Rio hit again as investors snub Chinalco
MINING giant Rio Tinto came under fire again yesterday over its controversial proposed tie-up with Chinalco.
In the latest in a series of criticisms from shareholders and the Australian government, investors in Sydney called for changes to the proposed $19.5bn (£13.6bn) tie-up with the Chinese state-owned aluminium company.
Shareholders object to the stake which Chinalco could take in some of Rio’s key assets. They are also concerned that the company would gain convertible notes, which would double its equity stake to 18 per cent.
Chinalco has been firm in its offer, saying the money it intends to pay, which will help Rio pay off its debt mountain, comes as part of a package, and is not flexible.
But rumours abounded yesterday that Chinalco was considering altering its package.
Neither company was available for comment.
Newly appointed Rio chairman Jan du Plessis is touring the UK and Australia, talking to shareholders of the dual-listed company, and assessing investor enthusiasm.
Several of Rio’s big UK shareholders have also voiced opposition, saying the convertible note issue favours Chinalco at their expense.
They have pushed alternative plans, including a rights issue and a tie-up with bigger mining rival BHP Billiton.
Before shareholders can vote on whether to go ahead with the tie-up with Chinalco, it must pass through Australia’s Foreign Investment Review Board (FIRB).
A decision from the government is due around 15 June. The board then needs a 50 per cent approval from investors to go ahead.