Deal has merit, Albanese

Shareholders who have been reluctant to give the go-ahead to Chinalco's $30 billion rescue deal with Rio Tinto are beginning to see its merits, Rio CEO Tom Albanese told The Australian.

Shareholders that have been reluctant to give the go-ahead to Chinalco’s $30 billion rescue deal with Rio Tinto are beginning to see its merits, Rio CEO Tom Albanese told journalists.

“Over the past three weeks, in all our markets, there has been a greater recognition of the value point (of the deal),” he said.

“Secondly, and largely as a consequence of what has been a pretty difficult couple of weeks in the market, there has been a greater appreciation of the sheer quantum the Chinalco transactions brings to the alternatives we had.”

Albanese this week flew in to Australia in an attempt to assuage shareholder’s fears and to try and sell them on the deal.

New Chinalco president Xiong Weiping also made a fleeting visit to Australia this week to discuss the deal with Treasurer Wayne Swan and the Foreign Investment Review Board.

Rio’s deal with Chianlco has been made largely to reduce the company’s US$40 billion debt, which is largely the result of its 2007 Alcan acquisition.

According to Albanese, the alternative to the deal would be a rights issue which would raise up to US$10 billion but it would have been at a 70% discount to the Australian shares and a 60% discount to the British share price in the dual-listed company.

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