debt repayment explained in a little more detail - reuters
Jan 15 (Reuters) - Fortescue Metals Group will pay off $1.64 billion on its bonds in March, up to two years ahead of maturity, slashing debt as fast as possible while iron ore prices remain strong, the world no.4 iron ore miner said on Wednesday.
With the latest pay down, its gross debt will fall to $9.6 billion from a peak of $12.7 billion, racked up as it expanded iron ore capacity to 155 million tonnes a year to become a major supplier behind Brazil's Vale, Rio Tinto and BHP Billiton .
"The substantial increase in production and strong market conditions have strengthened our balance sheet and enabled us to accelerate our debt reduction program," Fortescue Chief Executive Nev Power said in a statement.
The faster debt repayments come just as iron ore prices have slipped below the $130-$140 a tonne range for the first time in five months.
Fortescue said it would redeem $1.04 billion remaining on its senior unsecured notes due in 2015 and $600 million due in 2016 by March 14, 2014. The repayments would reduce net debt to $7.8 billion.
The miner also repaid an initial $1 billion on the 2015 debt last November. The moves to cut debt and reprice high-cost debt will save Fortescue $300 million a year in interest payments and lower its gearing towards 40 percent.
Power told Reuters in November that Fortescue wanted to cut its gearing to the 30-40 percent range before it considers raising its dividend payout.
Fortescue shares rose 3.3 percent to A$5.32, outpacing a 0.8 percent rise in the broader market.
FMG Price at posting:
$5.33 Sentiment: ST Buy Disclosure: Held
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