Current debt US$12bill ~ A$12.8bill today @ 93.75c exchange rate.
If IO price dropped suddenly to say US$100/tonne and precipitated an exchange rate tank to 70c then US$12bill becomes $17.1bill.... a 34% jump!
This would blow FMG market cap, debt ratios etc. out of the water.
Compare it then to RIO, BHP with low debt levels and alternative investments to IO.
Not saying above will happen but I am highlighting FMG's biggest risk. Remember it is iron ore prices which are holding up our exchange rate more than ever!
It is imperative FMG works post haste at reducing debt. In particular I believe it must be, and probably is currently(unofficially), working at selling off a minority stake in TPI. What does it matter if it owns only 60%, not 100%.... so long as it retains control? It should selldown now while IO prices are still higher than previously expected. These 3rd party rail-sharing deals should help boost the TPI sell-down price it can achieve.
Please note: I currently hold FMG stock and rate it a LTB. With a lower D:E ratio the shorters/knockers would be nowhere to be seen!
fortescue takes first step in debt reduction, page-15
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Last
$18.38 |
Change
-0.185(1.00%) |
Mkt cap ! $57.05B | |||
| Open | High | Low | Value | Volume |
| $18.70 | $18.72 | $18.21 | $62.29M | 3.368M |
Buyers (Bids)
| No. | Vol. | Price($) |
|---|---|---|
| 8 | 4336 | $18.37 |
Sellers (Offers)
| Price($) | Vol. | No. |
|---|---|---|
| $18.38 | 8461 | 25 |
View Market Depth
| Last trade - 13.05pm 30/08/2024 (20 minute delay) ? |
| FMG (ASX) Chart |