Fortescue expects iron ore prices to recover; confident on China demand
06 Aug 2012
Australia's Fortescue Metals Group has accessed higher than expected debt to fund its massive iron ore expansion plans, announcing $1.5 billion in new funding.
The figure stands 50 per cent over the extra $1 billion the country's third-largest iron ore producer last month indicated it would need.
Investors have been concerned over the company's large gearing comprising a large proportion of high-yielding US junk bonds coupled with sensitivity to iron prices.
Some analysts do not expect Fortescue to repay its debts and short sell the stock.
The company opened a $750 million short-term loan, in addition to a revolving credit facility also worth $750 million, according to the company.
Billionaire Andrew Forrest's company aims to triple annual iron ore output to 155 million tonnes by the middle of next year, around as high as BHP Billiton's current production rate.
