Fortescue Talks to Lenders About Potential Debt Relief
Fortescue Metals Group, Australia’s third-biggest producer of iron ore, said today it is in talks with lenders about potential debt relief, even as it remains fully compliant with its loan covenants.
Discussions are on “about potential waivers in the event that covenants are put under pressure by extended volatility in the iron ore market,” the company said today in a statement to the Sydney stock exchange. Fortescue has full access to all its funding facilities, it said.
The company asked its lenders to waive all debt covenants for the next 12 months in a call last week before putting it in writing early this week, the Australian Financial Review reported today, citing people familiar with the situation. The report reinforces concern the company, which has A$8.7 billion of debt, may be close to breaching its covenants, said David Lennox, a resources analyst at Fat Prophets.