Orica Completes $390 Million Unsecured Notes in USPP Market

Chemicals and explosives maker Orica on Wednesday said that it has completed the issuance of $390 million of fixed rate unsecured notes in the US private placement (USPP) market. The company said that it has recorded a final order book of $4 billion, providing favourable pricing opportunities on the transaction.

The company was founded in 1874 as a supplier of explosives to the Victorian gold fields in Australia, and has grown to become one of the leading publicly-owned companies listed on the Australian Stock Exchange (ASX).

The proceeds will be used to repay $150 million of notes maturing this calendar year, with the balance applied toward the repayment of existing drawn committed bank facilities. The latest issuance extends Orica’s drawn debt profile to 5.8 years, Orica said in a disclosure with ASX.

Orica Managing Director and CEO Sanjeev Gandhi said that the support from its debt investors demonstrated a “strong endorsement” for the company’s strategic growth initiatives and its focus on creating value through improved operational performance.

Orica’s chief financial officer James Crough said that access to term debt at competitive pricing is a fundamental element of Orica’s capital management strategy, and they were pleased to have received this level of support from USPP investors, a key capital market for Orica.

Second Placement

It may be recalled that the company has completed a $451 million and $45.69 issue of fixed rate senior unsecured notes in the US Private Placement (USPP) market five years ago.

Initially launched as a $250 million issue to refinance a USPP maturing in October 2020, the transaction achieved a final order book of $1.3 billion representing an oversubscription of more than 5x. The strong investor demand resulted in a tightening of margins and allowed the transaction to be upsized.

The senior unsecured notes were issued by wholly owned subsidiary Orica Finance Limited and were split evenly across 8.3 and 10.3-year maturities. The US dollar tranches were priced at coupons of 3.19% and 3.40% respectively, and the Australian dollar 10.3-year tranche was priced at 3.98%.