Fortescue secures $4.5 billion credit facility
SYDNEY (AP) — Shares in Fortescue Metals Group soared Tuesday after Australia's third largest iron ore miner secured a new $4.5 billion credit facility which it will use to refinance its looming bank debts.
Fortescue shares jumped more than 16 percent to 3.49 Australian dollars ($3.65) after the company announced the line of credit to be provided by Credit Suisse and J.P. Morgan. The five-year credit facility extends the earliest repayment of any of Fortescue's $9 billion of debt to November 2015, the company said.
"This action, together with our previously announced measures, will continue to build on Fortescue's profitability, liquidity and above all, removes uncertainty around our financing arrangements," Chief Executive Nev Power said in a statement.
The miner's financial strength has been hit by a fall in the spot price of iron ore to below $100 as demand from big ore consumers such as China slows. The company was founded in 2003 and quickly became one of Australia's largest miners with an expansion fueled by debt as its founder Andrew Forrest bet that Asian demand would keep ore prices sky high.
Fortescue requested a trading halt on Friday after its share price tumbled almost 14 percent on media reports that it was struggling to meet interest payments on its debt.
"Fortescue has moved quickly to ensure its capital structure can withstand prolonged market volatility," Power said.
He said that Fortescue expects the iron ore price will recover as the supply-demand balance "normalized."