Rio stays in the black

Although somewhat trimmed since its takeover by London-based Billiton last fall, Rio Algom continues to turn a tidy profit.

Earnings in the three months ended March 31 topped $18 million on revenue of $135 million, compared with $15 million on $99 million in the corresponding period last year. (The earlier period saw a contribution of $13 million from discontinued operations.)

For the 15 months ended March 31, Rio earned $25 million on revenue of $589 million, compared with a loss of $184 million on $346 million in the year ended Dec. 31, 1999. The recent period includes $36 million from discontinued operations, without which net income would have been $1 million in the red.

In late November, Billiton completed its purchase of Rio Algom’s common shares. Since then, Rio has changed its fiscal year-end to June 30 to match Billiton’s, terminated its US$500-million revolving credit facility, and sold its metals distribution and mining businesses in the U.S. to other Billiton subsidiaries.

Rio Algom preferred shares and 5.5% convertible debentures continue to trade on the New York and Toronto Stock Exchanges, respectively. However, a group of debenture-holders is seeking an order from the Ontario Superior Court of Justice requiring that Rio Algom re-purchase or redeem its notes at a premium over par value. The group members say they were oppressed or had their interests unfairly disregarded during the Billiton takeover, a claim disputed by Rio Algom.