Rio may raise equity

Rio Tinto will consider a potential equity issue in order to raise funds to pay down its debts, the company said in a statement to the Australian Securities Exchange (ASX).

Rio Tinto will consider a potential equity issue in order to raise funds to pay down its debts, the company said in a statement to the Australian Securities Exchange (ASX).

“The boards do not rule out the potential to issue equity as one of the options it has available, if it is determined to be in the best interest of shareholders,” Rio said.

Media speculation suggests Macquarie Group, Deutsche Bank and Morgan Stanley are the banks Rio Tinto will target to help them raise the money.

The miner has debt totalling US$38.9 billion as the result from its 2007 acquisition of Canadian aluminium producer Alcan and needs to pay a minimum of US$8.9 billion by October 22 this year.

“Rio Tinto continues to consider a range of options to meet its commitments to reduce debt by the end of 2009,” the company said.

Those options include reducing global workforce, which Rio did by announcing 14,000 job cuts in December last year.

The company this week said it had raised US$138 million after completing the sale of its 50% equity share of the Alcan Ningxia aluminium project in China to Qingtongxia Aluminium Group.

The asset sale was Rio’s first divestment in five months.

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