Shareholder concerns over Chinalco

A major Rio Tinto shareholder has gone public with its disquiet over the proposed Chinalco deal, saying it holds fears of the Chinese State-owned corporation having too much input into the running of the company.

A major Rio Tinto shareholder has gone public with its disquiet over the proposed Chinalco deal, saying it holds fears of the Chinese State-owned corporation having too much input into the running of the company.

The Australian Foundation Investment Company (AFIC) voiced its concerns yesterday in a statement to the Australian Securities Exchange.

“We are assessing the proposal from the perspective of being a long term investor,” AIF said.

“We are deeply concerned about Chinalco becoming involved with the running of the business.”

According to the statement, AFIC is concerned that a ‘sovereign/customer/competitor’ is being given two seats on the parent board and will be involved in corporate governance issues and other decision making processes.

Similar fears have been raised throughout Australian markets since the Rio/Chinalco deal was announced on February 12.

AFIC, who’s holding in Rio Tinto was valued at $111.9 million as of February 28, also voiced displeasure about existing shareholders not having been given the chance to racpitalise the company.

“Significant influence has been given to Chinalco with no premium paid,” AFIC said.

The statement came on the same day that the Foreign Investment Review Board notified Rio that it would exercise its option to extend its review period of the deal by a further 90 days.

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