British-Australian mining giant Rio Tinto Group has dropped plans to sell up to $5 billion in shares.
The company’s management had discussed the possibility of a share offering in meetings with investors. The proceeds could have been used to pay for the $6.7 billion takeover of Arcadium Lithium and to rebalance its shares between British and Australian investors.
Rio decided to shelve the idea after receiving significant pushback from investors, especially since the company did not believe the offer was financially necessary, people familiar with the situation said.
The miner completed its takeover of Arcadium in early March and said it was funding the acquisition using an existing credit facility, which it plans to replace with long-term debt financing.
Rio’s shares have risen 1.7% in London trading this year, giving the company a market value of about 81 billion pounds ($105 billion). The benchmark FTSE 100 index has risen 6.2% in the same period.
The company has faced calls from an activist investor to consolidate its dual listing into an Australian-listed holding company. Rio has dismissed the call, saying it would cost billions for nothing. However, investors will be able to vote on the idea at upcoming annual shareholder meetings in the UK and Australia.
The idea of raising new capital comes at a pivotal time for the mining industry. Having spent nearly a decade returning billions of dollars to shareholders – often through high commodity prices and asset sales – the industry now faces a period of potentially lower metals prices.
Hélène Tarin, Editor-in-Chief of the Asian Bureau, Rough&Polished
