04/02/2009 - 11:04

FMG pays $34m to settle dispute

04/02/2009 - 11:04

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Fortescue Metals Group has agreed to settle a shipping contract dispute with the issue of $US22 million ($A34 million) worth of shares and has entered into a shipping joint venture.

FMG pays $34m to settle dispute

Fortescue Metals Group has agreed to settle a shipping contract dispute with the issue of $US22 million ($A34 million) worth of shares and has entered into a shipping joint venture.

The miner said today it has reached agreement with Belgium shipping company Bocimar to terminate two contract entered in early 2008 when the shipping market was at its peak.

Under the arrangement, Bocimar will drop arbitration action against FMG and both parties agree they have no further claims against each other.

In consideration for the settlement, FMG has agreed to allot the equivalent of $US11 million worth of FMG shares to Bocimar for each contract.

The share price for the allotment will be taken as at the closing price on December 31 2008.

FMG shares ended the 2008 year at $1.93.

Late last year, FMG revealed is was facing legal action and arbitration cases from several shipping companies after it suspended some of its long-term and freight shipping contracts.

Meantime, FMG said today that it has agreed to establish a shipping JV which includes the chartering of three modern Cape-size vessels than range in capacity from 180,000 tonnes to 200,000t.

"The vessels have been secured at today's historically low rates, fixed for a 10 year period, in consideration for the future commitment to issue US$28m of FMG shares on 31 December 2009 set on a weighted average market price basis," the miner said.

"The JV will include an equal profit sharing arrangement for sub chartering of the vessels and will also cover advisory and management services to be provided by Bocimar, one of the world's most influential shipping groups."

Shares in FMG rose 10 cents to an intraday high of $2.02 before easing to $2.01 at 13:06 AEDT.

 

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