Fortescue bid on debt deadline
Fortescue Metals Group will try to extend the maturity date on its biggest debt obligation and request cheaper interest rates, as it continues to act early on its giant debt pile.
In a sign of Fortescue's growing confidence on the back of high iron ore prices, it announced on Wednesday that it would try to renegotiate terms on the $US5 billion ($5.3 billion) credit facility that makes up the single largest chunk of its $US12 billion gross debt pile.
The $US5 billion facility is set to mature in October 2017, but Fortescue said it wanted to reduce the 5.25 per cent interest.
"The release of the company's quarterly results and strong financial position, together with strong market conditions, has enabled the company to pursue an amendment," Fortescue said in a statement.
The request for an extension of the repayment time may be an attempt to smooth out its debt repayment process, which is heavily loaded towards a three-year period ending in June 2018, during which time $US9 billion must be repaid.
Fortescue has previously stated its desire to pay down much of its debt ahead of time.
It has also pledged to repay $140 million worth of preference shares within the next fortnight, even though they are not technically due until the March quarter of 2017.
Fortescue's challenge appears far more achievable now that the iron ore price has avoided a slump in August and September, as it did in 2012 and 2011.
Despite predictions it would slump as low as $US70 a tonne during spring, the price has held above $US130 a tonne.
In recent months Fortescue has won the praise of ratings such agencies as Moody's, which last month improved its outlook on the iron ore miner's debt situation.
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free