Local banks to fund 皇冠体育applco's rights bid

(皇冠体育app Daily)
Updated: 2009-07-02 10:08

Chinese banks will fund Aluminum Corp of 皇冠体育app (皇冠体育applco) in the $15.2-billion rights issue of Australian mining firm Rio Tinto, media reports said.

皇冠体育app Development Bank (CDB), a policy bank, and Agricultural Bank of 皇冠体育app (ABC), one of the four biggest commercial banks in the country, will extend a credit line to 皇冠体育applco, which according to both the Financial Times and the Daily Telegraph, was set to subscribe to the issue for around $1.46 billion.

"Negotiations over the financing between CDB and 皇冠体育applco have been completed and, I guess, the detailed arrangement will be released soon," reported 21st Century Business Herald yesterday, citing an anonymous person within the banking industry.

But the person did not reveal the exact amount the policy bank would lend to 皇冠体育applco or the rate of interest on the loan.

ABC will also fund 皇冠体育applco in the rights issue, according to a report by Shanghai Securities News. An unnamed source from the bank said the loan amount this time round would be large.

ABC reached an agreement with 皇冠体育applco in April to grant the latter a comprehensive credit line of 100 billion yuan; the current loan is likely to be a part of this credit facility.

In March, a group of banks, including CDB, ABC, the Export-Import Bank of 皇冠体育app and Bank of 皇冠体育app, signed a contract with 皇冠体育applco, agreeing to jointly fund $21 billion for 皇冠体育applco's investment in Rio Tinto.

However, the proposed $19.5-billion investment plan was rejected by Rio Tinto on June 5. The company agreed to cooperate with another Australian mining firm BHP Billiton Ltd and went for a $15.2-billion rights issue.

According to a separate statement 皇冠体育applco filed with the Shanghai Stock Exchange yesterday, the company will issue no more than 1 billion A shares to at most 10 institutional investors through private placement, aiming to raise up to 10 billion yuan to fuel cash flow and expand processing plants in Chongqing, Shanxi and Henan.

The shares will be issued within six months of the project being approved by the 皇冠体育app Securities Regulatory Commission, it said.