UPDATE: Rio Tinto will Replace Some Members of Ivanhoe Board; IVN CEO Resigns.
Ivanhoe Mines (IVN.TO) anounced today that it will proceed with a rights offering to holders of common shares of Ivanhoe Mines to raise approximately US$1.8 billion in gross proceeds as part of a memorandum of agreement with majority shareholder Rio Tinto.
The rights offering will be supported by a standby commitment for the full amount from Rio Tinto, or a member of the Rio Tinto Group. The proceeds of the rights offering will be used as part of the comprehensive financing plan to cover all projected capital requirements for the company's flagship Oyu Tolgoi copper-gold-silver mine development project in southern Mongolia for the next four to five years.
Rio Tinto will receive a commitment fee from Ivanhoe Mines equal to 4% of the rights offering's gross proceeds, which Rio Tinto may elect to reinvest in Ivanhoe shares.
Under the agreement, a new thirteen-member Board will be formed, the majority of which will be independent directors comprising:
Eleven Rio Tinto-nominated directors, six of which will be independent; and
Two directors nominated by CEO Robert Friedland, one of which will be independent. Friedland has also resigned his post.
There will be an interim Board in place until the new Board is formed. Seven Ivanhoe Board directors will step down immediately, including David Huberman who will step down as chairman but continue to serve as a Board member. Mr Michael Gordon has been appointed as interim chairman pending the formation of the new Board.
Kay Priestly, a director of Ivanhoe and CFO of Rio Tinto Copper, has been appointed interim CEO and Catherine Barone, vice president, finance of Ivanhoe, has been appointed interim CFO.
The interim Board will approve the appointment of six new Board directors nominated by Rio Tinto by 25 April, 2012 to complete the new Board composition. The appointment of a new CEO and CFO nominated by Rio Tinto will be also approved by the Board.
Ivanhoe shares are up 10.6% to $12.87. Taking it away from a year low of $11.63. More than 1.8 million shares have changed hands.
Copyright (C) 2016 MTNewswires.com. All rights reserved. Unauthorized reproduction is strictly prohibited.