Partial sell-off of Fortescue rail and port facilities to pay debt
Iron ore miner Fortescue Metals Group hopes to sell part of its rail and port assets by mid-year, with the proceeds going towards paying down its large 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.