20% LVR for FMG, I dont think so
Its more like 4.2/14.6 = 29%
And if its market cap was $6B again it would be 70%, you cant use book value or cash at bank to judge the LVR.
Its LVR has reduced due to the more than doubling of Mcap and halving of gross bond debt.
"
It had brought down gross debt to $US5.1 billion by the end of 2016 and in February said its gearing was well below its target ratio of 40 per cent. The company has promised to prioritise debt repayments over investments or acquisitions." (AAP 24/3/17)
"
For the record, Fortescue's gross debt at present sits at about $US4.2 billion and its net debt sits at a pretty comfortable $3.1 billion, given that the business is sitting on $US1.2 billion of cash.
With balance sheet stability assured it will then direct, with increasing enthusiasm, excess free cash at shareholders while reserving the right to opportunistic investment." (AFR 10/5/17)
Read more:
http://www.copyright link/business/...t-credit-rating-20170510-gw1t1l#ixzz4yxqQva93
Debt is what almost destroyed FMG twice, the goal is to reduce it dramatically until they get the investment grade rating of BBB- or higher
"A bond is considered investment grade or IG if its credit rating is BBB- or higher by Standard & Poor's or Baa3 or higher by Moody's. Generally they are bonds that are judged by the rating agency as likely enough to meet payment obligations that banks are allowed to invest in them."
Once the investment grade is achieved, they can obtain standard finance from Banks at much lower rates rather than junk bonds as in the past. This should happen around $1.5B net debt, likely around July-Oct 2018.
And if they keep paying debt down like this they should be debt free by June 2019
Get rid of the DEBT! Stuff the Banks! Those that refused and still refuse to lend to FMG and most entrepenuers. Then you are your own master and can then provide "
with increasing enthusiasm, excess free cash at shareholders while reserving the right to opportunistic investment".
(20min delay)