Fortescue strikes Chinese financing deal for $556m ore carriers
PERTH (miningweekly.com) – Iron-ore major Fortescue Metals has struck a partnership deal with China Development Bank Financial Leasing Company (CDB Leasing) over the $556-million price tag for eight very large ore carriers (VLOC) currently under construction.
The finance lease facility will fund 85% of the VLOC costs for a minimum of 12 years, on highly flexible terms, including early repayment and extension options.
On delivery of each VLOC, 85% of the payments will be drawn down on the finance lease facility.
The agreement is the largest direct funding arrangement provided by a major Chinese financier for a non-Chinese company in Australia.
“This is a groundbreaking finance transaction which builds and broadens Fortescue’s highly valued relationship with China through our first direct funding arrangement with a major Chinese leasing company,” said Fortescue CEO Nev Power.
“We welcome this important partnership with CDB Leasing, which is a significant milestone in our financial strategy, further extending our debt maturity profile while strengthening our capital structure.”
The VLOCs are currently being constructed in China and first delivery is scheduled for this month, while the balance of the vessels will be delivered through to mid-2018. Designed to complement Fortescue’s port infrastructure, the fleet will improve load rates, efficiencies and reduce operating costs and when fully operational will provide 12% of Fortescue’s shipping requirements.
The company will control the vessels for the life of the facility, and will take ownership on maturity or after early repayment.
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