Rio's UK cash call a success

MINING giant Rio Tinto yesterday pulled off one of the biggest rights issues on record, after the British leg of its $15.2bn (&pound;9.2bn) cash call was successful. <br /><br />The firm said 97 per cent of its British investors took up the world&rsquo;s fifth biggest cash call ever.<br /><br />The dual-listed company &ndash; which is seeking to ease the $38bn debt mountain it took on after its acquisition of Canadian aluminium group Alcan in 2007 &ndash; raised around &pound;7.1bn from stock available in London, after 524m new shares were sold at a heavily-discounted &pound;14 per share.<br /><br />The remaining rump of 15.9m shares were sold at &pound;21-a-share, a 2.7 per cent discount to yesterday&rsquo;s close.<br /><br />Its major shareholder, China&rsquo;s state-owned Chinalco &ndash; which owns 9.3 per cent of Rio &ndash; said it had taken up its full entitlement to the offer.<br /><br />In February, Rio announced it would be receiving a $19.5bn investment from Chinalco, which would have doubled the Chinese company&rsquo;s stake in Rio to 18 per cent.<br /><br />However, in June, Rio announced it was scrapping the deal with China&rsquo;s Chinalco in favour of a joint venture with rival giant BHP Billiton, and also announced plans for its huge rights issue. <br /><br />&ldquo;It is a relief that Rio are now in a much stronger position,&rdquo; said MF Global Spreads&rsquo; Manus Cranny. &ldquo;Rio have succeeded, supported in the most part by Chinalco.&rdquo;<br /><br />The results of its Australian offer, a 21-for-40 rights issue of 150m Australian listed shares at A$28.29 each, will be announced next week.<br />Despite the success of the rights issue, analysts said the mining giant would still need to dispose of core assets to pay down its debt.