BHP Potash Loan Syndication Draws More Than $45 Billion Sought by Bankers

Sep 11 (Bloomberg)--

BHP Billiton Ltd.’s loan underwriters attracted demand in excess of the $45 billion sought to fund the miner’s bid for Potash Corp. of Saskatchewan Inc., a person familiar with the situation said.

The financing was oversubscribed by new lenders three weeks after Banco Santander SA, Barclays Capital, BNP Paribas SA, JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc started marketing the deal Aug. 18, said the person, who declined to be identified because the information is private. The loan will be signed within 10 days, the person said.

Lenders were asked to provide $2.5 billion to join the syndication, the person said. Underwriters of loans, which take the bulk of fees paid by a borrower, seek to reduce the amount they lend by syndicating the credit to a wider group of banks and money managers. The commitment level was reported earlier by Reuters.
Illtud Harri, a London-based spokesman for BHP, couldn’t be reached for comment.

The world’s largest mining company is paying a margin of between 70 and 140 basis points on a $25 billion one-year term loan that can be extended by another year, according to a regulatory filing on Aug. 20. The interest rate will move depending on the company’s credit rating. The lowest rate applies if the company is rated A+ or higher, and the highest margin applied at BBB+ or lower.

The $10 billion three-year term loan and the $5 billion three-year credit line will pay interest between 110 and 180 basis points more than the benchmark lending rates, while margins for the remaining $5 billion four-year revolving credit ranges from 130 and 205 basis points, the filing shows. A basis point is 0.01 percentage point.

BHP is required to use proceeds from any bond issuance debt, asset sales or equity fund-raising to repay the $25 billion term loan, according to the filing.

BHP took its $130-a-share cash bid directly to Saskatoon, Saskatchewan-based Potash investors on Aug. 18 after the producer of crop nutrients rejected the proposal and said it was “grossly inadequate.”

The acquisition would be BHP’s biggest since buying WMC Resources Ltd. in 2005 and follows the scrapping of its $66 billion offer for Rio Tinto Group.