Fortescue share price lifts amid $2b cap raise

The Fortescue Metals Group Limited (ASX: FMG) share price is outperforming on Thursday following the completion of a US$1.5 billion (A$2 billion) notes offering.

Of the cash raised through the capital raise, US$800 million will go towards the company’s sustainable projects. The other US$700 million be put to general expenses.

At the time of writing, the Fortescue share price is $21.785, 0.58% higher than its previous close.

While not a huge gain, it sees the iron ore giant outperforming the broader market. Right now, the All Ordinaries Index (ASX: XAO) and S&P/ASX 200 Index (ASX: XJO) have both slipped 0.5%.

Let’s take a closer look at Fortescue’s latest capital injection.

Fortescue announces successful capital raise

The Fortescue share price is in the green after the company completed a notes offering its CEO claims demonstrates its commitment to sustainability.

News of the offering first broke yesterday when the company announced its launch.

It was made up of two tranches – a senior unsecured note for general corporate purposes and a green senior unsecured note.

The latter was issued for eligible projects under the company’s sustainability financing framework.

They include the 150-megawatt solar generation component of Fortescue’s Pilbara Energy Connect Project, its acquisition of Williams Advanced Engineering, and its hydrogen mobility project at Christmas Creek.

Fortescue CEO Elizabeth Gaines commented on the green notes, saying:

Fortescue’s sustainability financing framework recognises the global growth in sustainability and green sources of capital.

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.

The funds earmarked for general spend will help fund Fortescue’s Iron Bridge project, together with the balance of the Pilbara Energy Connect project.

Previously, free cash flow has funded the projects.

Fortescue chief financial officer Ian Wells said the transaction highlights the ongoing support for the company’s decarbonisation targets.

He also noted it has further optimised the company’s capital structure. That has helped it maintain its strong balance sheet underpinned by investment-grade credit metrics.

Fortescue share price snapshot

The Fortescue share price has been performing well through 2022 so far.

It has gained 9% year to date. It’s also 6% higher than it was this time last year.

For context, the ASX 200 has fallen 1.8% year to date. It has also gained 7.5% over the last 12 months.

The post Fortescue share price lifts amid $2b cap raise appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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