BREAKFAST DEALS: Rio's Mongolian joust
Rio Tinto’s plans to develop the Oyu Tolgoi are under a cloud as its dispute with Ivanhoe Mines threatens to get ugly, while Healthscope emerges as the lead candidate for Geoffrey Edelsten’s GP business.
Rio Tinto, Ivanhoe Mines
The stoush between Rio Tinto and Canadian miner Ivanhoe Mines could get ugly, especially after Ivanhoe announced plans overnight to scrap an accord limiting its ability to bring new investors into the $5.26 billion Oyu Tolgoi project in Mongolia. With the “strategic covenant” between the parties now dissolved, Ivanhoe said it intends to issue more than five per cent of its stock to one or more third-party investors. Ivanhoe’s lead independent director David Huberman said in a statement that the miner had exercised its contractual right to terminate a restrictive accord in place since October 2007. Ivanhoe says it is looking to maximise value for its shareholders and that means Rio – which holds a 29.6 per cent of the Canadian mine – will now have to pay full market price for Ivanhoe shares, if it wants to increase its stake. Under the old agreement Rio Tinto could raise its stake in the miner to 46.6 per cent, through an exercise of warrants priced well below Ivanhoe's current market price. Ivanhoe’s decision to go ahead with a shareholder rights plan in April had spurred Rio to take the matter to arbitration, but Ivanhoe has made it clear that it’s not going to take Rio’s objections lying down. In a further sign of tension between the two miners, Rio Tinto’s copper division boss Andrew Harding resigned from the Ivanhoe’s board, before the decision to scrap the accord was made. It will be interesting to see how Rio’s largest shareholder, Chinalco, responds to the latest twist in the tale. The Chinese mining giant only last week expressed its interest in taking a direct minority stake in the project.
Send your tips to deals@businessspectator.com.au and don’t forget to watch Deals TV for new rumours and reports later on this morning. Plus, you can follow us at www.twitter.com/WheelsDeals
Rio Tinto, Ivanhoe Mines
The stoush between Rio Tinto and Canadian miner Ivanhoe Mines could get ugly, especially after Ivanhoe announced plans overnight to scrap an accord limiting its ability to bring new investors into the $5.26 billion Oyu Tolgoi project in Mongolia. With the “strategic covenant” between the parties now dissolved, Ivanhoe said it intends to issue more than five per cent of its stock to one or more third-party investors. Ivanhoe’s lead independent director David Huberman said in a statement that the miner had exercised its contractual right to terminate a restrictive accord in place since October 2007. Ivanhoe says it is looking to maximise value for its shareholders and that means Rio – which holds a 29.6 per cent of the Canadian mine – will now have to pay full market price for Ivanhoe shares, if it wants to increase its stake. Under the old agreement Rio Tinto could raise its stake in the miner to 46.6 per cent, through an exercise of warrants priced well below Ivanhoe's current market price. Ivanhoe’s decision to go ahead with a shareholder rights plan in April had spurred Rio to take the matter to arbitration, but Ivanhoe has made it clear that it’s not going to take Rio’s objections lying down. In a further sign of tension between the two miners, Rio Tinto’s copper division boss Andrew Harding resigned from the Ivanhoe’s board, before the decision to scrap the accord was made. It will be interesting to see how Rio’s largest shareholder, Chinalco, responds to the latest twist in the tale. The Chinese mining giant only last week expressed its interest in taking a direct minority stake in the project.
Send your tips to deals@businessspectator.com.au and don’t forget to watch Deals TV for new rumours and reports later on this morning. Plus, you can follow us at www.twitter.com/WheelsDeals
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