Rio Tinto Has Other Options If Chinalco Deal Fails - CFO
March 26 2009 - 7:59AM
Dow Jones News
Anglo-Australian miner Rio Tinto PLC (RTP) has other options if
its $19.5 billion transaction with Aluminum Corp. of China, or
Chinalco, fails, Rio Tinto's chief financial officer, Guy Elliot
said Thursday.
"Like any prudent company, in these uncertain times, it is of
course sensible to consider contingencies," he said after speaking
at the Asia Mining Congress in Singapore. "This is the way we
always work."
What's proposed is an investment by Chinalco in Rio Tinto, with
the Chinese company increasing its interest to 18% from 9%.
Elliot said Rio Tinto thought a rights issue of up to $10
billion was possible, which would cover their 2009 debt
exposure.
"A rights issue was a serious possibility right until the board
took the decision on Chinalco," Elliot said at the conference.
But he added that a rights issue wouldn't help cover its debt
obligations in 2010 and would stymie the company's ability to tap
the equity markets again if needed.
The miner chose the Chinalco deal instead because it could cover
both debt requirements in 2009 and 2010, he added.
"Our board was unanimous in recommending the Chinalco
transaction and we believe it remains the right transaction for Rio
Tinto," he said.
Company Web site: www.riotinto.com
-By Alex MacDonald and James Campbell, Dow Jones Newswires; +44
(0)20 7842 9328; alex.macdonald@dowjones.com