Rio Tinto eyes $8 billion rights issue if Chinalco deal fails

Monday, 06 April 2009 16:48:05 (GMT+2)

It is reported that Australian mining giant Rio Tinto may launch a $8 billion rights issue as a backup plan in the event of failure of the bid by Chinese state-owned aluminum giant Chinalco to increase its stake in the miner.

Rio Tinto remains committed to Chinalco's $19.5 billion bid to almost double its stake in the miner from the existing 9.3 percent to 18 percent; however, there is still a risk that the deal may be rejected by Australian regulators or vetoed by Rio Tinto's shareholders.

The plan for the rights issue, codenamed Project Glasgow, underwritten by JPMorgan Cazenove and Credit Suisse, was drawn up earlier this year when the company announced its full year results.

Speaking on March 26 at a mining conference in Singapore, Rio Tinto CFO Guy Elliott said, "We have plans in the eventuality that either the various governments or the shareholders prevent the deal going through. What I can assure you is we have a Plan B...in good preparation."

Rio Tinto could not be reached for comment on the issue.

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