Fortescue Metals initiates $577m debt repayment

Fortescue Metals initiates $577m debt repayment

Fortescue Metals (ASX:FMG) has initiated a US$577 million repayment of debt today by issuing a voluntary redemption notice to holders of the 8.25% senior unsecured notes due in 2019, the firm announced today.

The outstanding notes will be absolved in full from accumulated cash on hand on Wednesday 1 June 2016. This will produce an additional interest savings of $48 million per year.

Fortescue’s shares rose 3.5 per cent in early trade to $3.26 and the firm has seen its share price increase 28 per cent since the beginning of April.

The miner shipped 42 million tonnes in March, a four per cent increase on the same time in 2015 allowing its annual run rate to be around 169 million tonnes above the company’s total-year guidance of 165 tonnes.

“Today’s announcement brings the amount of debt Fortescue has repurchased in the last 12 months to US$1.7 billion, with our total debt repayments in the last two and a half years now exceeding US$4.8 billion,” said Stephen Pierce, the firm’s CFO. “As previously flagged, we will continue to repay debt using accumulated cash balances and operating cash flows.”

The company’s share increase has been pushed by a jump in the iron ore price, which reached $70 a tonne last week. The price has risen more than 40 per cent since hitting a low of $28 in December.

@RGNOnline