FMG flags $US2.5b bond issue
UPDATE 1.15pm: Fortescue Metals Group has announced a $US2.5 billion bond issue as it seeks to refinance its heavy debt burden in a low iron ore price environment.
The iron ore miner had planned to raise the cash via a loan but has instead opted for a senior secured note offering.
The cash raised in the new issue will refinance existing notes due in 2017, 2018 and 2019.
FMG gave no indication of the tenure or pricing of the bond issue.
However the company said further announcements would be made as the transaction progressed.
An extended debt maturity profile would be a positive for the company, but a key issue is how much it will cost in terms of interest repayments.
Earlier this month, Fortescue said it also intended to extend the maturity on its existing $US4.9 billion Senior Secured Credit Facility resulting in the majority of its debt maturing beyond mid 2021.
Chief executive Nev Power said at the time the refinancing would extend Fortescue's debt maturity profile while maintaining flexibility and minimising interest costs.
The company is also continuing with an extensive cost cutting program as it battles to retain margins in a plunging iron ore price environment.
Iron ore with 62 percent content delivered to the Chinese port of Qingdao was at $US58.90 a tonne yesterday, down 46 per cent from a year earlier.
Shares in FMG were off four cents, or 1.99 per cent, to $1.97 at the close of trade.
