Fortescue Metals Group has announced a re-arrangement of its existing debt. The company has priced USD$500 million senior unsecured notes with a March 2023 call date.
The proceeds will be used to partly finance the redemption of USD$2.16 billion senior secured 2022 bonds, which became callable on 1 March 2018. These bonds were issued in April 2015 and were themselves used to refinance existing FMF bonds outstanding at the time.
The difference between the USD$500 million raised by this latest bond issue and the USD$2.16 billion required to redeem the 2022 bonds will be financed via a new USD$1.4 billion term loan which was announced in early February. Existing cash reserves will cover the balance.
The new March 2023 bonds will have a 5.125% coupon whereas the existing 2021 bonds have a coupon rate of 9.75%. Fortescue’s chief financial officer said the change would save the company around USD$130 million per annum in interest costs.
Source: FMG