TORONTO (miningweekly.com) – Vancouver-based Teck Resources will issue $4,22-billion in senior secured notes, and will use the proceeds to almost completely repay the bridging loan that it took out to help fund its acquisition of Fording Canadian Coal Trust last year.

After the note sale, the bridging facility, which stood at $5,2-billion on April 21, will be reduced to just $603-million, which is due on October 30, 2011, Teck said.

The company will sell $1,31-billion of five-year notes, $1,06-billion of seven-year notes and $1,85-billion of ten-year notes.

The five-year notes will bear interest at the rate of 9,75% a year, will be issued at 95,27% of face value and will be noncallable. The seven-year notes will bear interest at the rate of 10,25% a year, will be issued at 94,654% of face value and will be callable on or after May 15, 2013. The ten-year notes will bear interest at the yearly rate of 10,75%, will be issued at 94,893% of face value and will be callable on or after May 15, 2014.

The bonds are relatively pricey, compared with some other offerings announced in recent weeks, but the sheer size of the issuance, particularly for a company with Teck's balance sheet, is an indication that credit markets are loosening up.

The transaction is expected to close on May 8, 2009, subject to customary closing conditions, Teck said.

Last year, the diversified miner took on $9,8-billion in debt – a $5,8-billion bridging loan and a $4-billion term facility – to fund its acquisition of the assets of Fording Canadian Coal Trust.

The heavy debt load, which the company struggled to shift after credit availability froze in the second half of 2008, has worried investors, particularly as the bridge loan was to have matured in October this year.

However, last month Teck reached an agreement with its lenders to defer $4,4-billion in payments due this year, including $3,5-billion on the bridging facility.

Part of the deal was that the company must reduce the $5,2-billion left on the bridging to $3,5-billion by October.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.