Rio’s UK cash call a success
MINING giant Rio Tinto yesterday pulled off one of the biggest rights issues on record, after the British leg of its $15.2bn (£9.2bn) cash call was successful.
The firm said 97 per cent of its British investors took up the world’s fifth biggest cash call ever.
The dual-listed company – which is seeking to ease the $38bn debt mountain it took on after its acquisition of Canadian aluminium group Alcan in 2007 – raised around £7.1bn from stock available in London, after 524m new shares were sold at a heavily-discounted £14 per share.
The remaining rump of 15.9m shares were sold at £21-a-share, a 2.7 per cent discount to yesterday’s close.
Its major shareholder, China’s state-owned Chinalco – which owns 9.3 per cent of Rio – said it had taken up its full entitlement to the offer.
In February, Rio announced it would be receiving a $19.5bn investment from Chinalco, which would have doubled the Chinese company’s stake in Rio to 18 per cent.
However, in June, Rio announced it was scrapping the deal with China’s Chinalco in favour of a joint venture with rival giant BHP Billiton, and also announced plans for its huge rights issue.
“It is a relief that Rio are now in a much stronger position,” said MF Global Spreads’ Manus Cranny. “Rio have succeeded, supported in the most part by Chinalco.”
The results of its Australian offer, a 21-for-40 rights issue of 150m Australian listed shares at A$28.29 each, will be announced next week.
Despite the success of the rights issue, analysts said the mining giant would still need to dispose of core assets to pay down its debt.