Fortescue in $650m debt repayment

Fortescue Metals Group has taken its latest round of debt repayments to more than $US1.2 billion, with a $650 million buy of its 2019 senior secured term loans.

Today’s announcement leaves $US4.2 billion of 2019 maturity term loans, and will generate interest savings of $US28 million annually, the company said.

It follows a move to pay back $US577 million of senior unsecured notes last week, which left the company with no senior unsecured notes due in 2019.

That reportedly saved $US48 million in annual interest.

There’s an additional $2.16 billion of senior secured notes maturing in 2022 and $478 million of senior unsecured notes.

Fortescue chief financial officer Stephen Pearce said the company’s ongoing strategy of cash accumulation for debt repayment, together with consideration of alternative re-financing options, would further strengthen their balance sheet and maximise shareholder value.

“This $US650 million, in conjunction with last week’s $US577 million, brings Fortescue’s total FY16 debt repayments to US$2.3 billion,’’ he said.

“This has generated annual interest savings of $US164 million.”

For the March quarter, the company reported cash costs had fallen below $US15 per tonne of iron ore, while maintaining a full-year cash cost target of $US13/t.

An appreciating exchange rate and higher fuel prices might make that difficult to achieve, the company acknowledged.