Text Version
RSS Feeds
Newsletter
Home Forum Photos Features Newsletter Archive Employment
About US Help Site Map
SEARCH   About US FAQ Site Map Site News
  SERVICES
  -Text Version
  -RSS Feeds
  -Newsletter
  -News Archive
  -Give us feedback
  -Voices of Readers
  -Online community
  -China Biz info
  What's new
 -
 -
Rio rights offer lures investors
+ -
09:23, July 03, 2009

 Related News
 Chinalco confirms buying $1.5 bln of Rio Tinto shares
 Chinalco registers for Rio Tinto rights issue
 Ministry: Chinalco-Rio Tinto cooperation breakdown not to affect China-Australia economic ties
 Rio Tinto's backdown shows short-sightedness, prejudice
 News Analysis: Rio Tinto scraps marriage with Chinalco
 Comment  Tell A Friend
 Print Format  Save Article
SYDNEY: Rio Tinto Ltd's $15.2 billion rights offer, the fifth-biggest on record, generated strong demand from UK investors, putting the world's top iron ore miner back into growth mode after a debt-funded purchase of Alcan had brought it to its knees.

Rio revealed yesterday that shareholders had stumped up for almost all its London shares on offer. The UK tranche would have raised about 7.1 billion pounds ($11.66 billion), more than a fifth of the market value of the UK-listed company.

Results from the Australian offer were still to be released.

Strong take-up of the rights offer would place Rio in a much stronger position, though the mining group will still need to sell off non-core assets, analysts said.

"The high take-up reflects that the offer was attractively priced," said Ross Barker, managing director of Australian Foundation Investment Co, which manages about A$3.5 billion including Rio shares.

"It also confirms our view that shareholders were wanting to participate in Rio's recapitalization to get through with the issues that it had with the Alcan purchase."

Rio, listed in both London and Australia, said it had acceptances for 96.97 percent of the new London stock.

The indebted miner is raising money to cut a $38 billion debt mountain it accumulated when it bought Canadian aluminum group Alcan at the top of the commodities market in 2007.

Rio's market value has slumped 64 percent in little over a year, partly due to the debt-funded Alcan buy. Rio also rejected an all-scrip takeover offer from BHP, triggering broad criticism of Rio management.

"People still view Rio as having very good assets, and don't want to be diluted. But you'd want the board to be considering what it was that led up to the Alcan purchase and try and improve the processes so that sort of thing doesn't happen again," Barker added.

Rio's Australian shares gained 1.4 percent yesterday to A$52.32, outpacing a 0.4 percent rise on the benchmark S&P/ASX 200 index.

Rio offered 21 new shares for every 40 held, priced at a steeply discounted A$28.29 per Australian-listed share and 14 pounds per London-listed share. The London shares closed on Wednesday at 21.55 pounds.

Source:China Daily/Agencies



  Your Message:   Most Commented:
India's unwise military moves
Veiled threat or good neighbor?
China slams Clinton's June 4 comments
13 more bodies from Air France flight 447 recovered
To Be or Not To Be-- reflourishing bicycle in China

|About Peopledaily.com.cn | Advertise on site | Contact us | Site map | Job offer|
Copyright by People's Daily Online, All Rights Reserved

http://english.people.com.cn/90001/90778/90858/90863/6692508.pdf