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Chinalco poised to pour £14bn into Rio
Bill Condie11 Feb 2009
Aluminium Corp of China, (Chinalco) is expected to invest up to $20 billion (£13.9 billion) in Rio Tinto to gain more access to commodities.
Chinalco, already a 9% shareholder in Rio, is in talks to buy bonds that will convert into Rio shares and purchase stakes in Rio mines, insiders told Bloomberg.
An announcement is expected tomorrow when Rio publishes its annual earnings.
Rio said last week that it was in talks with Chinalco to raise cash by selling notes and parts of some units to reduce the $38.9 billion of debt it accumulated with the ill-timed acquisition of Alcan. The Chinalco talks are thought to have caused Rio chairman-elect Jim Leng to step down this week, after less than a month.
Merrill Lynch has also warned that the Chinalco stake-raising is not in shareholders' interests and has urged a wider share sale.
Rio, which plans to sell assets and cut jobs and spending to lower debt by $10 billion this year, is considering a rights offer to help reduce debt.
