selloff article

http://business.smh.com.au/business/fortescue-hit-by-share-revelation-20081222-73m4.html

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Question is why sell shares to raise cash when last Q they had 624million in the bank...??????
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Fortescue hit by share revelation
Rebecca Keenan
December 23, 2008

Shares in Fortescue Metals, Australia's third-biggest iron ore producer, suffered their steepest fall in more than two months yesterday after the company sold shares to pay bills and raise cash.

The shares plunged 21 per cent, the biggest decline since October 15, to $1.715. Fortescue sold 1.5 million shares at $2.36 each for "goods or services provided", according to an exchange filing last week.

Fortescue, run by chief executive Andrew Forrest, said at the time it had $1.5 million frozen in accounts because of legal action over shipping contracts.

It is being sued by at least three companies, including one owned by the Greek billionaire John Angelicoussis, who is seeking $130 million in damages.

In its statement to the Securities Exchange on Friday, Fortescue said it was reviewing the legal status of the disputed contracts. It would also consider each of the 10 contracts on their "specific facts and merits".

"Fortescue sought legal advice prior to taking its decisive action under the contracts and will continue to do so," it said.

As for the issue of new stock to pay bills, a Fortescue spokesman, Cameron Morse, said in Perth yesterday: "We issued shares to conserve our cash position, given the importance of cash in the present market."

Fortescue had $624 million in cash on September 30, according to its quarterly report. Mr Morse could not provide the latest cash position.

Fortescue shares have declined 87 per cent since its year-high on June 24.

Bloomberg