Ferrexpo extends runway with vessel sale; eyes equity raise
Ferrexpo PLC on Monday saw its shares come under pressure as it reported the sale of a transhipping vessel and said an equity raise is the ‘most viable solution’ to its funding needs.
Shares in the Baar, Switzerland-based iron ore producer in Ukraine fell 7.4% to 43.00 pence on Monday morning in London.
Attacks on Ukrainian infrastructure in the first quarter have hampered Ferrexpo’s operational capabilities, with activities having been largely suspended during the period.
Within this environment, Ferrexpo’s focus has been on managing its working capital and costs.
On Monday, it said it has inked an agreement for the sale of Iron Destiny, its transhipping vessel, for $7.7 million. It expects this deal to complete in April.
Ferrexpo said the ongoing war in Ukraine has constrained its ability to utilise the vessel, with it having to incur maintenance costs to keep the asset in a seaworthy state, and as such, contended the sale was in the company’s best interests.
The company said that taking into account this transaction, it estimates its cash runway has been extended to around the end of August from at least the end of June.
However, Ferrexpo explained this estimate remains subject to factors including the volatility of iron ore pricing, operating expenses and energy supply.
Ferrexpo also noted that following discussion with both existing and potential investors regarding funding options, it believes an equity raise is ‘the most viable solution in the timeframe required’.
The company said any raise would be structured as a conditional placing to existing and new institutional investors and seek to raise a minimum of $100 million to support its capital requirements.
Ferrexpo noted that completion of any such fundraise would require approval from shareholders. Thus, it said it has engaged with its largest shareholder Fevamotinico Sarl, which owns 49.32% of the ordinary shares in issue, to find out whether it would provide support for such resolutions. Ferrexpo said these discussions ‘remain ongoing’.
The company said it aims to provide an update on any possible fundraise in due course, adding that ‘there can be no certainty that the group will be successful in progressing towards any possible fundraise, or any alternative funding solution, within a suitable timeframe, or at all.’
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