It is reported that Australian miner Rio Tinto is considering changes to a key component of its $US19.5 billion (AU$26.5 billion) rescue deal with China's state-owned aluminum giant Chinalco, in a move designed to appease shareholders and the Australian government.
Accordingly, Rio Tinto is seeking a compromise scenario where Chinalco's convertible bond purchase would be limited to it raising its stake in Rio Tinto to about 15 percent, instead of 18 percent under the current deal. This would mean three to four percent of share capital, valued at about $US3 billion, would be offered to shareholders.
The move will serve to placate shareholders who are angry because they have been denied the right to participate in a capital rising and will also go down well with the Australian government.
Chinalco has already agreed to get Rio Tinto out of its debt by buying $US7.2 billion of convertible bonds to boost its Rio Tinto stake from the existing 9.3 percent to 18 percent. It would also buy a $US12.3 billion stake in Rio Tinto's best assets.
But as well as angering shareholders, who will vote on the deal if it is approved by Australian Treasurer Wayne Swan, the rescue package has run into political hurdles.