February 12, 2009 / 7:49 AM / 11 years ago

HIGHLIGHTS-Key points of Rio Tinto-Chinalco deal

For related stories see RIOTINTO/ or [ID:nSYD423671] Rio Tinto's statement can be found at www.riotinto.com/

Feb 12 - Chinese state-owned aluminium group Chinalco will invest $19.5 billion in miner Rio Tinto (RIO.L) (RIO.AX) in a deal that will secure resource supplies for China and help cut Rio’s debts.

As part of the biggest overseas investment by a Chinese company, Chinalco will spend $12.3 billion on stakes of up to 50 percent in nine of Rio’s mining assets.

Following are key points of the deal announced Thursday:

* Chinalco will invest $12.3 billion in aluminium, copper and iron ore joint ventures.

* Rio Tinto retains operational control of the joint venture assets.

* The issue of subordinated convertible bonds in two tranches with conversion prices of $45 and $60 in each of Rio Tinto Plc and Rio Tinto Ltd for a total consideration of $7.2 billion.

* The proceeds of $19.5 billion will be used in part for the prepayment of a $8.9 billion tranche of the Alcan credit facilities due in October 2009 and the $10.0 billion due in October 2010.

* If converted, the subordinated convertible bonds would increase Chinalco’s current shareholding to 19.0 percent in Rio Tinto Plc and 14.9 percent in Rio Tinto Ltd, equivalent to an 18.0 percent interest in the Rio Tinto Group.

* The initial completion of the transaction is scheduled to occur prior to July 31.

* The agreement provides for a break-up fee of $195 million.

* Rio Tinto will enter into a landmark joint venture for exploration in China, in partnership with Chinalco.

* The Chinalco relationship will facilitate access for Rio Tinto to funding for project development from Chinese financial institutions.

* Chinalco will be entitled to nominate two new non-executive board members, one independent under applicable corporate governance criteria, to add to the 15 current board members of Rio Tinto.

* Deal will give Chinalco 49.75 percent of Rio’s stake in Escondida copper mine in Chile.

* Chinalco will get 15 percent of Hamersley Iron mine in Australia.

* Chinalco to take 25 percent indirect stake in Kennecott Copper in the United States.

* The transaction is subject to approval by the shareholders of Rio Tinto, governments and other regulators. (Reporting by Jonathan Standing)

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