GEAR Signs $850M-Equivalent Facilities for Illawarra Met Coal Acquisition, Including $600M 5Y Private Credit 

A consortium led by Singapore-based miner Golden Energy and Resources Pte Ltd., or GEAR, has signed $850 million-equivalent facilities backing the acquisition of Australia’s Illawarra Metallurgical Coal, or IMC, including a $600 million five-year loan from private credit funds at around SOFR+ 800bps to 850bps, said two sources with knowledge of the situation.

The other debt funding backing the $1.65 billion acquisition comprises a $150 million working capital facility and an AUD 150 million ($100 million) guarantee facility, the sources said.

The seller of the mine is ASX-listed South32 Ltd.

Bloomberg reported earlier today that lenders to the $600 million facility include Farallon Capital Management, King Street Capital, Washington H Soul Pattinson, and Broad Peak Investors, with Deutsche Bank joining as the sole bank lender.

Many of the lenders were among the group that provided a $625 million, 11.5% senior secured five-year loan-note acquisition facility to the Widjaja-family-backed GEAR’s Stanmore SMC Holdings Pty Ltd. in early-2022, according to the sources. The facility was raised to part-finance Stanmore’s acquisition of BHP Minerals Pty Ltd.’s 80% interest in BHP Mitsui Coal Pty Ltd. by purchasing the entire share capital of shareholding vehicle Dampier Coal (Queensland) Pty Ltd., as reported.

The IMC acquisition deal, announced in February, prompted GEAR to launch a consent solicitation in June to amend the indentures of its outstanding $346.3 million 8.5% senior secured notes due 2027 to carve out headroom for the financing needed to complete the acquisition, as reported.

The share sale and purchase agreement, or SPA, to acquire IMC was signed on Feb. 29, 2024 between GEAR M Illawarra Met Coal Pty Ltd (BidCo), which is 70% owned by GEAR, through certain intermediate holding companies including Golden M NSW Pty Ltd (HoldCo) and GEAR M NSW HCC Pty Ltd (MidCo), with, among others, South32 Ltd., as also reported.

The IMC acquisition was to be funded in part by:

• a new acquisition debt facility of up to $650 million at MidCo, an entity 70% indirectly owned by GEAR and 30% indirectly owned by M Resources Pty Ltd., to be guaranteed by HoldCo;
• a $200 million term loan facility from a lender at a new wholly-owned finance subsidiary of GEAR, to be guaranteed by GEAR, a subsidiary guarantor and a new wholly-owned special purpose vehicle of GEAR (New SPV) holding a 70% interest in HoldCo; and
• GEAR’s existing cash on hand.

Golden Energy did not respond to calls or emails requesting comment.