Fortescue launches $1b US bond offering

Fortescue has advised the ASX it has launched a $US1 billion high-yield, unsecured bond offering in the United States.

Fortescue needs funding for an ambitious plan for a three-fold increase in production over the next few years.

“Fortescue is undergoing a transformative expansion from a 55 million tonne per annum operation to a 155 [million tonne per annum] powerhouse by June 2013,” the company says in a statement.

The plan involves building new infrastructure at Herb Elliott Port (at Port Headland), including up to three more ship berths to complement the two already operating, constructing 120 kilometres of mainline rail duplication, and a new 130-kilometre rail spur from Solomon to the mainline and new mines at Solomon and Chichester hubs.

“The company is rated BB- by Standard & Poor’s – three levels below investment grade – and has $US5.6 billion of bonds and loans outstanding,” according to Bloomberg.

“The five-and ten-year bonds will be callable after three and five years, respectively, according to a person familiar with the sale.”

Fortescue Metals Group is Australia’s third-largest iron ore producer. It announced a lift in profits in February.