Is Rio Tinto an 'Unfaithful Woman?'

It’s not often a multi-billion dollar company is called an unfaithful woman. Yet those are the words used by a Chinese newspaper to describe Anglo-Australian mining giant Rio Tinto and its decision to scrap a $19.5 billion investment from state-owned Aluminum Corporation of China, or Chinalco. In a revealing article about the failed link-up, which would have been China’s largest ever foreign direct investment, the Financial Times quotes an editorial from the Beijing Times: “Poor Chinalco prepared the wedding clothes, but when the peach was ripe somebody else plucked it,” the paper moans. “Rio Tinto is just like an unfaithful woman: once she loved the money in Chinalco’s pocket, but she actually didn’t love the man himself. Now she is breaking faith and kicking down the ladder.” Maybe someone should ask Rio’s embattled chief executive, Tom Albanese, if the Beijing Times’ analogy is fitting. All kidding aside, Chinalco has every right to feel bitter. Under the new deal, Rio Tinto will raise $21 billion through a combined rights issue and joint venture with arch rival BHP Billiton. That will help pay down roughly $20 billion of debt Rio must repay by October, 2010. As I've said before, Chinalco was a victim of bad timing. When it first made its $19.5 billion offer back in February, the debt markets were frozen and investor interest in stumping up cash for a rights issue was non-existent. Since then, however, the markets have sprouted tentative green shoots, which -- combined with somewhat xenophobic criticism over a Chinese company investing in Rio -- help shift the miner's focus away from Chinalco and back towards institutional investors. That's little consolation for Chinalco, which still owes around 9% in Rio -- a pretty large dowry for someone who's just been jilted at the alter. source：www.businessweek.com