Xstrata, Rio Tinto in fundraising talks: reports
Thu Jan 29, 2009 1:44am EST
LONDON (Reuters) - Debt-laden miner Xstrata (XTA.L: Quote) is set to launch a $6 billion capital raising as it looks to reduce its debt burden in the wake of the global commodities slump, reported the Daily Telegraph in its Thursday edition.
The mining group has signed up JP Morgan Cazenove to lead manage a rights issue or share placing, which could come as early as Thursday, the paper reported without citing sources.
Xstrata is expected to sell $1 billion of Canadian coal assets to Glencore International GLEN.UL, its largest shareholder, to raise funds in advance of the rights issue, according to the Telegraph's report.
Xstrata declined to comment. Shares in Xstrata closed at 623 pence on Wednesday, down 9 percent, valuing the group at just under 6.7 billion pounds.
Meanwhile, The Times reported in its Thursday edition that rival global mining group Rio Tinto Ltd/Plc (RIO.AX: Quote) (RIO.L: Quote) is in talks with Chinalco ALUMI.UL, the Chinese state-owned metals group, about a capital injection and sale of assets.
The newspaper cited sources close to Rio as confirming that it is in talks Chinalco about a multibillion dollar capital injection. The report said other options being explored with Chinalco include a sale of assets while Rio is talking to other parties, including sovereign wealth funds, about selling assets.
If talks fail to raise enough money, Rio will be forced into a rights issue, The Times said.
Rio Tinto, whose shares closed down 1.5 percent on Wednesday, declined to comment on the report.
On Wednesday, Rio Tinto confirmed it may issue shares to help pay off $39 billion in debt and analysts said Xstrata may have to follow suit.
(Reporting by Matt Scuffham; Editing by Tim Dobbyn)
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