Q: Came across this news article about Rio Tinto wanting to sell its stake Iron Ore Company of Canada (IOC).
Rio is also considering an initial public offering on the Toronto Stock Exchange of IOC, on which Royal Bank of Canada has been hired to advise.
https://news.sky.com/story/rio-tinto-approaches-bidders-for-6bn-canadian-iron-ore-stake-11473410
I look forward to your comments and the potential implication of LIF.
Thank you
Rio is also considering an initial public offering on the Toronto Stock Exchange of IOC, on which Royal Bank of Canada has been hired to advise.
https://news.sky.com/story/rio-tinto-approaches-bidders-for-6bn-canadian-iron-ore-stake-11473410
I look forward to your comments and the potential implication of LIF.
Thank you
5i Research Answer:
The royalty agreement would not change with a change of control at IOC. However, it is possible that a new owner might not want the royalty, and try to buy LIF outright or buy out the royalty interest. We would consider this a long shot possibility, however. This is not the first time RIO and IOC have had such rumours, but things seem to have progressed further this time around. Still, we would not expect a huge impact to LIF for a while and only then if a buyer of IOC decides to do something. We would not expect any change to LIF if there is an IPO vs a sale.