Rio Tinto raises US$40-billion for Alcan takeover

Global miner Rio Tinto has raised US$40-billion in an oversubscribed loan package for its acquisition of Canada's Alcan Inc., overcoming a debt backlog hampering many banks. "We are happy with the oversubscription," Rio Tinto spokesman Nick Cobban told Reuters Loan Pricing Corp. He declined to comment on how much was raised or whether the facility would be increased or bank commitments scaled back. It is nevertheless one of the largest loans ever raised in Britain. Rio Tinto will make an announcement on the transaction once documentation is signed next week, he added. Cobban also refused to comment on the pricing levels. "The pricing has been in line with expectations all along," he said. The oversubscription level for such a large debt package shows that borrowing is still possible despite ongoing fears of a credit crunch. Bookrunners are Royal Bank of Scotland, Deutsche Bank, Credit Suisse and Societe Generale. The jumbo facility, which closed on Wednesday, will finance Rio Tinto's all-cash takeover of Alcan for US$101 a share. The deal values Alcan at US$38.1 billion. When it was launched in July, the debt package included a US$15-billion, one-year loan with a one-year extension option at an interest rate of 22.5 basis points over Libor. In addition, there was a US$10-billion, five-year plus one-day bullet term loan at a rate of 32.5 basis points over Libor. Earlier this month, Standard & Poor's said Rio Tinto's A rating could be cut by several notches as the company sharply boosted its borrowing. It also had a US$10-billion, three-year revolving credit facility at an interest rate of 27.5 basis points over Libor and a US$5-billion, five-year revolving credit facility with a swing-line option at 32.5 basis points over Libor.