This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Rio Tinto Kills China Deal (Update)

Updated from June 4

The debt-ridden Aussie mining giant Rio Tinto (RTP) made official Thursday night its decision to scuttle a contentious deal with the Chinese aluminum concern, Chinalco.

Under an agreement signed in February, the Chinese government-owned Chinalco was to infuse $19.5 billion into Rio Tinto, which was struggling to pay down $19 billion in debt over the next year and a half. An $8.9 billion payment is due in October.

But Rio was able to cobble together a more attractive replacement for the scrapped Chinalco alliance, investors seemed to say Friday, when they pushed Rio's Australia-listed shares up by more than 8%. In New York, its American Depositary Receipts were trading at $195.96, up 7%. Rio shares had dropped sharply on Thursday when word emerged that it would likely move away from Chinalco, but details of the new rights offering appeared to appease investors.

In Sydney Friday, the company announced that it would issue a whopping $15.2 billion in rights on London and Australian exchanges. It will use the capital to cuts its debt from nearly $40 billion to $23.2 billion.

Rio also agreed to sell stakes in some key mining assets to archrival BHP Billiton for $5.8 billion. The companies will form a joint venture that will combine iron-ore production in Western Australia.

Chinese authorities, in a statement, said they would be monitoring that BHP-Rio linkup for signs of monopoly behavior.

Shareholder opposition to Rio's Chinalco alliance has been fairly fierce, especially because Rio's stock price has risen sharply since the deal was struck in February -- its ADRs are up 75% over that same span. Shareholders were therefore pushing management to either renegotiate the agreement with Chinalco or scrap it. The break-up fee is nearly $200 million.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,960.57 -123.23 -0.72%
S&P 500 1,978.34 -9.64 -0.48%
NASDAQ 4,449.5640 -22.5440 -0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs