Ferrexpo in talks to raise $100m through share placing

(Sharecast News) - Ferrexpo confirmed it was exploring a possible $100m fundraising on Monday, as the iron ore producer looks to shore up its finances amid difficult trading conditions. The Ukraine-focused firm, which is listed in London, said that following discussions with various institutional investors, it believed an equity capital raise was "the most viable solution" in the required timeframe.

It is now in talks with its largest shareholder Fevamotinico - which has a 49.3% stake - about a conditional placing of new shares, under which it would seek to raise a minimum of $100m. The money would be used to support the group's working capital position and short-term operational requirements while operating at a reduced level for the next 18 months.

Ferrexpo also confirmed it had agreed to sell its transhipping vessel Iron Destiny in a $7.7m cash deal to an unnamed buyer. Ferrexpo has been unable to use Iron Destiny since Russia invaded Ukraine, but has had to continue to pay to keep it seaworthy.

Ferrexpo has endured a difficult few years, with lower iron ore prices, higher costs and the war in Ukraine hitting it hard. Last week it confirmed output had tumbled in the first quarter, after Russian attacks on the country's power networks temporarily halted production.

The Ukraine government has also withheld VAT refunds worth around $12m due to sanctions on Kostiantyn Zhevago. The billionaire is one of three beneficiaries of a trust that owns Fevamotinico.

Following the sale of Iron Destiny, Ferrexpo said it had extended the runway of having sufficient net accessible cash by two months, to the end of August. But it warned that it remained subject to iron ore pricing volatility and operating expenses.

Discussions with Fevamotinico remained ongoing, meanwhile, "given the impact any possible fundraise may have on the dilution of interests held by Fevamotinico and its desire to participate in any possible fundraise".

It concluded: "The group remains focused on managing costs and optimising its sales mix."

As at 1030 BST, the stock had shed 7% at 43.4p.

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