Willy Packer lambasts Rio Tinto for ‘crucifying’ shareholders as miner dictates $880m ERA rescue raise

Willy Packer has accused Rio Tinto of crucifying shareholders as the mining giant ploughs $750 million into his thwarted uranium bet Energy Resources of Australia and forces a buyout of the company. According to ERA, majority stakeholder Rio Tinto was the only investor out of 90 keen to participate in a capital raising after sounding out the market earlier this week to raise $210 million. The call for capital came after an application to renew ERA’s Jabiluka uranium lease was sensationally blocked by the Federal Government in July, and claims cash reserves are likely to run dry by the end of the year. ERA had $650 million in cash at June 30. Rio Tinto is obligated to support the raising to ensure ERA can pay the $2.4 billion clean up bill to rehabilitate the Ranger site south of Jabiluka it mined since the 1980s. And ERA says it can’t delay spending on rehabilitation because the bill could blow out even further. The lease rejection in July on the advice of Traditional Owners virtually dashed all hopes of the site becoming a mine, much to the dismay of fund manager and ERA investor Willy Packer, who had been betting on nuclear resurgence and an agreement the lease would not be knocked back. ERA shares collapsed 53 per cent on Wednesday after Rio Tinto said it would take up its pro-rata entitlement of shares at a massive 87.8 per cent discount at $0.002 apiece via an $880 million capital raise. Mr Packer accused Rio of pushing ERA into its fourth heavily discounted capital raising in an attempt to seize control of ERA through compulsory acquisition. “Rio has controlled ERA for 25 years and it’s sad that they are crucifying ERA’s minority shareholders in this two-month window after decades of support,” he said. “They are doing this once again. This time, two months before a court case that will decide whether ERA retains one of the world’s most valuable deposits of uranium, vital to the world’s decarbonisation plans. This issue is being conducted despite ERA having enough cash on hand to see out this court case.” Packer & Co’s stake in ERA would now be worth about $4 million based on Rio’s offer price and after pouring in about $80 million from its investigator trust over the past four years. Mr Packer said the fund would have considered putting a small amount into ERA if the funds were needed to see it through the court case, but to pour another $80 million in would be a “gamble”. In taking up its entitlement and assuming no other shareholders jump in, Rio Tinto’s ownership of ERA would lift to more than 99 per cent and clear the way for a compulsory takeover, which ERA says the mining giant has indicated it will do. “In the event that Rio Tinto beneficially owns 90 per cent or more of the shares in ERA, Rio Tinto would have the option to compulsorily acquire the remaining ERA shares under Part 6A.2 of the Corporations Act 2001 (Cth) (Corporations Act) and has indicated an intention to do so,” ERA said. ERA is challenging the lease rejection decision via the Federal Court. Rio has categorically said it would not support the development of a mine unless Traditional Owners did.