Fortescue wins $4.5 billion respite, talking to potential partners

MELBOURNE (Reuters) - Fortescue Metals Group , the world's No.4 iron ore miner, has lined up $4.5 billion in debt and said several firms expressed interest in partnering in some of its assets, as it moved quickly to shore up funding to cope with a slump in iron ore prices.

Fortescue shares, halted last week after reports that the company was seeking waivers on its debt covenants, jumped as much as 17.7 percent in early trading on Tuesday.

The debt facility, fully underwritten by Credit Suisse and JPMorgan , will be used to refinance all existing bank facilities and gives the company until November 2015 to make its first repayment.

"Fortescue has moved quickly to ensure its capital structure can withstand prolonged market volatility," CEO Nev Power said in a statement.

The facility also waived earnings-based covenants.

"This is going to surprise people, in terms of the speed, the certainty, the magnitude," said an analyst who declined to be named as he had yet to write a note to clients. The analyst added that whether or not iron ore prices improve from their current levels above $100 a metric ton, this would allow Fortescue to cover its debt funding. "This is a good deal," he said.

Fortescue, one-third owned by billionaire founder Andrew "Twiggy" Forrest, said it was evaluating approaches from a range of firms to partner in its assets, but said it was not under pressure from lenders to sell any stakes.

"Transactions of this nature are not required under Fortescue's new debt facilities and will only be pursued if they clearly add shareholder value," the company said in a statement.

Earlier this month, Fortescue announced it was slamming the brakes on plans to triple its iron ore capacity, cutting $1.6 billion in planned capital spending this year, axing hundreds of jobs and selling a power station to preserve cash.

The moves shocked investors, coming less than a week after Power had said the company was comfortable with its funding, remained on track with its expansion, and was confident iron ore prices would recover in the near term.

NOT IN ASSET SALE TALKS

The price of iron ore traded as high as $180 a metric ton a year ago, but plummeted to a 3-year low of $86 earlier this month as demand in China shrinks. Late on Friday, benchmark iron ore with 62 percent iron content had rallied to $101.60 a metric ton, according to data provider Steel Index.

Fortescue produces only iron ore and effectively has a single customer, China. The company said on Tuesday it expected iron ore prices to continue edging higher, adding it would consider selling infrastructure assets, but was not in talks to do so. It added it was not in talks with Chinese steelmaker Baoshan Iron & Steel Co (Baosteel) <600019.SS> on selling any asset stakes.

Australia, the world's biggest exporter of iron ore, revised down its revenue forecasts for the steelmaking ingredient by a fifth on Tuesday, adding to signs that the industry is losing steam as China's slowdown drives down prices.

The Bureau of Resources and Energy Economics (BREE) forecast revenue from iron ore, Australia's largest single export, would fall to A$53.15 billion ($55.83 billion) in the current fiscal year. This compared to a June forecast of A$67 billion and around A$63 billion for last year.

Forrest has been fighting not to have his stake diluted in a company he built from scratch. He has spent close to $180 million in recent months to take his holding to 32.8 percent. The company said it saw no need at this time to raise equity.

($1 = 0.9521 Australian dollars)

(Reporting by Sonali Paul and Lincoln Feast; Editing by Eric Meijer and Ian Geoghegan)