Fortescue Metals Group completed an agreement with the China Development Bank Financial Leasing to finance eight very large ore carriers (VLOCs) currently under construction.

With Fortescue’s negotiations led by Ian Wells, company secretary, and Penny Stonier, funding manager, the agreement represents a significant partnership with CDB Leasing and is the largest direct funding arrangement provided by a major Chinese financier for a non-Chinese company in Australia.

The finance lease facility funds 85% of the VLOC cost 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.

“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 Nev Power, CEO. “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.” “We look forward to a long and mutually beneficial relationship with CDB Leasing as we continue to build opportunities for future Chinese co-operation.”

The VLOC’s are being constructed at China’s Jiangsu Yangzijiang and Guangzhou Shipbuilding International shipyards with the first delivery scheduled for November 2016 and the balance of the vessels through to mid-2018.