http://ftalphaville.ft.com/blog/2012/09/18/1164511/forescued-metals-group/
Shares in global shipping giant FedEx fell in pre-market trade this morning after the company reported quarterly results that continued to show strain under the slowing global economy.
FoRescued Metals Group (updated)
Australia’s third biggest mining company has got some much needed breathing space from its lenders.
The new A$4.5bn lending facility extended by Credit Suisse and JP Morgan is secured!
But it’s come at a cost.
From a company announcement on Tuesday:
So there’s no pressure on FMG to repay anything until November 2015 and the company is talking to “a range of parties” interested in partnering in some of assets. But there’s no pressure from the banks to do a deal, apparently.
That’s the good news and, given that 20 per cent of FMG’s free float is on loan, is likely to trigger a squeeze when the shares started trading again on Tuesday. They were suspended last week at A$2.99.
On the downside, we don’t know the all-in cost of the new facility, and the lending banks have taken security. All of which begs the question: wouldn’t an equity fund raising have been easier than taking on new facilities and refinancing debt? Surely the weakness of the existing funding model has been highlighted by the recent slump in the iron ore price? Chairman and 32 per cent shareholder Andrew Forrest presumably thinks differently.
It’s also not clear where refinancing leaves the owners of FMG’s A$7bn of unsecured high yield bonds. Did they rank pari passu before this deal was struck or not?
Hopefully the answers to this question and others will emerge from Tuesday’s media and analyst briefings.
and....
http://www.businessinsider.com/fedex-earnings-q1-2012-9
WEAK: FedEx Offers Bad Guidance And Shares Are Falling
FedEx Express
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FedEx said it earned $1.45 per share on net sales of $10.79 billion, slightly ahead of expectations for earnings of $1.40.
“Weakness in the global economy constrained revenue growth at FedEx Express during our first quarter and affected our earnings,” FedEx Chief Executive Frederick Smith said. "We are taking further actions to reduce costs and adjust our networks to match current and anticipated shipment volumes.”
The company's FedEx Express unit, which accounts for nearly two-thirds of overall sales, lagged freight and ground operations — as customers shifted to lower cost alternatives.
Net income declined 28 percent within the Express division, while total bottom line results improved one percent during the period to $459 million.
The Memphis, Tenn., based firm also guided below Wall Street expectations, forecasting second quarter results between $1.30 and $1.45. Consensus estimates were for $1.67.
Full year guidance was also slashed more than 10 percent to a range of $6.20 to $6.60 per share.
To bolster results, FedEx says it will boost shipping rates by an average of 3.9 percent.
"Weak global economic conditions dampened revenue growth, drove a shift by our customers to our deferred services and outpaced our near-term ability to reduce FedEx Express operating costs to match demand levels,” the company's CFO Alan Graf, Jr. said.
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