Rio sells 97% of London stock in US$15.2 billion sale

Finance

Rio Tinto Group, the world’s third- largest mining company, sold about 97% of the London listed shares on offer in a US$15.2 billion sale to reduce debt.

The company sold 508.6 million shares at the close of the offer at 11am London time yesterday, Rio said today in a statement to the Australian stock exchange. It will announce the results of the sale of Sydney-traded shares tomorrow, it said.

Rio rejected a UA$19.5 billion investment proposal from its biggest shareholder Aluminum Corp of China last month and instead opted for the share sale and an iron ore joint venture with BHP Billiton Ltd. Chinalco, as the state-owned company is known, confirmed that it took up its rights in the share sale.

"This was an economically rational decision as it prevented the dilution of our ownership in Rio," Chinalco said in an e-mailed statement today. "Chinalco will, as the company’s current largest single shareholder, continue to monitor developments at Rio."

Rio gained 0.3% to A$51.75 at the 4:10pm Sydney time close on the Australian stock exchange. Rio dropped £0.23, or 1.1%, to £21.35 as of 8:01am in London trading.

London-based Rio offered existing shareholders the right to buy 21 new shares for every 40 they hold at £14 pence for its London shares and A$28.29 for its Sydney shares.

Credit Suisse Group AG, JPMorgan Cazenove Ltd, Deutsche Bank AG, Morgan Stanley and Macquarie Capital Ltd are the joint global managers of the rights offer. Credit Suisse and JPMorgan, as underwriters of the share sale, will seek buyers for the balance of London-listed Rio shares not bought by shareholders.

BHP abandoned a US$66 billion all stock takeover offer for Rio in November citing Rio’s high-level of debt and declining commodity markets. Rio incurred most of its debt by buying aluminum producer Alcan Inc for US$38.1 billion in 2007.