Corrs Chambers Westgarth has advised J.P. Morgan and RBS on a $US2.04 billion high-yield bond offering by the Fortescue Group.
The senior unsecured notes were issued by FMG Resources (August 2006) Pty Ltd, a subsidiary of Fortescue Metals Group Ltd.
The transaction involved a refinancing of Fortescue's existing senior secured notes with a $US2.04 billion senior unsecured bridge loan facility and a $US2.04 billion senior unsecured note issue under Rule 144A of the US Securities Act 1933.
The existing senior secured notes, issued in 2006, created the financial base upon which Fortescue constructed its initial mine, port and rail infrastructure. Those notes contained project-finance style covenants, which largely restricted Fortescue to the Chichester Hub, Fortescue's two mine sites - Cloudbreak and Christmas Creek - during the life of those notes.
The new funding arrangements allow Fortescue the freedom to implement its "Two Ports, Three Hubs" mining strategy, expand the Chichester Hub, develop the Solomon Hub and Western Hub, and develop a second port near Cape Lambert.
The refinancing has been described by Fortescue CEO Andrew Forrest as "a major leap forward" for the company, which "stands on the cusp of becoming a world leading mining house". Fortescue is one of the first Australian corporates to tap into the newly resurgent high yield and institutional markets in North America.
The Corrs team was led by partners Rob Ritchie and Brad Robinson, who were supported by partners Peter Jarosek, Stan Lewis and Craig Milner, senior associates Mari Futaesku and Sabrina Ng, and lawyers Joseph Varghese, Amin Doulai, David Li, Nikki Chong, Karen Tseu and Les Gavara-Nanu. The team worked closely with White & Case as New York counsel to J.P. Morgan and RBS to successfully complete the transaction.