Previously announced Chinalco transaction terminated but Rio Tinto
sees potential for future collaboration
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY,
IN WHOLE OR IN PART, IN OR INTO CANADA, THE PEOPLE’S REPUBLIC OF CHINA,
HONG KONG SAR, JAPAN, PAPUA NEW GUINEA, SINGAPORE, THE REPUBLIC OF SOUTH
AFRICA OR SWITZERLAND OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.
Highlights of the Rights Issues
Rights Issues consist of 21 New Rio Tinto plc Shares offered for every
40 existing shares at 1,400 pence per share and 21 New Rio Tinto Limited
Shares offered for every 40 existing shares at A$28.29 per share to
raise approximately US$15.2 billion of gross proceeds, comprising
approximately US$11.8 billion for Rio Tinto plc and approximately US$3.4
billion for Rio Tinto Limited.
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The Rights Issues will enable the Group to meet its Alcan facility
debt repayment obligations fully in 2009 and substantially in 2010.
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As a result net debt will be reduced to approximately US$23.2 billion;
exceeding the commitment made in December 2008 to reduce net debt by
US$10 billion by the end of 2009.
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The Rights Issues and debt repayments will strengthen the Group’s
financial position in a period of continuing uncertainty and allow it
to take advantage of future value-creating opportunities.
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The subscription prices represent discounts of approximately 38.2% and
47.2% to the theoretical ex-rights prices (“TERPs”) of 2,265.6 pence
and A$53.61 per New Rio Tinto plc Share and Rio Tinto Limited Share
respectively; and discounts of approximately 48.5% and 57.7% to the
Closing Prices of Rio Tinto plc and Rio Tinto Limited on 4 June 2009;
respectively.
Update on Chinalco Transaction
The transaction with Chinalco announced and recommended by the Boards
will no longer be pursued. Rio Tinto and Chinalco have discussed
potential amendments to the transaction to address the improved
financial markets; as well as shareholder and wider stakeholder
feedback. Despite making good progress, a revised version of the
original agreement has not been realised and those discussions have now
ceased. As a result the Boards have withdrawn their respective
recommendations for the original transaction and Rio Tinto has
terminated the agreement. Rio Tinto will pay Chinalco the agreed break
fee of US$195 million.
Rio Tinto remains interested in potential future collaboration with
Chinalco and continues to recognise the importance of China and building
strong relationships there.
Use of proceeds
The Rights Issues are expected to raise gross proceeds of approximately
US$15.2 billion. The Boards intend to apply the net proceeds in the
mandatory prepayment of the tranche of the Alcan credit facilities due
in October 2009 (as at 30 April 2009, US$7.15 billion was drawn under
this tranche) and the substantial prepayment of the tranche due in
October 2010 (as at 30 April 2009 of this document, US$8.1billion was
drawn under this tranche).
Timing of Rights Issues
Application will be made to the UK Listing Authority and to the London
Stock Exchange for the new Rio Tinto plc Shares (nil paid and fully
paid) to be admitted to listing on the Official List and admitted to
trading on the main market of the London Stock Exchange. It is expected
that UK Admission will occur and that dealings in the New Rio Tinto plc
Shares (nil paid) on the London Stock Exchange will commence at 8.00
a.m. (London time) on 17 June 2009.
Application is also being made to ASX for official quotation of the New
Rio Tinto Limited Shares. The trading period in respect of the Rio Tinto
Limited Rights on ASX is expected to operate from 17 June 2009 to 24
June 2009, with deferred settlement and standard T+3 settlement trading
in the New Rio Tinto Limited Shares expected to commence on 25 June 2009
and 10 July 2009, respectively.
Important Information
This announcement is an advertisement.
