It would be great if BRM could pull off something similar to this - it's a bit beyond the boys at BRM imho, I get a sense they like to sit on the sidelines & say what they are gunna do....btw where are the mystical beneficiation results? UBS is our best chance to pull a deal like this off. It might be a while - (btw don't mention the rail!)
Yes, FMG did capital raising for different reasons to BRM. FMG really need this one. Debt pressure reduced now it might be well positioned. What has BRM done with it's capital raising, aside from fund WR's bonus shares? Come on BRM pull the finger out - you can't blame the GFC forever - I/O companies are still doing deals............
Fortescue ups sales to Valin after $1.2b deal Jamie Freed February 25, 2009 Fortescue Metals has agreed to quadruple its iron ore sales to an arm of Chinese steel maker Hunan Valin Iron and Steel Group, now its second-largest shareholder.
Under the co-operation agreement, Fortescue said today that, subject to production expansions, it would increase its supply to up to 4 million tonnes a year to Valin subsidiary Xiangtan Steel from 2010 onwards, up from 1 million tonnes a year now.
The agreement follows a deal struck yesterday in which Valin agreed to pay $1.2 billion for a strategic 15 per cent stake in the iron ore miner and institutional investors considered whether to take part in a $500 million share placement.
The Valin deal, signed in Hong Kong last night, will give the Chinese steel mill additional offtake and a seat on the Fortescue board for its chairman, but no rights to marketing or representation on management committees.
Meanwhile, Fortescue's share remain suspended. The miner this morning required an extension of the suspension, saying it was considering other capital raising initiatives but was not yet in a position to provide full details to the maket.
"Fortescue will provide further details in relation to those initiatives as soon as possible," the company said.
Fortescue's chief executive, Andrew Forrest, said yesterday the deal with Valin was "tailored to be attractive to the Australian Government", and that there was a standstill agreement prohibiting Valin from buying more shares.
To minimise dilution, Valin will buy 8 per cent of the company from the US hedge fund Harbinger Capital Partners. It will buy new shares from Fortescue at $2.48, but it was unclear what it would pay Harbinger.
Mr Forrest said Harbinger's stake would fall below 10 per cent, but he had been assured the fund would not sell any more of its holding unless Fortescue received a full takeover bid.
The Valin deal appeared to have been structured to avoid the backlash associated with Rio Tinto's deal with Chinalco.
The cash raised from issuing new shares to Valin and institutional investors will not cover the full costs of an expansion to 120 million tonnes, which Fortescue's head of business development, Chris Catlow, said would cost about $60 per tonne of capacity, or $3.9 billion.
Mr Catlow said Fortescue had so far been able to sell every tonne of iron ore it produced and expected to do so even if it expanded to an eventual 160 million tonnes of production.
Fortescue is in talks with China Investment Corp and others to cover the remaining $3 billion of expansion funds.
Before seeking final bids from institutions, Fortescue disclosed exposure to an estimated $US171 million ($264 million) in losses on shipping contracts, in addition to $108 million in losses and share-based settlements previously disclosed.
Even before the extent of the shipping losses was disclosed, some fund managers told the Herald they had been approached to take part in the placement but had declined.
BRM Price at posting:
$1.01 Sentiment: LT Buy Disclosure: Held
