bhp billiton preparing hostile bid for rio , page-2

BHP Billiton Picks Seven Banks to Fund Rio Bid, Times Reports

By Jacob Greber

Jan. 20 (Bloomberg) -- BHP Billiton Ltd. has asked seven banks to provide the $70 billion the mining company needs to fund its takeover of Rio Tinto Group Plc, the Sunday Times said, without saying where it got the information.

The cash will refinance a $40 billion loan Rio Tinto raised to buy Canadian mining company Alcan Inc. last year and a change- of-control clause means BHP must refinance this loan within 45 days of a takeover closing, the newspaper said.

Chief Executive Officer Marius Kloppers drafted Citigroup Inc., Barclays Plc, UBS AG, Goldman Sachs Group Inc., HSBC Holdings Plc, BNP Paribas SA and Banco Santander SA to help finance the takeover, the newspaper said.

BHP, which is offering Rio shareholders a three-for-one share swap, must raise the bid closer to four-to-one, the Sunday Times said, citing unidentified people. Bankers are working on a ``compromise'' of a ratio of 3.5 shares plus 6 pounds ($11.73) per share in cash, the newspaper said.

Rio spokesman Robin Walker and Carole Cable, a spokeswoman for BHP, both declined to comment.

To contact the reporter for this story: Jacob Greber in Sydney at [email protected]