Ivanhoe Mines Ltd. (IVN) said Monday that it's launching a
rights offering to raise about $800 million to $1 billion as it
works to develop its flagship Oyu Tolgoi operation.
The mining company also said company founder and Executive
Chairman Robert Friedland will re-assume the duties and title of
chief executive as part of a series of management changes that
include the establishment of an office of the chairman.
John Macken, who was chief executive, will remain president and
continue to lead the construction of Oyu Tolgoi, which is in
Mongolia.
"The goal of the offering is to ensure that Ivanhoe Mines
remains in a strong financial position to bring the Oyu Tolgoi
copper-gold mining complex into operation ahead of schedule in 2012
and to reinforce the company's independence to pursue strategic
alternatives to protect and enhance shareholder value," Friedland
said in a statement.
Pursuant to the rights offering, existing shareholders can
participate on an equal, proportional basis in purchasing
additional common shares. Pricing hasn't been set.
Friedland, who is Ivanhoe's largest individual shareholder, will
participate in the rights offering to the maximum permitted level
to maintain his 18.3% stake.
Friedland said talks are progressing with a group of
international financial institutions on a separate debt-financing
package that is expected to close in the first half of 2011. The
proposed multi-billion-dollar package is being considered by a core
lending group comprised of the European Bank for Reconstruction and
Development, the International Finance Corporation, Export
Development Canada, BNP Paribas and Standard Chartered.
Rio Tinto PLC (RIO) will be fully entitled to exercise its
rights in the rights offering. It currently owns a 34.9% stake in
Ivanhoe. Ivanhoe believes that the rights offering is exempt from
Rio Tinto's right of first offer to acquire shares issued by
Ivanhoe under terms of Ivanhoe's 2006 five-year private-placement
agreement with Rio Tinto.
The company said the office of the chairman will also include
Peter Meredith, its deputy chairman for the past four years, and
Sam Riggall, who is executive vice-president of Ivanhoe Australia
and will take on the added duties of executive vice-president,
Business Development and Strategic Planning, with Ivanhoe.
-By Carolyn King, Dow Jones Newswires; 416-306-2100;
carolyn.m.king@dowjones.com