Rio Tinto pulls a coup with rights issue

Debt-ridden Anglo Australian miner Rio Tinto has managed a coup with the successful completion of its $15.2-billion rights issue - the world's fifth largest issue and Australia's biggest ever. The issue is the second largest in 2009 after HSBC raised $18.3 billion in April.

The $15.2-billion deeply-discounted, fully underwritten rights issue of the dual-listed company was subscribed by 96.97 per cent by the UK shareholders of Rio Tinto plc and 94.76 per cent by Australian shareholders of Rio Tinto Limited.

The world's third largest mining company was forced to opt for a rights issue after shareholders forced it to dump Chinalco's proposed $19.5-billion deal last month, (See: Rio terminates Chinalco deal; to raise $15.2 billion through rights issue) to reduce its $38.7 billion debt after its acquisition of Canada-based aluminum producer Alcan for $38.1 billion in 2007 during the upturn in commodities cycle. (See: Update: Alcan to merge with Rio Tinto under $38.1 billion deal)

The rights issue of the UK and Australia listed company was in the ratio of 21 new shares of Rio Tinto Plc for every 40 existing shares at 1,400 pence each per share, aiming to raise approximately $11.8 billion in from its UK shareholders and at A$28.29 for Rio Tinto Ltd shares to raise $3.4 billion from its Australian shareholders.

Of the total rights issue of $15.2-billion, Rio Tinto has raised $15.06 billion - officially raising $11.66 billion from its UK shareholders and $3.4 billion from Australia shareholders.

Rio said last night that two brokers, Credit Suisse and JP Morgan had sold the remaining 3.03 per cent of the UK portion of the rights issue at a 50-per cent profit after the issue closed on Wednesday night, raising the full $11.8 billion in the UK, leaving the underwriters to pick up the balance 5.24 per cent of the Australian leg of the issue.