From Staff Reports
Worldwide mining giant Rio Tinto PLC (RTP) said yesterday (Thursday) that the Canadian government has signed off on its $38 billion purchase of Alcan Inc. (AL), noting that the deal raises no anticompetitive issues. The Canadian Competition Act clearance was one of the conditions of the deal’s consummation.
Rio also essentially thumbed its nose at the growing worldwide credit crisis by raising a record $40 billion in loans to finance its Alcan buyout. Rio agreed to buy Canada’s Alcan last month in a friendly $101-a-share deal, saving the Canadian aluminum company from a hostile takeover by its U.S. rival, Alcoa Inc. (AA).
The loans came through during one of the shakiest runs the global credit markets have seen in years. The loan package is the biggest ever to a UK-listed company and the fourth-largest worldwide, according to investment banking data provider Dealogic. Four lead banks – including Deutsche Bank AG (DB), Royal Bank of Scotland, SocGen, and Credit Suisse Group (CS), are responsible for the loan’s conception.
Rio Tinto Group is currently rated A+ by Standard & Poor’s and Aa3 by Moody’s. Those ratings will likely be reduced as a result of the loan, due to the higher debt load the company will be carrying.