Lower debt to stem rising costs: FMG

Fortescue Metals Group CEO Nev Power says the company's plans to pay off loans and restructure debt will be more than enough to offset rising costs in the industry.

Speaking at a Macquarie conference in Sydney, Power said FMG was on track to sell a stake in its Pilbara infrastructure assets, and the new money would go toward paying off part of the miner's $5 billion debt.

 

According to The Australian Power said paying off and repackaging some of the company's debt would help it access to much cheaper loans, and the move would have a significant impact on the bottom line.

 

“Our objective in terms of The Pilbara Infrastructure will be to repay $3bn or $4bn worth of debt to accelerate that process,” he said.

 

“It allows us to pay down a significant amount of our debt to reduce the direct interest cost, but most importantly to get the company re-rated to take advantage of lower cost debt going forward.

 

“Taking advantage of that … gives us a significant earnings upgrade at the net profit after tax level and allows us to more than offset the increase in operating costs.”

 

At the conference Power also said there was strong interest in FMG's Pilbara infrastructure, and a sale was likely to be closed by the middle of the year.

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