JOHANNESBURG (miningweekly.com) – The successful re-pricing of Fortescue Metals’ $4.95-billion term loan is saving the iron-ore miner $50-million a year in interest payments.
Lead arrangers Credit Suisse and JP Morgan have amended and re-priced the facility, which reduced the previous margin of 4.25% to 3.25% and extended the maturity by 21 months to June 30, 2019.
Fortescue said that the margin of 3.25% would decrease further as the company reduced leverage through debt reduction. If the miner achieved a leverage ratio of 2.5 times or less, the margin would reduce to 2.75%. This would represent a total saving of 1.5%.
“The amended terms of the facility reflect Fortescue’s improving credit profile, with the ability to realise further savings in interest costs as leverage decreases through debt reduction and increased earnings,” commented CFO Stephen Pearce.
Fortescue CEO Nev Power said in a statement that he was pleased with the support of the US capital markets. “The result again demonstrates the market’s confidence in our strategy of ramping up production and then progressively repaying the debt that has funded our expansion.”
The iron-ore company, which owns operations in the Pilbara region of Western Australia, is expanding its capacity to 155-million tonnes a year.