UPDATE 2-Brazil's Vale draws $3 billion of credit as asset sales falter

martes 12 de enero de 2016 11:44 GYT
 

(Writes through, adds details on coal deal, share price)

RIO DE JANEIRO Jan 12 (Reuters) - Vale SA , the world's largest iron ore producer, said on Tuesday it drew down $3 billion from a revolving credit line to pay debt due this quarter, a move that shines a light on its fragile finances amid low commodity prices and faltering asset sales.

Brazil-based Vale, which analysts expect to have a cash shortfall in 2016, said it took the action due to a delay in closing a deal announced at the end of 2014 to sell a stake in its Mozambique coal project to Japanese trader Mitsui & Co Ltd .

The closing is dependent on securing project financing for the coal mine and connecting rail and port, a hurdle the companies have been unable to clear so far. When the deal was announced, Vale said it was seeking up to $2.7 billion in project financing.

Analysts at BTG Pactual described the drawdown as "a signal of the challenging times ahead," and calculated that Vale could have an "uncomfortable" free cash flow gap of around $3 billion this year if it doesn't succeed in selling assets.

On top of the coal deal, Vale has said it is looking to sell its remaining 11 very large ore carrying ships. In the past, they have fetched about $100 million each.

The Brazilian miner did not say what the interest rate on the credit line was, but said in a statement it would try not to use it much in the future and was looking to sell long-term debt instead. A further $2 billion is available through another credit line, Vale said.

Preferred shares in Vale, the most traded form of stock, were down 6.2 percent on Tuesday afternoon in Sao Paulo. (Reporting by Stephen Eisenhammer; Editing by Bill Trott and Jeffrey Benkoe)