Guess who made $500 million in 2 mins?

Guess who made $500 million in 2 minutes?

Fortescue's shares surge after banks come to the party

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published September 18, 2012 10:38 am AEST

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) 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), Atlas Iron Limited (ASX: AGO) and Mount Gibson Iron (ASX: MGX) will be watching the price on a daily basis.

Fortescue is now out of the woods from 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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Motley Fool writer/analyst Mike King doesn't own shares in any company mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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