Shares soar after debt paid
Shares in Fortescue Metals Group were up after the iron ore miner said it would save $US26 million a year in interest payments by repaying $US700 million in debt ahead of schedule.
The 2019 senior secured credit facility, or term loan, will be repaid on Friday.
Chief financial officer Stephen Pearce said the $US700 million repayment added to the $US2.9 billion the company repaid in full-year 2016 and further reduced the company’s all-in cost base. “We will continue to apply our free cashflow to repay debt, lowering our gearing and strengthening our balance sheet,” he said.
FMG has been on a cost cutting drive in recent times and sought to use free cashflow to progressively reduce its debt exposure in a lower iron ore price environment.
The strategy is paying off with the company’s share price on a steady rise this year off a 52-week low of $1.44 in January.
FMG has also benefited from a stronger than expected iron ore price in recent months.
Fortescue chief financial officer Stephen Pearce at the Kings deposit at the company's Solomon mine.