THE WEST AUSTRALIAN
Friday, 30 November 2012 08:09
Fortescue Metals Group has stepped up its search for a potential buyer of part of its vast rail and port network, opening a data room for a handful of local and international operators to comb its books.
The sale of a possible stake in Fortescue's infrastructure arm, TPI, is being run by Macquarie Capital's global head of resources Robert Dunlop, and sources say activity has ramped up in recent days.
Proceeds from any sale would be used to retire Fortescue's substantial debt and fund the development of the Kings mine at its Solomon Hub.
The move has sparked myriad theories, including that the company could be prepared to sell a greater, even majority, stake in its assets if it could retain operational control of the rail and ports to ensure priority for its iron ore.
Another is that Macquarie could spin the assets out into a listed investment vehicle to unlock cash.
Speaking to _WestBusiness _ on Wednesday afternoon from Port Hedland, Fortescue chief executive Nev Power downplayed such suggestions, saying he was adamant the company would only sell a small equity stake.
"We've had a very high level of interest in our mining and infrastructure assets and we're now going through the process of reviewing what we do with that," he said.
"We are prepared to sell off a small percentage, it won't be a controlling interest and it won't be a majority interest but it is an effective way for us to sell off a small participating share in either the mining and/or infrastructure assets (including rail). We are working through that."
Mr Power said the likely ownership structure, if a partial sale was to another mining or rail group, would be commensurate with the pro-rata usage by each group.
"The level of ownership and control that's appropriate for us is commensurate with the level of use that we're putting on the infrastructure compared to others," he said.
Sources close to companies in the data room said Mr Power's comments would rule out players such as rail group Aurizon, as it had stated publicly that it was only interested in a majority stake.
Others said that one option could be for Aurizon, which until recently was called QR National, to combine its equity in future projects including a proposed rail line for juniors such as Atlas, into TPI, to "creep" to a controlling stake.
Fortescue Metals Group
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