March 22, 2018 / 6:54 AM / 9 months ago

Lenders to Glencore-led Australian coal port agree to 8-yr extension -sources

SYDNEY, March 22 (LPC/Reuters) - Lenders to Queensland’s debt-laden Wiggins Island Coal Export Terminal have agreed to extend about $3 billion due on an outstanding loan for eight years, a lifeline to owners who would have had to repay the hefty debt from September, two sources told Reuters.

“There is a structure on the table to extend the loan,” a banking source with direct knowledge of the matter told Reuters. The extension had been agreed to but not yet been signed by the parties, the source said.

Mining giant Glencore Plc and its partners - owners of the world’s most expensive coal terminal - face a September deadline to refinance the loan or pay off the full amount over the next 15 years.

Under the tabled deal, all free cash flow from the project will be used to pay down the loan, said two banking sources who declined to be named as the terms of the deal are private.

A spokeswoman for WICET, as the terminal is known, said the company “does not provide financial and other confidential information to the public”.

The lenders want the coal export terminal to half its debt to less than $1.5 billion, a level comparable to an investment grade company, making it easier for WICET to get a credit rating to refinance some of the loan in bond markets at a later stage.

The outstanding balance of the loan is slightly under $3 billion, one of the sources said.

WICET’s lenders have not increased the interest margin of the loan nor charged a fee so as not to further burden the troubled project, said one of the sources.

The lending syndicate comprises around 17 banks including Australia’s four largest banks, Asian and European lenders, and a couple of hedge funds, according to Thomson Reuters Loan Pricing Corp data.

Australian coal rail operator Aurizon Holdings had been in talks to acquire the coal terminal.

A spokesman on Thursday told Reuters the Brisbane-based company remained interested in the purchase.

WICET was built to service a consortium of eight coal companies. It was funded entirely by debt backed by port fees on 27 million tonnes of coal a year, whether that volume was shipped or not.

Three out of the eight original partners have folded, and Wesfarmers last year sold its exposure to the project to Texas-based Coronado Coal Group. Other owners include New Hope Corp, China’s Yancoal and Baosteel’s Aquila Resources.

The remaining five partners must shoulder the port’s debt and fees, meaning they now pay debt and loading fees of about $25 per tonne of coal, including financing charges. That is about five times the $5-per-tonne port fees at the adjacent RG Tanna coal terminal.

Loan Pricing Corp (LPC), owned by Thomson Reuters, is a provider of pricing information on loans and high yield bonds. (Reporting by Sharon Klyne of LPC and Paulina Duran in SYDNEY; Editing by Tom Hogue)

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