Reuters reported that Rio Tinto may replace the USD 7.2 billion convertible bond part of its tie up plan with Chinalco with a capital raising underwritten by the Chinese firm. The Australian newspaper, without citing sources, said that Rio is believed to have told Chinalco that talks with Rio shareholders have brought demands for changes to the planned USD 19.5 billion tie up.
The report is the latest in a series saying that Rio may be considering changes to the Chinalco deal. The speculation has come as Rio Chairman Mr Jan Du Plessis meets shareholders to discuss the deal, which was designed to help Rio pay down half its USD 38 billion in debt. The paper added that “Chinalco has not indicated that it is happy to compromise on the deal, but is thought to be resigned to changing the terms of the bonds but does not want any change to the part of the deal that gives it stakes in Rio mining assets.”
Major UK-based investors in Rio have demanded that it scrap a deal with Chinalco and actively pursue a new capital raising or a sale of assets to rival BHP Billiton Ltd. Rio has repeatedly said it remains committed to the tie-up with Chinalco.