Rio stock halted amid reports of Chinalco injection

Thursday 12th February 2009

Rio Tinto, the world's third-biggest mining company, had its ASX-listed stock and NYSE-listed ADRs halted from trading amid reports it is negotiating a US$19 billion cash infusion from Aluminum Corp of China, or Chinalco.

"Rio Tinto notes continued media speculation in connection with a possible transaction with Chinalco and confirms the parties are in negotiations, which may or may not lead to any agreement being reached," the resources company said in a statement. A further statement will be made shortly, it said.

Rio is scheduled to report full-year earnings later today, which are expected to show the benefits of soaring contract iron ore prices. The company is selling assets, firing workers and curbing its spending as it tries to slice US$10 billion from its US$39 billion of debt this year.

Last year the company rejected a US$66 billion hostile takeover offer from BHP Billiton. Rio may sell convertible bonds and stakes in some of its divisions to Chinalco to raise cash and repay debt, the Financial Times reported.

Rio stock has tumbled 60% in the past 12 months and was most recently at A$52 on the ASX.

By Jonathan Underhill

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