China approves Valin investment

Fortescue Metals Group has announced its Share Subscription Agreement signed on 25 February 2009 with Hunan Valin Iron and Steel Group Company (Valin) has received the approval of the Chinese Government’s National Development and Reform Commission (NDRC).

According to a company, the NDRC approval was the key milestone for the transaction and paves the way for the Chinese Ministry of Commerce and the State Administration of Foreign Exchange to formalise the Agreement.

“Once this is done, all conditions under the Agreement will have been satisfied to enable Valin to proceed with its acquisition of 260 million new Fortescue shares issued at a subscription price A$2.48 per share to raise A$644.8 million in new equity capital,” a media statement released this morning said.

Approval from the NDRC follows the approval from the Australian Federal Treasurer which was announced on 31 March 2009.

The placement, combined with Valin’s recent acquisition of 275 million existing shares from Harbinger Capital Partners (advised to the ASX 25 February 2009), will take Valin’s holding in Fortescue to 535 million shares, making it the second largest shareholder at 17.33% of total issued capital.

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