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Rio Tinto announces deal with Chinalco dead
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12:23, June 05, 2009

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Chinalco confirms deal breakup with Rio Tinto, expresses disappointment

Australian Rio Tinto Ltd has unilaterally announced its deal with Chinese Aluminum Corporation of China (Chinalco) is dead, and the company will instead hold a 15.2 billion U.S. dollars rights issue.

Rio Tinto chairman Jan du Plessis said in a letter to shareholders Friday the planned deal with Chinalco was now dead and his company would pay it a 195 million U.S. dollars break fee.

Rio Tinto, saddled with about 38.7 billion U.S. dollars in debt, has signed an agreement with the Chinalco on February 12 this year. The deal, being reviewed by Foreign Investment Review Board, is about to be settled on June 15 by the Australian government.

But 10 days ahead of that, Rio Tinto in a statement to the stock exchange on Friday said the deal was off, and instead would hold a rights issue.

The decision is made on Thursday night by board of directors of Rion Tinto in London, whose shareholders will be able to take part in the rights issue.

Jan du Plessis said Rio Tinto and Chinalco have discussed potential amendments to the transaction to address the improved financial markets as well as shareholder and wider stakeholder feedback.

Despite making good progress, a revised version of the original agreement has not been realized and those discussions have now ceased, he said.


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