Billionaire Andrew Forrest’sFortescue Metals Group Ltd. (FMG) got $4.5 billion of new loans, fueling its biggest share jump in three years and easing concern the company may need to sell assets or stock to pay debt.
The five-year facility, underwritten by Credit Suisse Group AG and JPMorgan Chase & Co., extends the earliest repayment date of the company’s debt to 2015, Perth-based Fortescue said today in a statement. Australia’s third-biggest iron ore producer began talks with banks to seek changes to loan terms as iron-ore prices fell this month to near a three-year low.
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Fortescue Gets New $4.5 Billion Facility to Refinance Loans
Fortescue, which had $9.1 billion of debt before today’s statement and a market value of A$9.3 billion ($9.7 billion), held a call earlier this month to reassure bankers in Asia about its finances, according to a person familiar with the matter.
Fortescue, which had $9.1 billion of debt before today’s statement and a market value of A$9.3 billion ($9.7 billion), held a call earlier this month to reassure bankers in Asia about its finances, according to a person familiar with the matter. Photographer: Carla Gottgens/Bloomberg
The deal eases pressure on Fortescue to sell more assets or undertake a share sale that would have diluted Forrest’s stake and shores up finances strained as China’s slowdown pushed iron ore prices down by almost a quarter this year. The company cut jobs and its full-year spending forecast by 26 percent to $4.6 billion this month to bolster margins and horde cash.
“It will probably remove the need for them to raise capital anytime soon,” Chris Weston, an institutional dealer at IG Markets said from Melbourne. “They’ve now got the flexibility to sell non-core assets as and when they need it ”
Fortescue rose as much as 20 percent to A$3.58, the most since June 11, 2009, as trading resumed after a halt on Sept. 13. They were at A$3.56 at 1:49 p.m. Sydney time, giving the company a market value of A$11.1 billion ($11.6 billion).