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Source: Reuters -
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Australian mining giant Rio Tinto has been placed on a trading halt at its own request, NZX said on Friday.
Rio Tinto said on Thursday that it was looking for new ways to deal with its huge debt burden, possibly in the form of a rights issue, in response to reports that its planned $US19.5 billion stake sale to Chinese state-owned metals firm Chinalco may have collapsed.
The halt has been put in place pending an announcement.
Rio Tinto shares closed on Thursday in Australia at $AU66.90.
Late on Thursday Chinalco was reported that it may revise its planned investment in Rio Tinto before a June 14 deadline to avoid further delays in Australian government approval.
The Financial Times reported that Chinalco was due to walk away from the deal because it could not reach agreement over revisions.
Australia's Foreign Investment Review Board (FIRB) is due to give its recommendation on the deal to Treasurer Wayne Swan by June 14. Swan has the final say on whether it will go ahead.
As the deal stands, Chinalco would pay $US12.3 billion for stakes in debt-saddled Rio's key iron ore, copper and aluminium assets and $US7.2 billion for convertible notes that would double its equity stake in Rio to 18%.
The deal has run into opposition from Rio shareholders, who have complained it favours Chinalco over other shareholders, and from some who are worried that China, Rio's biggest customer, will gain influence over pricing of key commodities like iron ore.
Rio originally lined up the deal in February to help pay off half its $US38 billion in debt, and had hoped then to complete the deal by early in the third quarter. However, commodity, equities and credit markets have improved since then, making the deal less attractive to shareholders.
The company has said it is listening to shareholders' concerns, and has said it remained committed to the deal.
Chinalco has said publicly it would not like to see its Rio stake reduced below 15% and did not want to see any changes to the asset side of the deal.
People familiar with the deal have previously told Reuters that Chinalco may be willing to drop a proposed 15% stake in Rio's Hamersley iron ore assets from the deal to get over Canberra's worry about a Chinese state-owned entity owning a strategic asset.
Peter Chilton, an analyst with Constellation Capital Management, which owns Rio Tinto shares, said a revised deal may reduce the bond issue to Chinalco, limiting its stake to 14.9%, and would include a rights issue to all Rio Tinto shareholders.
