see AF again richest guy why he need an other headache. so sad that he can not invest more money to Pos because he has his own baby FMG. and AF has right to ask us why we did not invest FMG when it was $1.50 if we trust him that much
Billionaire Forrest back on top LOUISE BURKE and PETER KLINGER, The West Australian October 11, 2010, 12:20 pm Andrew Forrest is believed to have re-claimed the title of Australia's richest man, after a strong surge in Fortescue Metals Group's share price, which has taken his estimated fortune to more than $6 billion.
Fortescue shares are trading at their highest price since September 2008, propelling Mr Forrest ahead of fellow billionaire Frank Lowy, who is estimated to be worth about $5.04 billion.
Fortescue shares soared 7.59 per cent, or 43? to $6.24, by noon today after the company confirmed it had secured a new $US2 billion credit facility.
There has also been recent speculation BHP Billiton could have Fortescue in its sights after the collapse of the proposed Rio Tinto-BHP Billiton iron ore joint venture in the Pilbara.
Mr Forrest's share-based fortune peaked at more than $12 billion in mid-2008, before plunging along with Fortescue's share price after the financial crisis hit in late 2008.
Fortescue Metals Group is now free to embark on $US15 billion ($15.4 billion) worth of iron ore projects after severing ties with its original financial backers, ending four years of constraints on Mr Forrest's ambitious Pilbara expansion plans.
The company said yesterday it would use a new $US2 billion credit facility to pay out $US1.65 billion and 315 million pounds ($449 million) worth of bonds issued in 2006 when Fortescue needed cash to build its Pilbara mine, rail and port project.
Related: COMMENT: Fortescue a valid BHP Pilbara 'Plan C'
The new facility with JPMorgan and Royal Bank of Scotland is unsecured, highlighting Fortescue's ability to generate vast amounts of cash only two years after shipping first iron ore.
That will allow Fortescue to offer security over its Chichester Range mines in the east Pilbara to financiers in return for the cash needed to start up the Solomon development in the central Pilbara.
Slated to cost $US3.2 billion, Solomon's start-up project will have a capacity of 60 million tonnes of iron ore a year and is expected to be sanctioned for development by the Fortescue board before the end of this year.
Mr Forrest used yesterday's announcement to launch a further attack on the Federal Government's proposed mining tax, claiming the uncertainty generated by the resource super profits tax and then its successor, the minerals resource rent tax, had delayed the refinancing by up to five months and cost the miner $US650 million in additional premiums due to bondholders.
"So if you ever needed to look at an immediate and direct cost of the unnecessary intervention into the mining sector then you need look no further (than) to the growth in premium which Fortescue has had to pay as US dollar interest rates have fallen," Mr Forrest said.
Mr Forrest would not discuss his preferred funding option for Solomon although he has previously said he favoured debt to pay for the development of Solomon.
An exuberant Mr Forrest said he was "extremely proud" of the refinancing, which comes a year before the first batch of the 2006 bonds was due for repayment. Fortescue also expected to save $US60 million a year because the interest rate on the new credit facility is 7.5 per cent, compared to a 9.75 to 10.625 per cent range on the bonds.
The terms of the original bonds prevented Fortescue from raising capital for other projects outside the Chichester hub, frustrating Mr Forrest amid his team's success in discovering billions of tonnes of iron ore in the central and western Pilbara.
"As time has evolved, it's become extremely clear that limiting Fortescue under the weight of its previous financing would in fact lock up tens of billions of dollars of shareholder value which is hereby released by this financing," Mr Forrest said.
"We have replaced a heavily- structured, highly-secured financing package with an unsecured and unstructured financing package which allows the company absolute freedom in all areas in which it would like to grow into, in particular the Chichester hub, the Solomon hub, Fortescue's second port (at Anketell Point) and the Western Hub. "And I say that under our three-hubs, two-ports strategy we are now free to realise the potential of that. It will, we believe, lead to unparalleled growth in the mining industry in one of its most important sectors and its most protected sectors and that is direct-ship iron ore."
POS Price at posting:
15.6¢ Sentiment: Sell Disclosure: Held
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