Fortescue has successfully syndicated a Renminbi (RMB)-denominated syndicated term loan facility of 14.2bn yuan ($2bn).
This marks a first for an Australian corporation in the Chinese lending market.
The strategic move underscores Fortescue’s commitment to its decarbonisation agenda and strengthens its long-standing ties with China.
The syndicated loan, which includes participation from top Chinese, Australian and international lenders, will bolster Fortescue’s general corporate activities.
It also aims to support the company’s decarbonisation strategy, which involves partnerships with Chinese technology leaders and suppliers.
As a core supplier of iron ore to China, Fortescue generates significant RMB revenues through its sales.
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By GlobalDataFortescue executive chairman Andrew Forrest AO said: “This isn’t just a financial transaction. It is a signal of what is possible when partners are aligned in ambition. As the United States steps back from investing in what will be the world’s greatest industry, China and Fortescue are advancing the green technology needed to lead the global green industrial revolution.
“China continues to lead the world in industrial scale and innovation. Fortescue shares that ambition and drive. This landmark RMB financing strengthens our long-standing partnerships with Chinese institutions and opens new frontiers for collaboration.”
The five-year loan’s terms outline a principal repayment of 0.5% every six months, starting 18 months post-financial close, with a 12-month availability period.
Bank of China, Sydney branch, and Industrial and Commercial Bank of China, Sydney branch, have been instrumental in this transaction, serving as mandated lead arrangers, underwriters and bookrunners.
Fortescue Group chief financial officer Apple Paget said: “This financing deepens our engagement with existing financial partners and further expands our banking syndicate to institutions with Renminbi lending capabilities. The exceptional demand through the syndication process is recognition of Fortescue’s strong credit profile, track record for operating excellence and disciplined capital allocation.
“It marks another milestone in execution of our capital management strategy, diversifying funding sources, enhancing flexibility and lowering our cost of capital, including achieving Fortescue’s lowest ever cost of debt. It reinforces our position as responsible custodians of capital.”
In January, Fortescue’s subsidiary FMG Pilbara entered a binding bid implementation deed with Red Hawk Mining.
The deal involves an off-market takeover offer to acquire up to 100% of Red Hawk’s shares.
The base offer price stands at $1.05 per share, potentially rising to $1.20 contingent on certain conditions. This offer values Red Hawk at an estimated $254m (A$406.48m).
