Fortescue secures Chinese loan to fund construction of new VLOC fleet

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Image credit: Fortescue Metals Group Limited

Fortescue Metals Group has reached an agreement with the China Development Bank Financial Leasing (CDB Leasing) to finance eight Very Large Ore Carriers (VLOCs), currently under construction at China’s Jiangsu Yangzijiang and Guangzhou Shipbuilding International shipyards.

Image credit: fmgl.com.au
Image credit: fmgl.com.au

Fortescue said the US$473 million loan will finance 85% of the total construction cost of the new VLOC fleet which is estimated to be around US$556 million.

According to the company, the agreement includes an early repayment option and an option for a 3-year extension on the original 12-year term.

“This is a groundbreaking financing transaction which builds and broadens Fortescue’s highly valued relationships with China through our first direct funding arrangement with a major Chinese leasing company,” said CEO Nev Power.

Adertisement

“We welcome this important partnership with CDB Leasing which is a significant milestone in our financing strategy, further extending out debt maturity profile while strengthening our capital structure. We look forward to a long and mutually beneficial relationship with CDB Leasing as we continue to build opportunities for future Chinese co-operation.”

Mr Powel said the new VLOC fleet will complement Fortescue’s port infrastructure, satisfying 12% of  the company’s shipping requirements.

According to him,  the investment will significantly improve load rates and reduce operating costs.

“The transaction is another example of Fortescue’s successful efforts to expand its collaboration with Chinese industry,” Mr Power added.

“The financing agreement supports important industrialisation initiatives in China, including the shipbuilding industry plan and growth in large-scale mechanical and electrical equipment.”