MELBOURNE, Oct 15 (Reuters) - World no.4 iron ore mine Fortescue Metals Group may be able to revive a plan to triple its iron ore capacity, it said on Monday, having been armed with an extra $500 million after its lenders completed the distribution of $5 billion in debt.
Fortescue last month slammed the breaks on plans to expand its capacity to 155 million tonnes following a sharp and prolonged slide in iron ore prices to a three-year low of $87 a tonne, a price at which the company would have struggled to manage its then $11.7 billion debt load.
It slashed its expansion target to 115 million tonnes, scrambled to line up a $4.5 billion credit facility with no earnings-based covenants to refinance debt and pay off a loan from its earliest backer, U.S. investment firm Leucadia National Corp.
With iron ore prices having rebounded nearly one-third to $115 over the past month, Credit Suisse and JPMorgan managed to increase the credit facility to $5 billion, at LIBOR plus 4.25 percent, putting Fortescue in a better position to go ahead with its ambitious expansion.
"Subject to iron ore market conditions, this additional liquidity will enable detailed consideration of the recommencement of the Kings expansion," Fortescue said on Monday.
Investors are likely to hear more on Tuesday, when Fortescue holds a briefing after releasing its September quarter production report. (Reporting by Sonali Paul; Editing by John Mair)