22/12/2008 - 13:13

FMG slumps on tenuous cash position

22/12/2008 - 13:13

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Investors have shaved as much as 21 per cent off Fortescue Metals Group's share price as stakeholders come to grips with the miner's cash situation.

Investors have shaved as much as 21 per cent off Fortescue Metals Group's share price as stakeholders come to grips with the miner's cash situation.

In trade today, the iron ore miner's share price slumped 46 cents or 21 per cent to an intraday low of $1.70 before rallying to rest at $1.82 at 15:05 AEDT.

The company's share price reached a high of $12.78 in June this year.

On Friday, the company revealed that it had issued $3.65 million worth of ordinary shares to pay an unnamed contractor for "goods/services" provided, with each share valued at $2.36.

The news followed a lawsuit launched by Greek shipping company, Angelicoussis, against FMG over the cancellation of a five-year ship charter.

The shipping company is seeking $US130 million in damages.

The iron ore miner is also facing other potential legal actions by a number shipping companies over changes made to contracts.

FMG said on Friday that $US1.5 million of its funds has been frozen in the United States as potential security for any payments following the arbitration process.

At the end of the September quarter, the company had $624 million in the bank.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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