Ivanhoe cancels poison pill, paves way for Rio deal
* Cancelling rights plan clears way for Rio to take majority stake
* Rio holds 49 percent of Ivanhoe
* Ivanhoe secures additional $1.8 bln bridge loan
* Ivanhoe, Rio working to secure $4 bln long-term financing
Jan 18 - Ivanhoe Mines (IVN.TO) has decided to scrap its shareholder rights plan, clearing the way for Rio Tinto (RIO.L) to acquire a majority stake in the company and take control of the massive Oyu Tolgoi copper-gold project in Mongolia.
A standstill agreement limiting Rio's stake in Ivanhoe to 49 percent was set to expire on Wednesday, but Ivanhoe's shareholder rights plan would have triggered a rights issue if the Anglo-Australian mining giant raised its stake further, making the move much more expensive.
Rio, which has built its stake in Ivanhoe to 49 percent as it has helped fund construction of Oyu Tolgoi, has told Ivanhoe's board that it intends to buy additional shares of regardless of the rights plan, Ivanhoe said on Wednesday.
"The board of directors has decided that the interests of shareholders and the company's strategic objectives would be best served by the termination of the company's shareholders' rights plan," Ivanhoe said in a statement.
Cancelling the plan will require approval of shareholders at the company's annual meeting on May 11, but Ivanhoe will delay activation of the rights plan in the meantime.
Oyu Tolgoi, considered one of the world's largest copper deposits, is expected to reach commercial production in 2013.
Over its first 10 years of commercial production, the mine is expected to produce more than 544,000 tonnes of copper, 650,000 ounces of gold, and 3 million ounces of silver.
Ivanhoe made the announcement as it said it had obtained second $1.8 billion bridge loan as a stopgap measure while it negotiates $4 billion in long-term financing Oyu Tolgoi, the Canadian company said. The bridge loan is subject to Rio approval.
Shares of Ivanhoe were down 0.9 percent at C$19.11 on the Toronto Stock Exchange. Rio was up 0.4 percent in London.
(Reporting By Cameron French; Editing by Frank McGurty)
((cameron.french@reuters.com)(416-941-8199)(Reuters Messaging: cameron.french.reuters.com@reuters.net)) Keywords: IVANHOEMINES/FINANCING
(C) Reuters 2011 All rights reserved. Republication or redistribution of Reuters content, including by caching, framing, or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
* Rio holds 49 percent of Ivanhoe
* Ivanhoe secures additional $1.8 bln bridge loan
* Ivanhoe, Rio working to secure $4 bln long-term financing
Jan 18 - Ivanhoe Mines (IVN.TO) has decided to scrap its shareholder rights plan, clearing the way for Rio Tinto (RIO.L) to acquire a majority stake in the company and take control of the massive Oyu Tolgoi copper-gold project in Mongolia.
A standstill agreement limiting Rio's stake in Ivanhoe to 49 percent was set to expire on Wednesday, but Ivanhoe's shareholder rights plan would have triggered a rights issue if the Anglo-Australian mining giant raised its stake further, making the move much more expensive.
Rio, which has built its stake in Ivanhoe to 49 percent as it has helped fund construction of Oyu Tolgoi, has told Ivanhoe's board that it intends to buy additional shares of regardless of the rights plan, Ivanhoe said on Wednesday.
"The board of directors has decided that the interests of shareholders and the company's strategic objectives would be best served by the termination of the company's shareholders' rights plan," Ivanhoe said in a statement.
Cancelling the plan will require approval of shareholders at the company's annual meeting on May 11, but Ivanhoe will delay activation of the rights plan in the meantime.
Oyu Tolgoi, considered one of the world's largest copper deposits, is expected to reach commercial production in 2013.
Over its first 10 years of commercial production, the mine is expected to produce more than 544,000 tonnes of copper, 650,000 ounces of gold, and 3 million ounces of silver.
Ivanhoe made the announcement as it said it had obtained second $1.8 billion bridge loan as a stopgap measure while it negotiates $4 billion in long-term financing Oyu Tolgoi, the Canadian company said. The bridge loan is subject to Rio approval.
Shares of Ivanhoe were down 0.9 percent at C$19.11 on the Toronto Stock Exchange. Rio was up 0.4 percent in London.
(Reporting By Cameron French; Editing by Frank McGurty)
((cameron.french@reuters.com)(416-941-8199)(Reuters Messaging: cameron.french.reuters.com@reuters.net)) Keywords: IVANHOEMINES/FINANCING
(C) Reuters 2011 All rights reserved. Republication or redistribution of Reuters content, including by caching, framing, or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
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