Aluminium Corporation of China (Chinalco) has agreed to invest a further $19.5 billion in Australian natural resources firm Rio Tinto in what will rank as China’s largest outbound investment to date. The unlisted Chinese metals and mining firm will invest $12.3 billion in aluminium, copper and iron ore joint ventures and another $7.2 billion in two tranches of convertible bonds.

The bonds will increase Chinalco’s shareholding in the Rio Tinto Group to 18% upon conversion. The bonds have a maturity of 60 years and are convertible at any time from 41 days after closing. The Australian bonds pay an annual coupon of 9% while the UK bonds pay 9.5%. $3.1 billion of the bonds will convert into Rio Tinto shares at a price of $45 per share and the balance $4.1 billion will convert at a price of $60 per share.

Read it at FinanceAsia

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