Credit Suisse, JP Morgan Arrange Fortescue Facility Amendment
Fortescue Metals Group announced that lead arrangers Credit Suisse and JP Morgan acted successfully amended its senior secured credit facility.
In repricing the facility, the company has reduced the previous margin of 4.25% by 1.00% to 3.25%, and extended the maturity to June 30, 2019. The initial margin of 3.25% will decrease further as Fortescue reduces leverage through debt reduction.
Changes to the facility include:
The repricing of the Facility will not increase Fortescue’s debt position, and Fortescue retains the ability to make early voluntary repayments of the facility at the company’s option. Terms and conditions of the Facility remain consistent with the company’s unsecured
notes and do not contain financial maintenance covenants.
Fortescue CEO Nev Power said he was pleased with the support of U.S. capital markets and the great work achieved in Perth and New York by the combined Fortescue, Credit Suisse and JP Morgan teams. “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,” Power said.
Fortescue CFO Stephen Pearce said, “Fortescue has again received exceptionally strong support from the US debt capital markets. The amended terms of the Facility reflect Fortescue’s improving credit profile, with the ability to realize further savings in interest costs as leverage decreases through debt reduction and increased earnings. In the past 12 months Fortescue has consolidated its operational position, reduced production costs and continued to ramp up production as the
155Mtpa expansion nears completion. With stable iron ore market conditions and the commitment to actively reduce debt in advance of formal maturity, the company is in a very strong financial position.”