Chinalco against any revision of Rio Tinto deal - FT

09 May 2009 | 04:54 Code : 19102 Geoscience events
A senior executive of Chinese metals firm Chinalco stood by a planned $19.5 billion...

A senior executive of Chinese metals firm Chinalco stood by a planned $19.5 billion tie-up with global miner Rio Tinto Ltd/Plc (RIO.AX) (RIO.L: Quote) amid speculation Rio might try to revise part of the deal to win shareholder support, the Financial Times reported on Monday.In a separate report, citing a source close to the deal, the FT said Rio Tinto was considering ways to revise the deal, which was designed to help it cut its debt in half, to appease shareholders and regulators."This investment is a package. It is a result of two months of very intensive negotiations. It cannot be viewed separately," Wang Wenfu, president of Chinalco Overseas Holdings, was reported as saying in an interview with the Financial Times, seen on its Website ( part of the deal, Chinalco agreed to invest $7.3 billion in convertible bonds that would double the Chinese group’s equity stake in Rio Tinto to 18 percent.Some shareholders have complained that the deal favours one shareholder and want to be able to take part in the capital raising.The FT said under one scenario to revise the deal, Rio might offer Chinalco convertible bonds worth 5 percent of the company’s equity, with the rest to be offered to other shareholders."We don’t comment on market rumour and speculation," said Rio spokeswoman Amanda Buckley."We respect the (pre-emption) rights of shareholders. Shareholders should have the right to help their company and Rio management has to assess the situation and it is their judgment that this transaction is in the best interest of all shareholders," the FT quoted Wang saying.Speculation the deal would have to be revised has grown over the past week as Rio’s shares have climbed above the $45 conversion price for one of the two tranches of bonds, which would make it a cheap deal for Chinalco.Rio’s Australian-listed shares last traded up 4.4 percent at A$66.97 ($49.35). ($1=1.357 Australian Dollar) (Reporting by Sonali Paul; Editing by Jonathan Standing)

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