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.