Rio May Offer Notes to All Shareholders, Report Says

The debt-laden miner Rio Tinto may try to persuade irate shareholders to back a $19.5 billion tie-up with Chinalco by offering them bonds on the same terms as the Chinese company, The Sydney Morning Herald Reported. “What we’ve said since we launched the deal is we are actively engaging shareholders and we are looking into their views and explaining the rationale behind the Chinalco deal, and that position hasn’t changed,” London spokeswoman Christina Mills told Reuters. Chinalco, China’s top aluminium maker, agreed this month to pay $12.3 billion for stakes in Rio’s key iron ore, copper and aluminium assets and $7.2 billion for convertible notes that could potentially double its equity stake in Rio to 18 percent. The deal sparked protests by Rio Tinto’s top shareholders in Britain who said the company should have done a rights offering to all shareholders so that their stakes in the company would not be diluted. “In response to the backlash from its powerful institutional shareholders over the proposal, Rio is understood to be working on a deal which would deliver them a slice of the Chinalco action: that is, an offer of bonds on the same or similar terms,” the newspaper said. Rio Tinto’s shares recovered in London after sliding in Australia, gaining 1.2 percent to 1,832 pence by 1155 GMT, but slightly underperforming a 1.8 percent rise in the UK mining index. The Sydney stock ended down 6.8 percent, lagging behind rival BHP Billiton’s shares, which fell 3.9 percent.