Rio Tinto begins $1.5 billion tender, includes any and all 2017 notes

By Susanna Moon

Chicago, April 21 – Rio Tinto plc said Rio Tinto Finance (USA) plc and Rio Tinto Finance (USA) Ltd. began two separate tender offers to purchase four series of notes.

“Rio Tinto is using its strong liquidity position to reduce gross debt through the early repayment of some near-term maturing debt, by today commencing cash tender offers to purchase its 2017 and 2018 notes,” according to a company notice.

The notes are guaranteed by Rio Tinto plc and Rio Tinto Ltd.

In the any-and-all offer, Rio Tinto Finance (USA) plc is tendering for two series of its notes, with pricing to be set at 11 a.m. ET on April 27 using a reference security plus a fixed spread as follows:

• $500 million 2% notes due 2017 using the 0.875% U.S. Treasury notes due March 31, 2018 plus 30 basis points; and

• $1.25 billion 1.625% notes due 2017 using the 0.875% U.S. Treasury notes due March 31, 2018 plus 30 bps.

The any-and-all tender will end at 5 p.m. ET on April 27.

Holders will also receive accrued interest on the settlement date of April 29, or May 3 for notes delivered under the guaranteed delivery procedures.

In the Dutch auction offer, the companies are offering to purchase for cash an aggregate principal amount up to $1.5 billion less the aggregate principal amount of any and all notes purchased in the any-and-all offer.

The Dutch auction notes are as follows:

• $1.75 billion 6.5% notes due 2018 issued by Rio Tinto Finance (USA) Ltd.; and

• $1.25 billion 2.25% notes due 2018 issued by Rio Tinto Finance (USA) plc.

For each issue, pricing will be set at 11 a.m. ET on May 5 using the 0.875% U.S. Treasury notes due March 31, 2018 plus a spread, with a minimum spread of 50 bps and a bid spread range of 120 bps.

The companies are offering an early tender premium of $30 for each $1,000 principal amount of notes tendered by 5 p.m. ET on May 4.

Holders will also receive accrued interest on the settlement date, which will be May 6 for early tendered notes.

The Dutch auction tender will end at 11:59 p.m. ET on May 18.

If the offer is oversubscribed, the notes will be accepted based on priority and proration.

The offers are not conditioned on the tender of a minimum principal amount of securities.

The lead dealer managers are Bank of America Merrill Lynch (888 292-0070, 980 387-3907 or +44-20-7996-1103) and RBC Capital Markets, LLC (877 381-2099, 212 618-7822 or +44-20-7029-7063). The co-dealer managers are BMO Capital Markets Corp, CIBC World Markets Corp, nabSecurities, LLC and TD Securities (USA) LLC.

Rio Tinto is a mining group based in London.

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