Rio Tinto Terminates Chinalco Deal, Launches US$15.2 Billion Raising
June 04 2009 - 9:51PM
Dow Jones News
Rio Tinto Ltd. (RTP) said Friday it is terminating its planned
US$19.5 billion alliance with Aluminum Corp. of China, or Chinalco,
and instead launching a US$15.2 billion rights issue and entering
into an iron ore joint venture with BHP Billiton Ltd. (BHP.AU).
Rio said the Chinalco deal looked less valuable in the wake of
recent market movements and that despite talks with Chinalco on a
reworking of the deal, which would have been China's biggest ever
overseas investment, it has decided to terminate the deal and pay a
US$195 million break fee.
The miner will now carry out a 21-for-40 rights issue to raise
US$15.2 billion, with the offer pitched at GBP14 per share in the
U.K. and A$28.29 a share in Australia.
Rio also released an unaudited net profit of US$1.60 billion for
the first quarter, down from US$2.94 billion last year, and said it
won't pay an interim dividend in light of the current macroeconomic
outlook. However, it said it does expect to pay a final half
dividend.
-By Alex Wilson, Dow Jones Newswires; 61-3-9292-2094;
alex.wilson@dowjones.com