Fortescue Remains in Port, Rail Stake Talks After Offers Too Low
Fortescue Metals Group Ltd. (FMG), Australia’s third-biggest iron ore exporter, remains in talks to sell a minority stake in its port and rail assets after offers to date didn’t meet its expectations.
“It’s not shelved, we’re in discussions right now,” Neville Power, chief executive officer of the Perth-based company, told reporters on a media call. While significant offers were received, they haven’t met objectives for value and terms, the company said in a statement. A sale could raise an estimated $3 billion, according to JPMorgan Chase & Co.
Fortescue, which sold $5 billion in loans to cut debt after prices fell last year, started talks in December for the sale of a stake in its port and railroad assets. The company, which plans to boost capacity to 155 million metric tons, has benefited from higher-than-expected iron ore prices and pre-payments from customers.
“There is no pre-set idea on how a deal should be structured,” Power said. “That has allowed people to come to us with a variety of different ideas and proposals and we continue to assess those.”
Fortescue, which today reported net income of $1.75 billion that met analyst expectations, gained 3.3 percent to A$4.225 at 1:31 p.m. in Sydney trading. The benchmark index fell 0.7 percent.
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