline Sprung-Keyser (Capital Markets); Rob Holo, Michael Badain and Brian Mendick (Tax); Timothy Mulvihill and Noreen Lavan (Environmental) and Jennie Getsin (Blue Sky).

 

Involved fees earner: David Azarkh – Simpson Thacher & Bartlett; Rodrigo Surcan dos Santos – Simpson Thacher & Bartlett; Sung Jin – Simpson Thacher & Bartlett; Madeline Sprung-Keyser – Simpson Thacher & Bartlett; Robert Holo – Simpson Thacher & Bartlett; Michael Badain – Simpson Thacher & Bartlett; Brian Mendick – Simpson Thacher & Bartlett; Timothy Mulvihill – Simpson Thacher & Bartlett; Noreen Lavan – Simpson Thacher & Bartlett; Jennie Getsin – Simpson Thacher & Bartlett;

Law Firms: Simpson Thacher & Bartlett;

Clients: Deutsche Bank Securities; Morgan Stanley; Credit Suisse Securities Limited; JP Morgan Securities;

 

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Author: Ambrogio Visconti