Rio Tinto and Chinalco in $20 B Dea

123jump.com Staff
12 Feb, 2009
New York City

Rio Tinto will sign a US$13 billion asset sale and US$7 billion convertible note issue with Chinalco today. The sale is part of the company effort to lower its debt load. Australian employment rate rises 1.2% to 10.7 million in January.

[R]3:00AM New York, 7:00PM Sydney - Australian employment rate rises 1.2% to 10.7 million in January. Rio Tinto to sign $13 billion asset sale deal with Chinalco.[/R]

Australian market averages rose after a government report showed that the country''s employment rate rose unexpectedly in January.

Gold stocks also increased after gold prices advanced $30.3 to $944.5 per barrel.

In Sydney trading ASX 200 index rose 1.5% or 39.9 to 3,514.30.

Of the ASX 200 index stocks 129 rose, 59 declined, and 12 were unchanged. Transpacific Industries led advancers in the index shares with a rise of 13.1% followed by St Barbara Ltd. increasing 11.1%.

Employment Rate Rises 1.2% in January

Australian Bureau of Statistics reported today that the country''s employed persons increased 1.2% from a month ago and 0.9% from a year earlier to 10.7 million.

However unemployed persons rose 36.8% from a month earlier and 18.4% from a year ago to 540,200, as the number of persons looking for full-time work gained by 29,900 to 381,300 and the number of persons looking for part-time work increased by 6,900 to 158,800.

The report notes that the unemployment rate rose 0.3 percentage points to 4.8% and the participation rate rose 0.1 percentage point to 65.1%.

Rio Tinto to Sign US$13 billion Asset Sale Deal with Chinalco

The Australian reported today Rio Tinto will sign a US$13 billion asset sale and US$7 billion convertible note issue with Chinalco today in order to part its debt obligations ""and tackle shareholder discord"".

The report notes that Chinalco board has since approved the US$20 billion deal, while Rio''s directors are expected to make a decision today when it will announce its full-year financial results.

Chinalco is expected to shore up its stake from 9% to between 18% and 19% through the note issue.

In addition, the Chinese company will take stakes of between 10% and 40% across assets such as iron ore and alumina/bauxite in Australia and the Escondida copper mine in Chile that is run by BHP.

Chinalco has reportedly approached the Foreign Investor Review Board for regulatory approval in Australia.

Gainers & Losers

Transpacific Industries led gainers in the ASX 200 index shares with a rise of 13.1% followed by increases in St Barbara Ltd. of 11.1%, in James Hardie-CDI of 10.9%, in Macquarie Countrywide of 9.1%, and Tishman Speyer of 8.7%.

Sino Gold gained 8.6% and Lihir Gold edged up 8.3%.

Lynas Corp. led decliners in the ASX 200 index shares with a drop of 19.4% followed by losses in EMECO Holdings of 19.1%, in Bradken of 16.3%, in ING Office Fund of 9.7%, and Kagara Ltd. of 9.2%.

Energy stocks fell as crude oil prices shed $1.6 to $35.9 per barrel.