One of Australia's leading iron ore miners Fortescue Metals Group has agreed pay Leucadia National Corporation, a US holding company, an amount or $715 million as repayment towards Leucadia's unsecured loan notes, bringing an end a two-year long legal battle.
New York-based Leucadia owns stakes in manufacturing, mining, oil and gas drilling, and medical firms, besides having interests in US real estate, automobile dealerships and clean energy. The company has a market capitalisation of $8 billion as of 15 June 2012.
''The agreement effects the early repayment of the Leucadia loan notes, releases the parties from all liability in relation to the notes and settles the ongoing court proceedings and all other claims between the parties,'' Fortescue said in a filing to the Australian Stock Exchange.
Leucadia had purchased $100 million of unsecured loan notes from billionaire Andrew Forrest's Fortescue in July 2006 with a maturity date of August 2019. The loan had entitled Leucadia for a 4-per cent royalty on iron ore production from Fortescue's prestigious Pilbara mining operations for the next seven years.
Leucadia has been gaining handsomely from the $100-million loan notes. According to its financial statements, the company reaped over $500 million from royalties linked to the loan.
The dispute cropped up when Fortescue wanted to issue more loan notes that would have diluted Leucadia's royalty payments.