Friday newspaper round-up: Rio launches $15.2bn rights, ties with BHP

5th Jun 2009 06:15

Rio Tinto launched a deeply-discounted $15.2bn rights issue, scrapped a proposed $19.5bn tie-up with China's Chinalco and struck a joint venture deal with arch rival BHP Billiton in a string of announcements on Friday that will transform the Anglo-Australian mining group's long term future, the FT reports.Rio will pay a $195m break fee to Chinalco, the mining group's largest shareholder with close to a 10% stake, for abandoning a deal for the Chinese aluminium group.The Times adds that Rio Tinto has now agreed a joint venture with BHP Billiton covering their iron ore operations in Western Australia after walking away from a $19.5 bn deal with China resources giant Chinalco. The tie-up between the mining companies is expected to save them at least $10 bn. The deal will see BHP Billiton pay Rio Tinto $5.8bn to equalise their stakes in the joint venture, taking BHP's stake to 50% from 45%.Employers were last night warned not to use the recession as an excuse to water down staff pensions after Wm Morrison became the third blue-chip company this week to take the axe to its final salary scheme. Britain's fourth-biggest supermarket operator said that it was altering its defined benefit scheme so that the 10,000 employees in it would clock up future pension benefits based on their career-average pay, and not their final salary, the Times writes.Meanwhile, British Airways has not ruled out following Barclays lead and closing its final salary pension scheme to 100,000 existing members in what would amount to a highly controversial move by the airline. The UK flag-carrier admitted on Thursday that all options to tackle its pension deficit would be reviewed at the completion of the current triennial actuarial review, the Telegraph reports.The biggest union in Lloyds Banking Group has demanded the bank provide a written guarantee that it will keep open its final salary pension for the scheme's existing 30,000 members. The demand is a sign of rising union concern that leading UK companies are set to follow the contentious move announced by Barclays this week to close its final salary scheme to existing members, the FT writes. Goldman Sachs raised its oil price forecast for the end of 2009 to $85 a barrel from $65, anticipating dwindling supply and rising demand this year and next.Its forecast also put prices at $95 by the end of 2010, led by economic recovery in China. Influenced by these predictions, US light crude rose $2.39 to $68.51, while Brent was up $2.52 to $68.40, sparking fears of a further increase in prices at the petrol pump, the Times reports. Steven Esom, the former head of food at Marks & Spencer, was paid more than £1 million for just 112 days' work on its board, the annual report revealed. Mr Esom, who was dismissed by M&S in July last year after being appointed to the retailer's board in March, received a payoff of £568,000 in line with the terms of his contract. Mr Esom's pay package for his entire stint at M&S was £1.038m, the Times writes.The FT adds that Sir Stuart Rose has ended the financial year at Marks and Spencer with 28 per cent more compensation in spite of presiding over a year that saw pre-tax profits at the retailer slide 40 per cent to £706m and the dividend cut for the first time in nine years. Sir Stuart, who promised investors when he was promoted from chief executive to executive chairman that he would not be taking a pay rise for his controversial combined role, has seen his total pay package increase from £1.38m to £1.76m. More than 3,000 jobs were in jeopardy tonight as Newcourt Group, one of Ireland's biggest security and recruitment companies, was forced to call in receivers at Deloitte after failing to renegotiate its bank debt. Newcourt operates a string of subsidiaries, including Federal Security Group, which alone employs 3,000 staff, the Times reports. Sweden is preparing to part-nationalise banks exposed to the economic collapse in Baltic states, raising fears that a string of Western European countries could face similar fallout from rising defaults in the former Communist bloc. Finance Minister Anders Borg said the Swedish state will buy stakes in distressed banks if they fall deeper into trouble but will impose draconian terms. Swedish banks have lent more than $75bn (£46bn) to Latvia, Lithuania and Estonia, led by Swedbank and SEB, the Telegraph reports. Apple plans to introduce a cheaper version of its popular iPhone as soon as Monday, in a move that could dramatically increase the company's share of the market for web-surfing devices, people familiar with the initiative said on Thursday. Analysts said that the company wanted to show off either a $149 phone or a $99 phone, down from the current low end of $199 and still subsidised in exchange for an AT&T communications service contract, the FT reports.Angelo Mozilo, founder of Countrywide Financial, which was once the most prolific sub-prime lender in the US, last night became the first big- company chief executive to be charged with fraud over the credit crisis. Releasing a slew of damaging emails, the Securities and Exchange Commission, Wall Street's regulator, said it was charging him and his two most senior lieutenants with deceiving investors and insider dealing in the company's shares, reports the Independent.