Global miner Rio Tinto wrapped up one of the world's biggest rights issues on Friday, saying its Australian shareholders had taken up 94.76 percent of their entitlements to the new shares.
By Mark Bendeich
On Thursday, UK shareholders had taken up 96.97 percent of the deeply-discounted, fully-underwritten $15.2 billion (9.3 billion pound) rights offer, the fifth-biggest on record, putting the indebted Anglo-Australian group on a firmer financial footing.
The issue also marks a bonanza for the banks that underwrote it: Credit Suisse , J.P. Morgan Cazenove , Macquarie , Deutsche Bank , Morgan Stanley , RBS and Societe Generale .
The underwriters of the two legs of the rights issue were paid a 2.75 percent fee, or around $420 million in total, and are now also making a substantial extra profit by selling the small portion of shares that were not taken up by existing investors.
In Australia, banks sold the "rump" at A$48.50, 71 percent higher than the rights issue price of A$28.29, and in London the remaining shares sold on Thursday at 21 pounds, 50 percent higher than the rights issue price of 14 pounds.
Rio shares fell 4.2 percent in Sydney to close at A$49.60 and the London shares were down 2.9 percent at 19.75 pounds by 10:20 a.m. British time, compared to a 1.8 percent decline in the UK mining index .
Rio needed to raise the money to cut a $38 billion debt mountain it accumulated when it bought Canadian aluminium group Alcan at the top of the commodities market in 2007, an acquisition that opened one of the 136-year-old firm's darkest chapters.
Rio Tinto fell prey to an aborted takeover bid by rival BHP Billiton then briefly fell into the arms of its major shareholder, Chinese state-owned aluminium group Chinalco, before finally calling off the $19.5 billion Chinalco deal.
In the end, encouraged by a share-market rally and its investment banks, Rio Tinto opted for the rights issue and a cost-cutting iron ore joint venture with BHP Billiton.
But analysts said the mining giant still needs to sell non-core assets to pay down more debt.
(Reporting by Mark Bendeich and Denny Thomas in Sydney and Eric Onstad in London; Editing by James Thornhill).
SYDNEY (Reuters)