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Fortescue Metals refinances debt

Iron ore major Fortescue Metals Group has completed a US$600 million offering of senior unsecured notes.
Fortescue Metals refinances debt Fortescue Metals refinances debt Fortescue Metals refinances debt Fortescue Metals refinances debt Fortescue Metals refinances debt

Staff reporter

The notes have an interest rate of 4.5% and mature in September 2027. Proceeds from the offering will be applied to the partial repayment of $600 million of the outstanding $1.4 billion 2022 syndicated term loan facility.

FMG had net debt of $2.1 billion and gross debt of $4 billion at June 30.

The company is in negotiations with existing term loan lenders for the extension of maturities of $600 million to 2025 on the same terms and conditions.

The balance of the term loan of $200 million will be repaid from operating cash.

"Following the record financial result in FY19 together with a strong start to FY20, the ongoing strength of Fortescue's performance has resulted in today's successful execution of the senior unsecured note offering," FMG CEO Elizabeth Gaines said.

"Fortescue's balance sheet is structured on investment grade terms which have allowed us to take advantage of market conditions to extend the maturity profile of Fortescue's debt at a low cost.

"In addition, we are in negotiations to extend the balance of the 2022 term loan while maintaining optionality and flexibility to ensure the long term sustainability of our operations, invest in growth and development and continue to deliver returns to our shareholders."

FMG's capital expenditure will rise from just over $1 billion in FY19 to $2.4 billion in FY20 as the company progresses two major projects, the Eliwana hematite project and the Iron Bridge magnetite project.

Shares in FMG closed at a five-week high yesterday of A$8.27, valuing the company at $25.5 billion.