The plunging iron ore price has forced Mr Andrew Forrest's Fortescue Metals to ask its bankers for waivers of its loan conditions, triggering a 14% share price plunge.

Fortescue stock was dumped in the last hour of trade after word spread through the market that the miner had sought the waivers from lenders owed USD 11 billion, including the big four Australian banks, and others including Bank of America Merrill Lynch, UBS and JPMorgan.

In a statement after the market closed, Fortescue confirmed it was in 'full compliance with all of its banking covenants, which would be reviewed on December 31st 2012 and continued to have full access to all of its funding facilities.

Merrill Lynch, which recently advanced AUD 1.5 billion to Fortescue, has been seeking to syndicate the loan and recently extended the deadline for the raising until the end of September 2012.

Fortescue sought to reassure its lenders in Asia last week, a day after axing AUD 1.6 billion in capital expenditure and reducing its annual production target from 155 million tonnes per annum to 115 million tonnes by deferring the Kings mine at Solomon. Iron ore prices have dropped 30% in recent months. They rallied briefly in the past week but had dropped back down to USD 98 by yesterday.

Source - Brisbane Times

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