Mining magnate Andrew Forrest has suffered a massive setback at the markets with Fortescue Metals' shares being placed in a trading halt on Friday after nearly $1.5 billion was wiped off its value in 90 minutes of trading on Thursday.
Amidst rising concerns for the company’s ability to meet its debt obligations, Fortescue Metals Group on Friday placed its shares in a trading halt after holding talks with its bankers overnight.
The miner said the discussions had progressed well and that it was in the best interests of shareholders to halt trading in its shares.
"Fortescue reiterates its announcement from yesterday that it is in compliance with its banking covenants and is conducting discussions with its supportive banking group," the company said in a statement.
Fortescue said it remained concern about continued rumours and speculation about its bank facilities.
It said it intended to make an announcement about the restructure of the facilities on or before the start of trade on Tuesday.
What next for Fortescue?
Spot price of the iron ore has plunged more than 30 per cent in the past two months.
Analysts say the highly leveraged company's net debt will peak at about $A9.60 billion with current gross debt $US8.35 billion.
The share price of Fortescue - Australia's third largest iron ore miner after BHP Billiton and Rio Tinto - closed down 48 cents, or more than 13.8 per cent, at $2.99.
If bankers do not meet Fortescue's request to waive its debt covenants, the miner might not be able to draw down further on its finance facilities and meet payment obligations.
It could also mean its debt falls due immediately.
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