FIRB extends review into FMG-Valin deal

A review into a $645 million Chinese investment into Fortescue Metals Group has been extended by the Foreign Investment Review Board.

FMG said it has received an interim order from FIRB that will extend the review period for up to a further 30 days from the date the order comes into operation, which was expected to be March 25.

Last month, Hunan Valin Iron and Steel Company agreed to subscribe for up to $558 million FMG shares and earlier this month subscribed for a further $87 million worth of FMG stock.

"Fortescue remains confident that the structure of the share subscription agreement will enable Valin to obtain FIRB approval," the company said in a statement yesterday.

The placement is also subject to Chinese regulatory approval.

The review extension follows a similar extension by FIRB into the $US19.5 billion Rio Tinto and Chinalco deal.

The announcement is below:

Fortescue Metals Group Ltd ("Fortescue") has been informed by the Foreign Investment Review Board ("FIRB") that it has issued an interim order in relation to the application by Hunan Valin Iron and Steel Company ("Valin"), to acquire up to 17.55% of the issued capital of Fortescue. The transaction was announced to the market on 25 February 2009.

The interim order will extend the FIRB review period for up to a further 30 days from the date the order comes into operation (i.e. the date the order is gazetted which is expected to be 25 March 2009).

Under the terms of the share subscription agreement, Valin has committed to acquire 260 million shares to be issued by Fortescue, for consideration of $644.8 million. Fortescue remains confident that the structure of the share subscription agreement will enable Valin to obtain FIRB approval.

The share subscription agreement is conditional on both FIRB and Chinese regulatory approval being granted.