Chinalco may consider changes to Rio deal-paper

SYDNEY, May 15 (Reuters) - Chinese state owned metals firm Chinalco may consider changes to the terms of convertible notes included in its planned $19.5 billion tie-up with global miner Rio Tinto Ltd/Plc (RIO.AX) (RIO.L), the Australian Financial Review newspaper said on Friday.

Citing no sources, the business daily said Rio's director of strategy, Doug Ritchie, was believed to have visited Chinalco officials last week to discuss opposition to the deal and possibly revising the terms of the $7.2 billion note issue.

The paper said Chinalco President Wang Wenfu was believed to be pragmatic over the price of the notes, but was adamant that the asset sale part of the deal should remain.

Rio Tinto shares hit a three-week low on Thursday as many investors bet it would scrap or alter the Chinalco deal in favour of a rights issue.

In a report on Thursday, brokerage UBS said it believed that BHP Billiton Ltd/Plc (BHP.AX) (BLT.L) may offer to help underwrite a rights issue by Rio and propose an iron ore joint venture (see [ID:nLE899659] for more).

The Financial Review said Australia's Foreign Investment Review Board is expected to seek changes to the Chinalco deal, including limiting the size of any equity stake to 14.99 percent and asking Chinalco to forgo one of the two seats on Rio's board that it is seeking.

The review board is expected to rule on the deal on June 14. It will give its recommendations to Treasurer Wayne Swan, who will make the final decision on whether to allow the deal.

For Reuters coverage of the Rio-Chinalco deal, double click on [nSYD423833]. (Reporting by Jonathan Standing)