Australian court says Fortescue founder didn't mislead investors
By Maggie Lu Yueyang
CANBERRA (Reuters) - Australian iron ore magnate Andrew Forrest and Fortescue Metals Group Ltd (FMG.AX: Quote) won a High Court appeal to overturn a conviction for misleading investors, allowing the billionaire to return as an executive director to the company he founded.
The ruling ends an eight-year legal battle between Fortescue and the country's securities watchdog, and promises to bring clarity to the direction the world's No.4 iron ore miner will take as it struggles with heavy debts, ebbing demand from China and sliding iron ore prices.
"It eliminates one area of uncertainty that has dragged on for quite a while," said Jamie Spiteri, senior dealer, Shaw Stockbroking. "But for Fortescue it comes down to genuine iron ore demand. Their future profitability is dependent upon an improvement in that iron ore price."
Forrest founded Fortescue in 2003 after a decade of promoting everything from Cuban-style nickel mining to underground desert oceans. He owns around one-third of the company, worth more than $3.5 billion at current prices.
Known by his nickname "Twiggy," Forrest is credited with turning Fortescue into the country's third-largest iron ore producer after Rio Tinto Ltd (RIO.AX: Quote) and BHP Billiton Ltd (BHP.AX: Quote) by selling almost all of the company's output to Chinese steel mills.
But hammered by slowing Chinese demand and slumping iron ore prices just as it ramps up borrowings to fund a surge in production, Fortescue has come under increasing pressure in recent months. In September, the company said it would slash spending and jobs just days after reassuring on its outlook, shocking investors.
"We can now focus our full attention to ensuring the continued success of Fortescue Metals Group for many years to come," Deputy Chairman Herb Elliott said in a statement.
The legal battle had been an "expensive distraction," he said. Continued...