Bloomberg reported that Fortescue Metals Group Limited's talks with lenders to restructure debt is reviving investor memories of the disaster of billionaire Australian mining magnate Mr Andrew Forrest's previous venture a decade ago.

The nation's third biggest iron ore exporter plans to update the market on the talks after a record slump in its US securities on September 13th 2012. The Perth based company halted its shares from trading last week as its market value plunged to AUD 9.3 billion.

The slide means Forrest has likely lost his place as Australia’s richest man as about AUD 3 billion was wiped off the value of his stake in Fortescue since its peak this year on March 22nd 2012 as the company raised borrowings to AUD 10.6 billion to fund expansions. Anaconda Nickel Limited, an earlier venture of Forrest who is also known as Twiggy, was forced to sell shares to meet debt payments in 2003 after its mine was delayed and costs blew out.

Mr Peter Rudd, resources and mining manager at Altitude Private Wealth in Melbourne, said that "He is pretty good, Twiggy, at convincing people from overseas to buy part of the dream. As we know with Anaconda, that eventually fell over."

According to data compiled by Bloomberg based on filings from groups that are obliged to disclose their purchases, US investors Pacific Investment Management Co, which manages the world's biggest bond fund, BlackRock Inc and Franklin Resources Inc are the biggest holders of Fortescue bonds.

US bondholders, who bet USD 400 million on Anaconda, recouped 26 cents in the dollar after Mr Forrest, who built the company, was ousted in 2001 from his position as CEO. Anglo American Plc fared even worse, walking away with 7% of its USD 200 million investment, after battling to remove Mr Forrest.

Anaconda shares slumped 89% ahead of the company being re badged as Minara Resources Limited. It was eventually taken over by Glencore International Plc in 2011. Fortescue shares have declined 30% in 2012.

Source - Bloomberg

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