The Great Debate UK
Jan Du Plessis, the man parachuted into the chair at Rio Tinto from British American Tobacco (they’ve so much in common), has spent a day on a charm offensive with the big shareholders in the mining group.
This Chinese deal is marvelous, he’s telling them. Not only do we get a fine price for selling what are merely minority, passive stakes in our mines, but just think of what we’ll be able to dig up in China with a powerful local to open the doors for us.
Besides, as he may not be emphasising with quite the same vigour, we can’t renegotiate the deal to sell them this slug of convertible loan stock, because they keep saying, rather publicly, that they’d walk away if we proposed doing so. Don’t even think of replacing our convertible with a straight bond.
The Chinese are even more sensitive about loss of face than the Rio directors, and it’s never clever to upset your biggest customer. Yet a compromise is desperately needed here, even if it costs the job of one or two of du Plessis’ colleagues.