The Fortescue Metals Group Limited (ASX: FMG) share price is on course to finish the week on a high after the market responded positively to an announcement by the iron ore producer this morning.
At the time of writing the Fortescue share price is up 3.5% to $8.56.
What did Fortescue announce?
This morning Fortescue announced the successful completion of its US$600 million offering of Senior Unsecured Notes at an interest rate of 4.5%, maturing on September 15 2027.
According to the release, the proceeds from the bond offering will be used for the partial repayment of the outstanding US$1.4 billion 2022 Syndicated Term Loan Facility.
In addition to this, management revealed that it is currently in negotiations with existing term loan lenders for the extension of term loan maturities of US$600 million, to 2025 on the same terms and conditions. The remaining US$200 million of the term loan will be repaid from operating cash.
Fortescue's chief executive officer, Elizabeth Gaines, appeared to be very pleased with the news.
She said: "Following the record financial result in FY19 together with a strong start to FY20, the ongoing strength of Fortescue's performance has resulted in today's successful execution of the Senior Unsecured Note offering."
"Fortescue's balance sheet is structured on investment grade terms which have allowed us to take advantage of market conditions to extend the maturity profile of Fortescue's debt at a low cost. In addition, we are in negotiations to extend the balance of the 2022 Term Loan while maintaining optionality and flexibility to ensure the long term sustainability of our operations, invest in growth and development and continue to deliver returns to our shareholders," added Ms Gaines.
This looks to be a good deal for Fortescue and I can't say I'm surprised to see its shares push higher today. Overall, if you're very confident that iron ore prices will stay higher for longer then it could make Fortescue a good option. Though, I would still choose BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) due to the diversity of their operations.
