Rio Tinto accepts $1.5 billion notes in oversubscribed tender offers

By Angela McDaniels

Tacoma, Wash., Oct. 10 – Rio Tinto plc said its tender offers for up to $1,497,535,000 of dollar-denominated notes were oversubscribed as of 5 p.m. ET on Oct. 7, the early tender deadline.

As a result, $1,497,535,000 of notes will be purchased and no notes tendered after the early tender deadline will be accepted.

According to a filing with the London Stock Exchange, the following notes will be purchased in the offers:

• $528,196,000 of Rio Tinto Finance (USA) plc’s $988,472,000 3.5% notes due 2022;

• $471,807,000 of Rio Tinto Finance (USA) plc’s $985,449,000 of 2.875% notes due 2022;

• $245,694,000 of Rio Tinto Finance (USA) Ltd.’s $1.5 billion of 9% notes due 2019;

• $47,513,000 of Rio Tinto Finance (USA) Ltd.’s $512,389,000 of 3.5% notes due 2020;

• $82,143,000 of Rio Tinto Finance (USA) Ltd.’s $662,122,000 of 4.125% notes due 2021; and

• $122,182,000 of Rio Tinto Finance (USA) Ltd.’s $749,211,000 of 3.75% notes due 2021.

Notes purchased in the offers will be retired and canceled.

The 3.5% notes and 2.875% have acceptance priority levels of one and are subject to a maximum tender amount of $1,000,003,000, increased from an original cap of $1 billion. The remaining notes have acceptance priority levels of two.

About $1.1 billion of the priority one notes were tendered by the early tender deadline. They have been prorated using a proration factor of 87.3%.

The priority two notes have been prorated using a proration factor of 60.4%.

The total consideration for each series of notes, which includes a $30 early tender payment, will be determined by the dealer managers based on a spread over a reference Treasury security as of 11 a.m. ET on Oct. 11.

The reference Treasury security is the 0.875% Treasury due Sept. 15, 2019 for the 9% notes and the 1.125% Treasury due Aug. 31, 2021 for each of the other series of notes.

The spread is 65 basis points for the 3.5% notes due 2022, 70 bps for the 2.875% notes, 65 bps for the 9% notes, 53 bps for the 3.5% notes due 2020, 65 bps for the 4.125% notes and 70 bps for the 3.75% notes.

Holders will also receive accrued interest up to the settlement date, which is expected to be Oct. 12.

The tender offers were scheduled to expire at 11:59 p.m. ET on Oct. 24.

Bond redemptions

The tender offers are part of a bond purchase plan for up to $3 billion, according to a prior filing with the London Stock Exchange.

In addition to the tender offers, Rio Tinto issued a redemption notice for about $1.5 billion of dollar-denominated notes, saying it is taking advantage of a strong liquidity position to further reduce its debt.

On Oct. 26, Rio Tinto will redeem all of the 2% notes due March 22, 2017, 1.625% notes due Aug. 21, 2017 and 2.25% notes due Dec. 14, 2018 issued by Rio Tinto Finance (USA) plc and all of the 6.5% notes due July 15, 2018 issued by Rio Tinto Finance (USA) Ltd.

All of the notes subject to the tender offers and the redemption notices are guaranteed by Rio Tinto plc and Rio Tinto Ltd.

The lead dealer managers for the tender offers are BNP Paribas Securities Corp. (888 210-4358, 212 841-3059 or +44 20 7595 8668), Credit Agricole Securities (USA) Inc. (866 807-6030, 212 261-7802 or +44 20 7214 5482) and Credit Suisse Securities (USA) LLC (800 820-1653, 212 538-2147 or +44 20 7883 8763). The co-dealer managers are Bank of China Ltd., London Branch and UniCredit Bank AG.

The depositary and information agent for the tender offers is Global Bondholder Services Corp. (866 807 2200 or 212 430 3774).

Rio Tinto is a mining group based in London.

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