FMG refinances $US2.16bn of debt

Fortescue Metals Group (FMG) has today announced refinancing of $US500 million ($644.6 million) of $US2.16 billion in pro forma senior unsecured notes.

The refinancing of this $US500 million, now due for repayment in 2023 at an interest rate of 5.125 per cent per annum, means that FMG has lowered its overall annual borrowing costs by $US130m.

A combination of the refinanced notes and recent $US1.4 billion term loan announced in FMG’s latest half-year report will go towards completing FMG’s repayments, lowering annual borrowing costs by $US130m and significantly increasing FMG’s debt maturity.

The move represents a part of FMG’s overall corporate strategy of transition from asset-led capital structure to investment grade company with low-cost, flexible debts, according to chief financial officer Ian Wells.

He said that the success of the issue reflected “continued support of the US capital markets” and that it was “a key part of executing Fortescue’s capital management strategy”.

Recently appointed chief executive officer Elizabeth Gaines, who replaced Nev Power last month, said she was pleased with the move.

“We are very pleased with our recent financing transactions, which have resulted in a flexible, low-cost capital structure,” she said.

“We will continue to be disciplined in our approach to capital management and debt repayment, reinvestment in our iron ore business, identification of low-cost growth opportunities and delivering returns to our shareholders.”

The offer is expected to be completed by March 15, subject to closing conditions.

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