FMG in first green debt offering

FORTESCUE Metals Group has tapped the US bond market to fund its US$3.3-3.5 billion Iron Bridge magnetite project and a number of decarbonisation and hydrogen initiatives.
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Iron Bridge under construction

The company completed a $1.5 billion offering of senior notes overnight.

It comprised an $800 million offering of green senior notes under its sustainability financing framework, and $700 million of senior notes for general purposes.

The green senior notes will fund the 150 megawatt solar generation component of the Pilbara Energy Connect (PEC) project, the acquisition of Williams Advanced Engineering and the hydrogen mobility project at Christmas Creek.

"The successful completion of Fortescue's inaugural green financing offering demonstrates the company's passion and commitment to integrate sustainability into all aspects of our business, as we take a global leadership position in the green energy transition," FMG CEO Elizabeth Gaines said.

The proceeds raised from the senior notes are available to fund Fortescue's major growth project, Iron Bridge, together with the balance of PEC.

Expenditure on the projects to date has been funded from free cashflow, which totalled $648 million in the December 2021 half.

Capital expenditure for the December half was $1.5 billion within FY22 guidance of $3.-3.4 billion.

The figures exclude the company's green arm, Fortescue Future Industries.

FMG has committed 10% of net profit after tax to FFI.

"The company maintains a strong balance sheet underpinned by investment grade credit metrics," FMG chief financial officer Ian Wells said.

"The success of this transaction demonstrates the ongoing support for Fortescue's industry leading decarbonisation targets and further optimises our capital structure."

The company had gross debt of $4.6 billion and cash of $2.9 billion at December 31.

Shares in FMG were 0.2% higher in early trade at A$21.71.