SYDNEY -- Andrew "Twiggy" Forrest's paper fortune ballooned by $500 million this morning, after Fortescue's share price surged, jumping 51 cents within the first 2 minutes of trading.
The company has secured a credit facility of up to US$4.5 billion that will be used to refinance all existing bank facilities and provide Fortescue with additional liquidity. As the owner of more than 1 billion of Fortescue Metals Group (ASX: FMG.AX) shares, representing 32% of the company, Twiggy's fortunes are closely tied to the company he founded. This could be the turnaround the company needs, while the spot iron ore price remains volatile.
In more good news, the iron ore price posted its second day of gains overnight, rising to US$105 a tonne. Although it's still volatile, Fortescue, Rio Tinto (ASX: RIO.AX), Atlas Iron Limited (ASX: AGO.AX) and Mount Gibson Iron (ASX: MGX.AX) will be watching the price on a daily basis.
Fortescue is now out of the woods from a debt perspective, given the earliest it has to repay any debts is November 2015. Previously, it had US$1.5 billion due to be repaid in December 2013. The news should make it easier for Twiggy to sleep at night, and will also give reassurance to other miners.
Last week, Fortescue had asked its lenders to waive all covenants on its debt for 12 months, as the low iron ore price could have seen the miner breach those debt covenants in December this year.
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