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FMG Finance's ratings affirmed at 'B+', off negative watch -

FMG Finance's ratings affirmed at 'B+', off negative watch - S&P
April 22, 2008: 04:49 AM EST

MUMBAI, Apr. 22, 2008 (Thomson Financial delivered by Newstex) -- Standard & Poor's (NYSE:MHP) Ratings Services said it has affirmed its 'B+' ratings and recovery rating of '4' on the project debt issues of FMG Finance Pty Ltd., the project financing arm of Fortescue Metals Group Ltd. and removed the ratings from negative watch.

The rating outlook is negative.

S&P said the affirmation follows the review of the project's liquidity level as it approaches completion and moves into commissioning and ramp-up.

According to S&P, although the leases increased the project's liabilities and debt-servicing requirements, the lease proceeds together with iron ore pre-sales have provided the project with essential liquidity.

Without the liquidity provided, the project did not have sufficient cash at the project level to complete construction and ramp-up, S&P added.

Its negative rating outlook reflects the potential for unbudgeted costs and working capital increases, and ramp-up delays over the remaining commissioning and ramp-up phases, which could compound the project's liquidity and need for potential cash contributions from Fortescue Metals Group.

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