An independent arbitrator has upheld Rio Tinto’s claims against Ivanhoe Mine’s shareholder rights plan (SRP).
This latest announcement means that once an existing standstill agreement expires on 18 January next year, Rio is able to purchase additional share in Ivanhoe above its current 49% holding without being diluted by the SRP.
Ivanhoe adopted the SRP in April 2010, and Rio referred this plan to arbitration in June 2010.
The case itself focused on Rio Tinto’s anti-dilution rights, which were established in a 2006 private placement agreement when it took a 19.9% stake in Ivanhoe and secured rights to purchase additional shares.
This agreement also established a five year standstill agreement which capped Rio’s stake in Ivanhoe.
The arbitration process was put on hold for six months in December last year as part of a new financing agreement between the two wherein Rio gained management of the Oyu Tolgoi mine in Mongolia.
Rio gained nearly half of Ivanhoe’s shares in September, a day after Ivanhoe released a statement saying it expected the Mongolian Government to support the development of the massive Oyu Tolgoi mine.
As part of the arbitrator’s decision, Ivanhoe’s counterclaim was dismissed and Rio was ruled to not have breached its Private Placement Agreement with Ivanhoe.
From 19 January Rio will not be subject to a standstill agreement with Ivanhoe, and is able to increase its stake in the miner to a majority position.
While Rio Tinto says it currently has no intention of making a full takeover bid for Ivanhoe, it does have the right to change this decision in the future.