Yep, the share prices of the two mining giants have crossed. After suffering another sickening fall on Thursday, Rio shares (down 10 per cent) are now trading at £10.40, about 4p lower than BHP’s.
This is seriously embarrassing for Rio. After all, BHP’s abandoned bid was pitched at a ratio of 3.4:1.
Of course, the reason Rio is being dragged lower is debt. And Rio has a lot of it - $40bn to be precise, against a market value of $27bn.
The company says it will be able to meet its debt repayments ($8.9bn is due next September) and does not need a rights issue.
But the market doesn’t believe Rio, and the result is a sinking share price.
Since BHP walked away last week, Rio shares have fallen 58 per cent.
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WSJ's What's News Early Edition, March 18, 2010by The Wall Street Journal 18 Mar 2010 at 6:00am
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