Partial sell-off of Fortescue rail and port facilities to pay debt
Chief executive Nev Power declined to divulge who was interested in the sale, which is understood to involve about 40 per cent of Pilbara Infrastructure, but Fortescue was working on a shortlist of potential buyers, including sovereign wealth funds, infrastructure funds and industry players.
"Our intention is to sell a minority interest and that we would retain control and flexibility to manage the infrastructure," Mr Power said at the opening of the company's Firetail operations at the $3.2 billion Solomon project in the Pilbara.
"There is no other infrastructure that you can buy like this in Australia and perhaps not even in the world," he said.
Mr Power said the company had not declared details of the sale. "It's a confidential process," he said. Atlas Iron is understood to be the frontrunner to secure a stake in Fortescue's prized heavy rail and port facilities, valued at more than $3 billion.
Mr Power said the company would use the proceeds of any partial sale to accelerate its debt repayments after the iron ore miner raised $5 billion in US debt markets late last year.
In February, Fortescue decided not to pay a half yearly dividend.
Mr Power said investors did not expect to see a dividend payout as the company continued to expand.
"Investors would expect to see us get our balance sheet into a long-term sustainable phase, start that debt-pay-down process and the transition into higher and higher yields," he said.
Fortescue's dividend payout ratio gave investors certainty through the cycle, he said.
The company is ramping up production at Firetail to 20 million tonnes a year while its neighbouring Kings mine targets 40 million tonnes a year. The company plans to expand capacity to 155 million tonnes by the end of the year.
Mr Power said Fortescue was not forced into selling assets and he ruled out any asset purchases for the time being.
"Right now we're focused on the infrastructure assets," he said.
Frequently Asked Questions about this Article…
Fortescue plans to sell a minority interest — understood to be about 40% — in its Pilbara rail and port infrastructure. The company says it will retain control and flexibility to manage the assets.
The company intends to use proceeds from the partial sale to accelerate debt repayments. Fortescue recently raised US$5 billion in debt markets and aims to reduce its large debt burden.
Fortescue is working from a shortlist that includes sovereign wealth funds, infrastructure funds and industry players. Atlas Iron is reported to be the frontrunner, although the CEO declined to name interested parties and described the process as confidential.
The heavy rail and port facilities are valued at more than $3 billion. The partial sale is understood to involve roughly 40% of Pilbara Infrastructure and is structured as a minority stake sale so Fortescue keeps control.
Fortescue hopes to complete the partial sale by mid‑year. The company has not disclosed sale details, calling it a confidential process.
Fortescue did not pay a half‑yearly dividend in February. Management says investors should expect a focus on getting the balance sheet into a sustainable phase and starting debt pay‑down before transitioning into higher yields — implying dividends are being deferred while debt is reduced.
According to CEO Nev Power, Fortescue is not being forced into a sale and has ruled out any asset purchases for now. The company is focused on its infrastructure assets.
Fortescue is ramping up production at Firetail to about 20 million tonnes a year, targeting 40 million tonnes a year at the neighbouring Kings mine, and plans to expand overall capacity to 155 million tonnes by the end of the year.
Call 1300 880 160
Start a chat
Schedule a call
