FMG - Fortescue Ltd

[ROE]

Haha, didn't know if you'd get the reference.

On the topic of FMG - does anyone know how I can find out what the Oz banks' exposure to this is?

They basically borrow from any one who willing to lend them money...this is a list of lenders to FMG

Australia big 4, Bank of America, Merrill Lynch, UBS and JPMorgan.

I say most of them evenly split with maybe give or take a few hundred mil from one lender or another
as their total debt is around 9-10 Billion

I got no FMG or shorting it, its CEO scare me with various interview I see and how they run their business

The longer iron ore below $110 bucks the less sleep these CEO get to sleep night

The beauty of all this is when and if something blow up BHP will stand to benefit the most

 

[McCoy Pauley]

ASX issued FMG with a "please explain" letter yesterday afternoon to which FMG responded citing "media speculation about the suspension of debt covenants".

Now FMG has sought and been granted a trading halt until Tuesday next week to sort out things with its bankers.

 

[VSntchr]

ASX issued FMG with a "please explain" letter yesterday afternoon to which FMG responded citing "media speculation about the suspension of debt covenants".

Now FMG has sought and been granted a trading halt until Tuesday next week to sort out things with its bankers.

LOL @ them missing the up day!!!

 

[Huskar]

Lol. No. I am not long.

It's just good market governance. Everyone knows there's a rumour out there. Market is trading uninformed. That's the basis for a halt.

How do you short skc?

I am just retail with small $ and have been trying for a while to figure out the best way to go short China and FMG in particular. Have missed the big drop on the roller coaster but suspect there might be a few more dives yet. Listed options or warrants? Or do I have to join the dark side and use CFDs?

 

[skc]

How do you short skc?

I am just retail with small $ and have been trying for a while to figure out the best way to go short China and FMG in particular. Have missed the big drop on the roller coaster but suspect there might be a few more dives yet. Listed options or warrants? Or do I have to join the dark side and use CFDs?

For retail and straight forward delta, just use CFDs.

My reference to the dark side has nothing to do with CFDs. I don't consider that to be the dark side.

 

[Joules MM1]

http://www.businessspectator.com.au...-report-pd20120914-Y5494?OpenDocument&src=hp5

Published 12:10 PM, 14 Sep 2012 Last update 12:10 PM, 14 Sep 2012

Unconfirmed reports have emerged that Fortescue Metals Group will attempt to offload a 15 per cent stake in the company to China's Baosteel over the weekend, according to The Australian Financial Review.

The newspaper said Fortescue may attempt the placement at $4 per share, representing a 33 per cent premium on its last closing price of $2.99.

The news comes after the company was placed in a trading on reports it had asked for a waiver of all its debt covenants for 12 months, which it described "rumours and speculation"

"Discussions with its banks have progressed significantly overnight and it is in the best interests of shareholders to halt trading in Fortescue’s securities," the miner said earlier today.

"Fortescue re-iterates its announcement from yesterday that it is in compliance with its banking covenants and is conducting discussions with its supportive banking group."

The AFR said the group's founder and chairman, Andrew Forrest, has been cautious about raising capital in the past, but said that the premium price would mean less dilution than would occur in a sale to institutions.

A sale of the stake to Baosteel would also need the approval of the Foreign Investment Review Board.

----------------------------------------------------
twittshpeak:

Peter Esho ‏@PeterEsho

Twiggy trying to do 15% placement for FMG at $4 per share with Baosteel, possible?

Chief Market Analyst at City Index Asia Pacific

 

[ROE]

LOL @ them missing the up day!!!

I doubt that will help, with the current iron ore price it probably cant meet its bank liability
most people probably head out for the exit.

I still cant believe they model all their stuff at iron ore price at $110 and refuse to cater for a scenario
below $110 ....such reckless and hubris management...the CEO need to go I reckon and fall on his sword

 

[notting]

Lender's should have seen this coming, must not have expected the dramatic fall in iron ore prices which is just as stupid, capital raising after capital raising to be expected.
Chinese will want to steel it, not buy it!
Go go go taxes and royalties WA!

 

[roders]

Not sure if anyone else is following the transaction trades on FMG but is it just me or is something strange going on.
7.05am on Friday just prior to trading halt a number of transactions were done at $5.00?
Strange when market price was $2.99?

Is there a big jump expected upon trade resumption on Tuesday?

 

[banco]

I doubt that will help, with the current iron ore price it probably cant meet its bank liability
most people probably head out for the exit.

I still cant believe they model all their stuff at iron ore price at $110 and refuse to cater for a scenario
below $110 ....such reckless and hubris management...the CEO need to go I reckon and fall on his sword

Pretty obvious Twiggy's overriding priority was not diluting his holdings.

 

[skc]

Not sure if anyone else is following the transaction trades on FMG but is it just me or is something strange going on.
7.05am on Friday just prior to trading halt a number of transactions were done at $5.00?
Strange when market price was $2.99?

Is there a big jump expected upon trade resumption on Tuesday?

No. Those were put options exercise.

 

[Timestar]

Debt + Interest = the end of FMG !!

What on earth was Twiggy thinking ??

Let's manage our debt situation by - BUYING MORE DEBT !!

This is the last straw for FMG and their "1" real customer (China), they will drown in debt and sit back and watch the iron ore price slide into oblivion.

No backup plan, no strategy, that's is some management team.

Not happy Jan.

 

[sammy84]

Re: Debt + Interest = the end of FMG !!

What on earth was Twiggy thinking ??

Let's manage our debt situation by - BUYING MORE DEBT !!

This is the last straw for FMG and their "1" real customer (China), they will drown in debt and sit back and watch the iron ore price slide into oblivion.

No backup plan, no strategy, that's is some management team.

Not happy Jan.

Without knowing the details in full detail I thought this was a master stroke. What else did you want him to do?

He has effectively rolled over his previous borrowings into a new facility which doesn't have an iron ore price covenant and repayment isn't due for a few years. His other option was to sell shares at their current levels, which has been heavily oversold by anyone's account.

The sale and leaseback idea had merit but he wasn't exactly in the best bargaining position to extract real value out of it.

 

[notting]

Re: Debt + Interest = the end of FMG !!

What on earth was Twiggy thinking ??

Let's manage our debt situation by - BUYING MORE DEBT !!

Well it was actually a pretty slick deal, under the circumstances.
All depends on the Ore price now
If that doesn't hold around 1.20 for a fair amount of time FMG will struggle to service it's debts.

 

[drsmith]

Re: Debt + Interest = the end of FMG !!

Well it was actually a pretty slick deal, under the circumstances.
All depends on the Ore price now
If that doesn't hold around 1.20 for a fair amount of time FMG will struggle to service it's debts.

If it does, the real test will then be whether or not Twiggy is a chronic gambler.

 

[McLovin]

Re: Debt + Interest = the end of FMG !!

Well it was actually a pretty slick deal, under the circumstances.
All depends on the Ore price now
If that doesn't hold around 1.20 for a fair amount of time FMG will struggle to service it's debts.

I think you're pretty much spot on.

 

[Tysonboss1]

Re: Debt + Interest = the end of FMG !!

Well it was actually a pretty slick deal, under the circumstances.
All depends on the Ore price now
If that doesn't hold around 1.20 for a fair amount of time FMG will struggle to service it's debts.

I think you're pretty much spot on.

I have spent a bit of time chruching the numbers on FMG, I see $106 a tonne as being a figure that will see FMG earn a fairly decent margin.

If Iron ore averages $106 for the next 12months FMG will be worth more than double what it closed at today.

Ofcourse nobody can predict the ore price, But there is a decent chance of a large gain on this one.

 

[prawn_86]

Re: Debt + Interest = the end of FMG !!

Ofcourse nobody can predict the ore price, But there is a decent chance of a large gain on this one.

Yes, many market commentators say that FMG is essentially a leveraged investment into iron ore prices.

 

[notting]

Anything is possible, but why not just buy AGO which has not debt and produces cheaper and has been just as badly, actually more badly spanked. No BRAINER. :screwyr RIO.

 

[Tysonboss1]

Re: Debt + Interest = the end of FMG !!

Yes, many market commentators say that FMG is essentially a leveraged investment into iron ore prices.

yes, they have leverage and they do rely on selling iron ore above a certain price so i guess they are right.

Just as Westfeild is a leveraged investment into retail leases.