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Fortescue Metals refinances $1.65 billion, €315 million of notes
By Angela McDaniels
Tacoma, Wash., Oct. 11 - Fortescue Metals Group Ltd. is refinancing the project-based senior secured notes issued by FMG Resources (August 2006) Pty. Ltd. with a $2.04 billion bank facility, according to a company news release.
The new facility is fully drawn, and the redemption process for the notes will be completed in one month.
The notes were issued by FMG Resources (formerly FMG Finance Pty. Ltd.) in August 2006. They include $250 million of floating-rate notes due 2011, $320 million of 10% notes due 2013, €315 million of 9¾% notes due 2013 and $1.08 billion of 10 5/8% notes due 2016.
The company said the project finance-style covenants under the notes contained funding and operational restrictions and constrained its ability to issue dividends and pursue new development projects outside its Chichester Hub.
"The bank facility allowed Fortescue to buy back all outstanding notes for a premium of approximately $650 million, which ... was largely funded in Australian dollar terms by the recent sharp fall in the U.S. dollar," chief financial officer Stephen Pearce said in the release.
The company believes the value of the development of its assets outside of the Chichester Hub outweighs the premium needed to redeem the notes, chief executive officer Andrew Forrest said in the release.
The new bank facility matures in five years. Interest is linked to Libor, and the initial rate is 7½%.
Fortescue Metals mines for iron ore and is based in East Perth, Australia.
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