Perth, Australia, Dec 10, 2012 - (ABN Newswire) - Atlas Iron Limited (ASX:AGO.AX - News) is pleased to announce that it has completed the Company's previously-foreshadowed USD$325 million financing package, ensuring Atlas remains firmly on track to meet its Pilbara iron ore production target of 12 million tonnes per annum by December, 2013.
In light of the significant improvement in iron ore markets during the December 2012 Quarter, Atlas has elected to improve the structure of the debt package from that proposed in its ASX release of 18 October 2012.
Atlas has now completed a US institutional Term Loan B offering to USD$275 million ("Term Loan"), down from USD$325 million. Atlas has also put in place an undrawn AUD$50 million three-year "covenant lite" revolving facility ("Revolver"). Importantly, both the Term Loan and Revolver terms contain no earningsbased maintenance covenants.
The decision to adopt a lower Term Loan and undrawn Revolver reduces the amount of loan drawn down, lowering Atlas' overall cost of funding.
The completion of this financing package delivers the Company sufficient funds to complete the development of the Mt Dove, Abydos and Mt Webber mines (the Mt Webber mine is subject to Atlas Board approval in the March 2013 Quarter), and the Yard 2 expansion works at Utah Point at Port Hedland.
Atlas continues to adopt a conservative approach to its capital management through modest debt levels in conjunction with incremental, staged project execution.
A summary of the key terms and conditions of the Term Loan B facility are as follows:
Principal Amount: USD$275 million
Maturity: 5 years
Coupon: L + 7.50%
LIBOR Floor(1): 1.25%
Guarantors: Atlas and all material subsidiaries
Secured over the assets of Atlas and each material subsidiary subject to agreed exceptions and, in certain circumstances, to obtaining third party consents
Terms and conditions:
The facility has no earnings based maintenance covenants and is repayable at the company's option at par, without penalty in most circumstances. Minimal repayment penalties apply if refinanced early through the Term Loan B market place.
Amortisation: 1% per annum
Credit Suisse is the Sole Lead Arranger and Underwriter for the Term Loan with Goldman Sachs as Co-Manager.
Atlas Managing Director Ken Brinsden said "Despite challenging market conditions with concerns over the US 'fiscal cliff' post US elections, the completed financing package ensured Atlas' Horizon 1 projects, which will lift production to 12Mtpa, are fully-funded."
"These financing arrangements are totally consistent with Atlas' policy of achieving growth over both the short and long terms, while maintaining a conservative balance sheet," Mr. Brinsden said.
"Atlas believes it is prudent to have flexible forms of financing and sufficient liquidity, while accessing the lowest cost source of funds available to the Company at this stage of its development, to allow the Company to implement its expansion strategy on its terms."
(1) LIBOR Floor represents the minimum LIBOR base used to calculate the coupon.
About Atlas Iron Limited:
Atlas Iron Limited (ASX:AGO.AX - News) is mining and exporting from its 100%-owned Pardoo and Wodgina Iron Ore projects, located 75 kilometres and 110km by road from Port Hedland in the Pilbara region of Western Australia. In the 2009/10 financial year Atlas shipped over 1.2 million tonnes of Pardoo Direct Shipping Ore (DSO). Atlas is expanding its production from its Wodgina and Pardoo DSO mines following the commissioning of the Utah Point port facility and is targeting exports at an annualised rate of 6 million tonnes by the end of 2010. When combined with additional export tonnages from its Abydos & Mt Webber DSO Projects, the Company is targeting exports at an annualised rate of 12 million tonnes during 2012.
Atlas Iron Limited T: +61-8-6228-8000 F: +61-8-9476-7988 WWW: www.atlasiron.com.au
Atlas Iron Limited
Copyright (C) 2012 ABN Newswire. All rights reserved.