Debt-saddled Fortescue Metals Group Ltd. on Tuesday said prices of iron ore will rebound in the near term to $120 a metric tonne.
"We expect the iron ore price to recover to more sustainable levels," Nev Power, chief executive of the world's No. 4 iron ore miner, told reporters after the company was able to secure $4.5 billion in debt to settle off all existing debt facilities.
"We expect the iron ore price to recover to more sustainable levels," Nev Power, chief executive of the world's No.4 iron ore miner, told reporters after the company was able to secure $4.5 billion in debt to settle off all existing debt facilities.
Shares of Australia's third-biggest iron ore producer jumped to 18 per cent to A$3.52, its biggest in three years since June 11, 2009, when trading resumed after a Sept. 13 halt. As of 10:23 a.m. Sydney time, shares traded at A$3.485, valuing the company at A$10.8 billion ($11.3 billion).
"It will be sufficient to cover their working capital requirement and obviously to repay those debts that were associated with the covenants," resources analyst David Lennox said in Bloomberg News. "It gives them a needed cash injection and removes some of the risks that they had in those projects," he said.
Fortescue on Tuesday morning announced it was able to snag a new line of credit from Credit Suisse and JP Morgan, effectively extending the maturity of $9 billion worth debts to 2015.
"This facility will be used to refinance all existing bank facilities and provide Fortescue with additional liquidity," the company said.
"The facility extends the earliest repayment date for any of the company's debt to November 2015 and removes financial maintenance covenants which applied under previous facilities," the company said.
The iron ore miner has recently slashed $300 million from its costs and cut off 1,000 personnel.
With the new package, Fortescue owner and billionaire Andrew Forrest will no longer have to sell more assets or shares, as first option, to boost the company's finances.
The new line of credit also has an extra $900 million in cash to aid the mining firm's expansion projects.
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