With Rio Tinto plc's (NYSE:RTP) $19.5 billion deal with Aluminum Corp. of China, known as Chinalco, on the verge of collapse, the mining giant is giving Plan B more thought. That plan could include a rights issue valued at more than $10 billion. The Aussie company
issued a statement Thursday about media reports but did not mention Chinalco.
It read, "Rio Tinto is pursuing a range of options, some of which are at an advanced stage, for maximizing shareholder value and improving the Group's capital structure."
Rio Tinto, struggling with debt it took on from its $38.1 billion acquisition of Alcan Inc., received
flack about the Chinalco deal from politicians, among others, over whether it would give China too much control over prized iron ore assets in Western Australia. Chinalco, which is Rio's biggest customer, would pay $12.3 billion for certain iron ore, copper and aluminum assets.
The main issue Rio and Chinalco seem to be having trouble with is a $7.2 billion convertible
bond component of the deal. Rio's shares have risen steadily since January.
As for Plan B, in March, chief financial officer Guy Elliott said
Rio could sell shares, bonds and assets, and reschedule debt repayments if the deal doesn't go through. Recent reports have varied saying Rio could make as much as a
$15 billion rights issue. -
Baz HiralalGo to the full story from The Deal Pipeline (subscription required)Also see:Chinalco reportedly restructuring Rio Tinto dealRio Tinto gets new chairman
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