Iron ore major Fortescue Metals Group has announced it is forging ahead with its debt reduction program, paying down another $US1.6 billion.
The voluntary repayment of the two senior unsecured notes will be finalised on March 14, they were originally due to mature in 2015 and 2016.
In December FMG repaid $US1 billion of the 2015 notes, and with Wednesday’s announcement the company’s total debt repayments equal $US3.07 billion since November last year.
At its peak the company’s gross debt totalled $US12.7 billion.
By the end of March FMG expects gross debt to fall to $US9.6 billion.
Setting a target of reducing the company’s gearing to 40 per cent, Fortescue’s chief financial officer Stephen Pearce said the voluntary repayments will significantly lower its interest bill.
“The combination of voluntary debt repayments of $US3.07 billion, in addition to successfully lowering the cost of remaining debt, represents an annual interest saving of more than $US300 million per annum,” he said.
Company chief executive Nev Power said the accumulated debt funded FMG’s expansion to 155 million tonnes of iron ore per annum.
“This is a pivotal year for Fortescue as we near the completion of our expansion,” he said.
“The substantial increase in production and strong market conditions have strengthened our balance sheet and enabled us to accelerate our debt reduction program.”