By Raji Menon

LONDON, Feb 16 (Reuters) - Major investors in Rio Tinto (RIO.L: Quote, Profile, Research) (RIO.AX: Quote, Profile, Research) have poured scorn on efforts by the mining group to provide explanations of plans to raise $19.5 billion from state-owned Chinalco, shareholder sources said on Monday.

Over the weekend Rio Tinto held meetings with its largest investors to try to win support for the deal. Investors have complained that the deal ignores pre-emption rights, which should give right of first refusal to existing shareholders in any fund-raising. [ID:nSYD436504]

One top 20 Rio Tinto investor said: "We are absolutely furious, some of the investors are spitting rivets. It just doesn't pass muster under any sort of circumstances and we have made this very clear in our feedback to their advisers.

"They are working on a charm offensive to come around and see shareholders but I can't see what sort of 'concessions' would appease the situation because it's pretty black and white."

Other large investors, including Legal & General Investment Management (LGEN.L: Quote, Profile, Research) and Scottish Widows Investment Partnership (LLOY.L: Quote, Profile, Research), have expressed their dismay over the proposed Chinalco plans. The deal would see China's top aluminum maker pay $12.3 billion for stakes in Rio's key iron ore, copper and aluminum assets and $7.2 billion for convertible notes potentially doubling its equity stake in Rio to 18 percent.

A Rio spokesman said: "We are aware of concerns, we want to listen to shareholders, we want to try and explain the reasons for the deal and see where that takes us." He declined to comment on any possible concessions to investors.

The top 20 investor said he believed the mining group may have to abandon the current deal altogether.

"Rio have either got to come up with a completely different set of proposals where maybe Chinalco underwrites the rights issue where we have the opportunity to participate or we have the ability to access the 9 percent coupon preference shares. [Otherwise] you abandon this deal completely and progress with a rights issue that institutions have expressed support for before.