Rio Tinto redeems $1.72 billion notes, wraps tender for $781 million

By Susanna Moon

Chicago, June 23 – Rio Tinto plc said it redeemed $1.72 billion of two series of notes and obtained tenders for $781 million of four more series in the offer that ended at 11:59 p.m. ET on June 19.

Rio Tinto has now reduced its outstanding bonds to about $9.5 billion from about $21 billion since the beginning of 2016, according to a company update on Friday.

As announced May 22, Rio Tinto called its 9% notes due May 1, 2019 and its 3.5% notes due Nov. 2, 2020 for redemption on June 21.

Specifically, the issuer redeemed $1,254,306,000 of the 9% notes and $464,876,000 of the 3.5% notes.

In the tender, Rio Tinto was offering buy up to $780,818,000 of notes from five series of its dollar-denominated debt.

The accepted tender amounts are as follows, with a purchase price for each $1,000 principal amount set and the notes listed in order of priority:

• $144,185,000 of the $579,979,000 of 4.125% notes due 2021 with pricing at $1,080.05, set using a spread of 30 basis points over the 1.875% Treasury due April 30, 2022;

• $273,929,000 of the $627,029,000 of 3.75% notes due 2021 with pricing at $1,066.93, set using a spread of 40 bps over the 1.875% Treasury due April 30, 2022;

• $231,615,000 of the $460,276,000 of 3.5% notes due 2022 with pricing at $1,057.76, set using a spread of 45 bps over the 1.875% Treasury due April 30, 2022; and

• $131,089,000 of the $513,642,000 of 2.875% notes due 2022 with pricing at $1,028.77, set using a spread of 55 bps over the 1.875% Treasury due April 30, 2022.

The issuer also was offering to purchase its $1.2 billion of 3.75% notes due 2025 with pricing set using a spread of 70 bps over the 2.375% Treasury due May 15, 2027. None of those notes were purchased.

The early redemption costs are expected to reduce underlying earnings by about $180 million and cash flow from operating activities by about $260 million in the first half of 2017, the company noted on Friday.

All the prices included an early tender payment of $30.00 per $1,000 principal amount that were only paid to holders who tendered by the early deadline of 5 p.m. ET on June 5.

Rio Tinto also paid accrued interest.

Pricing was set at 11 a.m. ET on June 6, and settlement for the tender occurred on June 7.

The tender had been set to end at 11:59 p.m. ET on June 19.

The dealer managers are Mizuho Securities USA LLC (866 271-7403, 212 205-7736 or +44 20 7090 6442), Morgan Stanley & Co. LLC (800 624-1808, 212 761-1057 or +44 20 7677 0473) and RBS Securities Inc. (866 884-2071, 203 897-2963 or +44 20 7678 5282)

Global Bondholder Services Corp. (866 807-2200, 212 430 3774 or http://www.gbsc-usa.com/RioTinto) is the depositary and information agent.

Rio Tinto is a mining group based in London.

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