Rio Tinto broke a huge loss of aluminum billion break-up fee not enough to compensate the bank

Chinalco's 195 million dollar breakup fee is far from enough to pay the bank. "Rio's breach has not only caused huge losses to Chinalco, but it has also had a big negative impact on four state-owned banks, and Chinalco's $195 million break-up fee is far from enough to compensate the four banks.　　"The Chinese Times reporter, who is familiar with the strategic partnership deal between Rio Tinto and Chinalco, said," but he declined to disclose the exact amount of Chinalco's compensation to four banks.　　Chinalco will inject $19.5 billion trillion into Rio Tinto's investment pact with Chinalco in February of the financial crisis, and will send two directors to Rio's board. In March, led by the National Development Bank, ABC, Bank of China and another policy bank, the Chinese import and Export Bank, formed a consortium to provide 21 billion US dollar mergers and acquisitions loans to Chinalco. June 5 Chinalco, Rio Tinto announced the withdrawal of 19.5 billion U.S. dollar capital injection transactions. Rio Tinto broke its promise to Chinalco, while Chinalco passively snapped at the four state-owned banks, Rio Tinto only gave Chinalco 1% of the liquidated damages, while Chinalco's compensation to the big four banks was much higher than the $195 million trillion.　　Although the four banks have yet to issue the acquisition loan to Chinalco. Four state-owned banks carried out a project evaluation, a pre-credit survey, a lot of expert consultancy fees, assessment fees, attorneys ' fees, exchange losses and exchange-rate risk, and foreign exchange asset allocations before Chinalco offered loans, and the banks did a huge job of no work.　　But for Chinese banks, there should be some lessons to be paid for overseas mergers and acquisitions loans.　　Chinalco: "Throwing" aside Chinalco's strategic significance of investing in Rio Tinto the cost of a stake in Chinalco's investment is not counted, and the losses in and out of Chinalco are huge and the biggest victims, only in terms of the money spent on Rio Tinto. Chinalco's injection of such huge sums of money would have to pay for huge investment banking fees, financial consultancy fees and legal fees.　　Chinalco has signed a loan deal with four banks, and Chinalco has to pay huge sums of money to the big four, as Chinalco's default does not accept 21 billion of billions of dollars in loans.　　Although the said person did not disclose the amount of compensation, but he suggested that this is a long-term loan, high interest rates, the penalty is also high. Chinalco has invested 7.2 billion of billions of dollars in investment in Rio Tinto, subscribing to the bonds issued by Rio Tinto and the net interest rate of 9%. Chinalco may choose to turn shares at any time within the term of the swap.　　After the swap, Chinalco's overall stake in Rio Tinto will rise to about 18% from the current 9.3%, with Rio Tinto's UK holdings increasing to 19%, holding 14.9% per cent of Rio's Australian shares. Currently, BOC's official website announces a maximum annual interest rate of 5.94%. Originally, Chinalco's wishful thinking is that once the deal comes into force, Chinalco will receive interest income of 9% per cent of its net nominal interest rate from Rio Tinto and repay its bank loans with a stable and high income source. Now, with Rio's default, not only will Rio Tinto's 9% interest income be paid, but it will have to payHuge fees and liquidated damages to banks. In this failed deal, Chinalco's direct economic losses are also a huge figure.　　[Page] Bank: Losses were not hit in China, as long as there are mergers and acquisitions loans provided by state-owned banks that have little to do, Rio's breach has made banks realise that state-owned banks are not working for overseas companies. The four state-owned banks suffered direct economic losses in the failed deal to be far less than the suckers.　　Chinalco's compensation to the bank would cover the bank's assessment fees, attorneys ' fees, expert fees and other expenses. As early as February this year, the domestic information agency, which specializes in mergers and acquisitions loans, issued a report to the media entitled "The four risks of aluminium in the acquisition of loans".　　However, the lender said to the newspaper that four banks also had plans to default or deal with Rio Tinto before deciding to issue loans to Chinalco, "which is why four banks have not suffered losses since the deal failed."　　According to China UnionPay letter analyst Mao Lihui and Zhong Gayong, although the banks did not have too much cash losses, but the failure of the acquisition of the bank and Chinalco earlier negotiations, approval, assessment and other aspects of the efforts to naught, and the related costs also become sunk costs. Chinalco's merger with Rio Tinto has won 21 billion of billions of dollars in loans to four state-owned banks, including the National Bank, the import and Export bank, AgBank and BOC, and its China-run and import and export lines were 9.5 billion yuan, with ABC 1.2 billion US dollars and BOC 800 million dollars.　　Banks have made serious preparations, in which ABC set up a special project group. The future: Buy garbage easy to buy resources are difficult UnionPay letter experts believe that the failure of the Chinalco merger and acquisition of Rio Tinto can be seen that the political risk remains the Chinese enterprises overseas mergers and acquisitions of energy, mining enterprises, the biggest obstacle.　　Over the years, the international "China threat" has been heard, and the decision to equate state-owned enterprises with the government has made foreign takeovers of Chinese state-owned enterprises particularly strong resistance, coupled with the importance of resources such as energy, minerals, and many other factors combined to create this situation. From past case studies, such as the 2005 CNOOC takeover of Unocal, it was the result of the US government's obstruction that ultimately failed. The Chinalco takeover of Rio Tinto, though not directly defeated by political obstacles, instead, Rio Tinto's business interests have been taken into account, but without the Australian government's two-month delay, Rio Tinto's share price rose as a result of Chinalco's takeover, while the global warming of commodities　　It's not going to happen. Through this incident and the situation of Chinese enterprises ' overseas mergers and acquisitions in recent years, we can draw the conclusion that the political factors in the overseas mergers and acquisitions of energy and mineral enterprises are still the key to determining the success of mergers and acquisitions. At the same time, the success rate of overseas mergers and acquisitions for small and medium-sized enterprises is higher, and the success rate of overseas mergers and acquisitions of large enterprises is lower, and the corporate culture and employee attitude of the merged enterprises will become the banksThe basis for judging foreign mergers and acquisitions loans. In view of the 2005-year CNOOC and the failure of Chinalco this year, the banking sector's first consideration of overseas mergers and acquisitions of energy and mineral companies is political risk. The attitude of the Government and the attitude of the people will seriously affect the success rate of the merger and even the most important factor of the influence. So for banks, the prevention of political risks in the process of mergers and acquisitions will be the most important to avoid such losses.