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Rio Tinto seals rights issue with help from Chinalco
London (AFP) July 2, 2009 Miner Rio Tinto said on Thursday that investors led by Chinese aluminium giant Chinalco had snapped up all its new London-listed shares, as it looks to raise 15.2 billion dollars (10.8 billion euros). The Anglo-Australian group had announced plans on June 5 to raise 11.8 billion dollars from the sale of fresh London-listed stock and 3.4 billion dollars from new shares listed in Sydney. The results of the Sydney rights issue would be announced on Friday. Analysts said the initial sale had left Rio Tinto better able to compete with fierce rival BHP Billiton. Rio had last month cancelled a tie-up with the state-owned Chinalco. "It is a relief that Rio are now in a much stronger position and the general consensus is that they are on a better footing to compete again with BHP," said MF Global Spreads analyst Manus Cranny. "Rio Tinto have succeeded in their capital raising ambition... supported in the most part by Chinalco." Rio, which earlier on Thursday put the acceptance level at about 97 percent, added that it had secured buyers for the remaining 15,882,790 shares. The announcement of Rio Tinto's massive rights issue in June came as it canned the Chinalco tie-up in favour of a joint venture with BHP Billiton. However, the state-run Chinese firm said on Thursday that it had taken up its allocation from the rights issue -- maintaining its 9.3 percent stake and its position as biggest shareholder -- and would continue to monitor developments. "This was an economically rational decision as it prevented the dilution of our ownership in Rio," it said in a statement. "Chinalco believes in the long-term prospects of the industry and will continue to explore opportunities to advance its strategic objectives." Chinalco was to have invested 19.5 billion dollars in Rio Tinto, which instead unveiled an iron ore joint venture with BHP along with the bumper rights issue. Rio has been searching for extra funds after its purchase last year of Canadian aluminium group Alcan, which saddled the company with about 38 billion dollars of debt. But Chinalco's emergence as a suitor sparked a political firestorm over ownership of Australian assets, leaving Canberra with a difficult choice -- to risk angering either its electorate or China, a key market. BHP abandoned a hostile takeover bid for Rio last November. Rio's share price was down 1.90 percent at 2,117 pence in midday trade on London's FTSE 100 leading shares index, which was 0.54 percent lower at 4,317.36 points. Share This Article With Planet Earth
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