>>> Bayer - Completes placement of €4B mandatory convertible notes with instit.

Bayer - Completes placement of €4B mandatory convertible notes with institutional investors 
- The notes will be issued at par with a coupon of 5.625% per annum.
- The minimum conversion price has been set at €90.
- The maximum conversion price has been set at €108, representing a maximum conversion premium of 20%.
- The notes will mature on 22-Nov-19.
- BofA Merrill Lynch, Credit Suisse, Goldman Sachs and J.P. Morgan are acting as Joint Global Coordinators and Joint Bookrunners.

WSJ : Supersonic Passenger Jet Edges Closer to Reality

Supersonic Passenger Jet Edges Closer to Reality
Demonstrator vehicle, called Baby Boom, slated to take to the air in 2017

Honeywell International Inc. has agreed to supply avionics for a proposed supersonic jetliner—intended to carry only premium passengers—that could slash transcontinental travel times in half.

The concept of a three-engine aircraft featuring fewer than four dozen seats, previously announced by closely held startup Boom Technology Inc., also is expected to take another step forward Tuesday with the unveiling of a one-third scale flying prototype.

The demonstrator vehicle, called Baby Boom, is slated to take to the air in 2017. If development goes as planned, the full-size version, including cockpit systems from Honeywell and engines manufactured by General Electric Co., could start carrying passengers early in the next decade.

With its needlelike nose, sweptback wings and tapered carbon-fiber body, the XB-1 demonstrator resembles the contours of an experimental jet fighter. It has room for a single pilot, plus an optional flight-test engineer.

A cabin mock-up of the ultimate aircraft, also shown for the first time Tuesday, features large oval windows, almost like portholes, and a single row of seats on each side of the fuselage.

The project, which could cost more than $1 billion, has initial support from several venture funds and is taking an unusual approach by adopting various technologies already certified by regulators. Still, future funding remains uncertain, daunting regulatory hurdles remain and the tight test schedule, aiming to certify a jetliner able to cruise 10% faster than the now-mothballed Concorde, could stretch due to unexpected challenges.

While engineers have leveraged the latest aerodynamic research and computer design tools, the company’s bare-bones technical staff must rely on Virgin Galactic LLC, British entrepreneur Richard Branson’s budding space tourism company, for manufacturing and flight-test support. When the actual jetliner starts flying, Boom technology may have no more than 50 full-time employees.

But Blake Scholl, the company’s chief executive, said in an interview that rolling out the prototype highlights the company’s novel strategy. The driving principle, he said, is “not just to sit around and study” supersonic technologies, adding that “we are much closer to flight than anyone else” seeking to break the sound barrier for travelers.

A number of other companies with deeper pockets are pursuing business jets with similar goals, and some have estimated much higher overall development costs. But Mr. Scholl said Boom is the only major project envisioning passengers, without access to corporate jets, paying fares comparable to today’s first-class tickets for a supersonic experience.

Designed to fly twice as fast as today’s most-advanced airliners, the XB-1 is intended to offer travelers greatly expanded options, particularly for swift transcontinental round-trips.

As currently conceived, according to Mr. Scholl, the proposed jet would allow passengers to fly from the West Coast to Singapore, for example, have a full day of meetings there, and return home on a red-eye flight. The entire trip would take slightly more than 24 hours. Existing airline schedules require three days.

Increased interest in supersonic travel comes as members of Congress and the National Aeronautics and Space Administration step up efforts to study ways to significantly reduce sonic booms that traditionally have restricted commercial flights over the U.S.

WSJ : Snapchat Parent Begins the IPO Process

Snapchat Parent Begins the IPO Process
Messaging company, now called Snap, could be valued at $20 billion to $25 billion

Snap Inc. has confidentially filed paperwork for an initial public offering that may value the popular messaging platform at as much as $25 billion, a major step toward what would be one of the highest-profile stock debuts in recent years.

The company, formerly known as Snapchat, made the filing with the Securities and Exchange Commission in recent weeks, according to people familiar with the matter.

An IPO, expected as early as March, could value Snap at between $20 billion and $25 billion, one of the people said. The Wall Street Journal reported last month that the valuation could be $25 billion or more. The reason for the discrepancy isn’t clear.

If Snap pursues an IPO at the currently expected valuation, it would still be the largest U.S.-listed technology offering since Chinese e-commerce company Alibaba Group Holding Ltd. made its debut at a $168 billion valuation in 2014.

ENLARGE
That could provide a boost for the IPO market, which has had a dismal year. Just 103 companies have listed their shares in the U.S. in 2016, raising $21.8 billion, according to data provider Dealogic. That is down from 165 deals raising $34.6 billion at the same juncture last year and marks the lowest year-to-date level for deals since 2009 and proceeds since 2010. Technology IPOs have experienced similar weakness.

But bankers and investors are optimistic that a successful debut for Snap would convince other bellwether tech companies to tap the IPO market.

The recent strong performance of the few tech-company shares that have started trading this year has given market participants confidence that the new-issue market is due for a rebound next year.

Snap would become the first of a small batch of highly valued and closely watched venture-backed companies, such as Uber Technologies Inc., to test the public markets.

The four-year-old company, whose Snapchat app lets users send disappearing messages from their smartphones, was eligible to file its IPO paperwork confidentially because it expects to have less than $1 billion in revenue this year. Under the 2012 Jumpstart Our Business Startups Act, companies with annual revenue below $1 billion have the option to file an initial draft of their IPO prospectus with regulators and make adjustments before unveiling it publicly.

Morgan Stanley and Goldman Sachs Group Inc. would be lead underwriters of a Snap IPO, according to people familiar with the matter. Snap executives plan to be relatively conservative in pricing the offering, the people said.

Recent tech offerings have generally been priced conservatively. The average multiple of total company value to expected sales for tech companies at their debut this year was three times, compared with 3.6 times last year and 4.9 times in 2014, according to a recent report from Deutsche Bank’s equity-capital-markets group.

There is no guarantee that Snap, based in Venice, Calif., will proceed with a share sale in the time frame it currently envisions, or that it will achieve the valuation contemplated.

Snap’s main source of revenue is selling ads on Snapchat that are slotted in between stories contributed by media partners and video diaries posted by the app’s users. Marketers also can buy location-based or event-based geofilters and “lenses” that add quirky characteristics to photos and videos.

Snap has been working hard to win over Madison Avenue ahead of the IPO. Advertisers are intrigued by the Snapchat app, which reaches more than 150 million users daily, including 41% of 18- to 34-year-olds in the U.S., according to Nielsen.

But marketers and ad agencies have been frustrated with Snap’s tight controls on ad content and the long wait times some have experience getting ads approved by the platform. Others say those problems amount to growing pains.

Snap has been taking some steps to make life easier for advertisers. It released an “application programming interface” that helps advertisers buy ads through a more automated process. And it has lifted some previous restrictions, allowing marketers to target customers using email databases and other data sources.

The company’s revenue has grown quickly since it started running ads in 2014. Snap told investors earlier this year that it expected revenue of between $250 million and $350 million in 2016 and as much as $1 billion in 2017.

It is already ahead of the top end of its 2016 forecast, people familiar with the matter have said. In 2015, the company generated just $60 million in revenue. Snapchat loses money, according to people familiar with the matter, as it focuses on revenue growth and finding ways to make money off its big user base.

In September, the company renamed itself Snap in a bid to show that its ambitions extend beyond Snapchat. As part of the change it unveiled camera-equipped sunglasses, called Spectacles, that can record video in short bursts. The foray into hardware potentially gives Snap another source of revenue, but poses new challenges such as managing inventory.

FT : Smartphone sales predicted to slide on AI advances

Smartphone sales predicted to slide on AI advances
CCS report also forecasts ‘smart shoes’ boom and Nokia comeback

The rise of advanced technology is likely to depress sales of smartphones in mature markets by 20 per cent within the next 10 years, as the loss of skilled jobs to artificial intelligence means consumers have less money to spend on the latest gadgets.

The forecast from CCS Insight, the research company whose annual predictions are keenly watched by the telecoms and technology industries, sees smartphone sales falling by 20 per cent by 2025, as artificial intelligence cuts into disposable income.

Ben Wood, principal analyst with CCS, said many skilled jobs were already under threat from AI, with banking, journalism, customer service, legal services and real estate the type of professions that would be transformed over the coming decade.

The trend is likely to dent the income and wealth of the middle classes, as skilled occupation opportunities dry up and have a knock-on effect on the sales of expensive consumer electronics, as well as services such as pay-TV and music streaming.

“It is an overwhelming pressure across the board,” said Mr Wood, who argued that artificial intelligence is already creeping into all facets of life without people realising it. He cited the example of customer service ‘bots’ that can switch between software and a human agent, without the consumer being aware.

CCS Insight predicts that smartphone sales in developed markets, covering western Europe, North America and Asia-Pacific countries, including Japan and Australia, will fall to 350m units by 2025 from 440m in 2015, as a result of the rise of artificial intelligence.

Other predictions include 1m pairs of “smart shoes” being sold in 2018, rising to 5m pairs by 2020, as sensors start to make their way into apparel.

CCS also predicts television broadcasters in mature markets will have dropped linear programming — traditional live programming — by 2025, as the distinction between live, on-demand and recorded content blurs.

On the device front, CCS predicts that an Indian brand will emerge as a top-10 player by 2018. That could be Micromax or a new player that can capitalise on the Indian government’s push to strengthen its local technology industry.

Another forecast is that the Nokia brand will return to the smartphone market in force, grabbing a 5 per cent share by 2019. Nokia has licensed its brand to a new company in Finland called HMD, which will build handsets using the Android operating system. Mr Wood said that the Nokia brand still has “considerable legs” and expects the relaunched models to command twice the sales that Lumia phones managed in 2014, the height of Nokia’s previous tie-up with Microsoft.

The CCS Insight report is also famous for providing forecasts at consolidation moves. This time, it predicted that CK Hutchison, the owner of the Three mobile network, would form a partnership with Liberty Global in 2017 and 2018 to combine product sets in the UK, Austria and Ireland.

It also predicted that apps would continue to be hoovered up by the large platforms, forecasting that Musical.ly, the lip-syncing and dance video company with more than 70m registered users, would fall into the hands of Facebook, while Citymapper, the UK transport app, would be bought by one of Apple, Google or Here, the old Nokia maps business now owned by a consortium of carmakers.

NY Post : Why post-election Wall Street gains are unlikely to last

Wall Street eked out another day of gains on Monday, marking the fourth day of a rally after Donald Trump was elected president.

The Dow Jones rose 21 points, to 18,868.69, a new all-time high. Other markets were slightly down — the S&P 500 fell 0.25 points, to 2,164.20, and the Nasdaq fell 18.72 points, to 5,218.40.

While investors were optimistic about Trump’s infrastructure stimulus, analysts were skeptical that a rally could last much longer.

“The Trump victory here is not going to power us further in terms of the stock rally,” Chris Rupkey, chief economic strategist at MUFG, told The Post. “I’d be concerned it might fly back a little.”

Trump has vowed to spend $1 trillion on public works projects to repair infrastructure and raise employment.

Meanwhile, gains in stocks were offset by the sharpest selloff in bonds in three years, as investors expect an increase in inflation due to the construction spending.

In a note, Deutsche Bank said it was raising its prediction for where the S&P 500 would end for the year.

“The likelihood of tax cuts and hopefully stronger growth is currently balanced by still weak oil prices and the likely upward grinding dollar,” bank analyst David Bianco said in a note to investors.

FT : Rolls-Royce CEO touts faster engine production

Rolls-Royce CEO touts faster engine production
East argues transformation efforts have made ‘reasonable progress’

Warren East took over as Rolls-Royce chief executive in the wake of several profit warnings nearly 16 months ago, and, by his own admission, the transformation of one of Britain’s proudest industrial companies is taking longer than he had expected.

“I had hoped we would be more into concentrating on strategy and refining product portfolios by now rather than basic transformational activity,” he told the Financial Times in an interview. Nevertheless Mr East will tell investors at the company’s capital markets day on Wednesday that, “one year on, we have made reasonable progress”.

To back up his claim, the Rolls-Royce chief plans to point to anecdotal evidence of change at the 110-year-old company, which is as famous for the bureaucracy that weighs on profitability as it is for the jet engine technology that has won it 50 per cent of the global market for wide-body turbines.

Since February Rolls-Royce has cut the time it takes to assemble the Trent 1000 engine — found in Boeing’s 787 Dreamliner — by almost a quarter, from 40 days to 30, Mr East says. “This is a genuine improvement,” he says.

He aims within the next 12 months to bring assembly time down further, to just 20 days. The lessons will be applied across other engine programmes, in particular the Trent XWB which powers the Airbus A350 wide-body. There, the goal is to reduce the production time by 50 per cent.

Mr East is counting on similar improvements to encourage a more flexible way of working and to help the group deliver the £1bn in efficiency improvements it needs to match the profitability of rival General Electric of the US.

Seven per cent of Rolls’ workforce has been cut in two years, but Mr East concedes, “There is still a heck of a long way to go”.

The changes will also help to free up resources as Rolls-Royce faces one of the biggest production challenges in its recent history. The company intends to double annual production by the end of the decade, which will allow it to churn out 600 jet engines a year — more than at any time since second world war.

Mr East arrived at the helm of Rolls-Royce in July 2015, after three profit warnings had undermined the company’s credibility and shattered a long record of steady profits growth. Under his tenure the company has revised its guidance twice more. Analysts are now expecting underlying pre-tax profits of about £680m for 2016 against the £1.4bn achieved last year.

Rolls-Royce is not expected to change guidance again on Wednesday, but it will make clear the impact of new accounting standards, which are due to come into effect in 2018, by restating 2015 profits as a guide to what to expect. This restatement is expected to show that reported profits last year would have been lower by more than £800m had the new rules applied.

The group is keen to stress that the changes are technical and will have no impact on the fundamentals of the business or on its cash flow, which is already strained by the ramp-up in production and investment in new engine programmes.

Mr East plans to reassure investors that the volatility that has hit Rolls-Royce’s cash generation is ebbing. The Rolls-Royce boss will indicate that 2016 will be a low point with more cash going out than coming in. He expects to reach cashflow break-even next year, with the trend improving to sharply positive in 2019.

Mr East admits, however challenges remain for the final six weeks of the year. Meeting this year’s earnings guidance will depend on the performance of the power systems business, which makes reciprocating engines for ships, rail and land vehicles and the oil and gas industry, sectors where the market is extremely tough.

“We need the power systems business to deliver what we expect it to deliver. We think it will, but it is very challenging,” he says.

The difficulties in power systems, and in the group’s marine engine division which is also heavily reliant on the depressed oil and gas sector, have not weakened Mr East’s commitment to a diversified Rolls-Royce. Some investors have said the company’s wide range of activities has distracted management from the core need to improve competitiveness and cash generation in civil aerospace, which contributes two-thirds of group revenues.

Mr East insists the business portfolio remains “broadly right”. However he now plans to set strategic priorities which are likely to mean a substantial downsizing of both the marine and power systems divisions.

He adds that he believes that the time is now ripe to set out his long-term vision for these businesses and for the civil aerospace division that defines Rolls-Royce. It will involve a focus on new technologies, including electrification in all types of propulsion, from planes to trains and ships.

“We want to reassure people that we haven’t totally got our heads in the weeds of operational stuff,” he says. “There will be a future.”

>>> After Hours Summary: YRD +9%, A +1% following earnings/gui

After Hours Summary: YRD +9%, A +1% following earnings/guidance, STEM +36% on asset purchase agreement news... MTSI -3.6% following earnings/guidance

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: YRD +8.9%, FOMX +1.8% (ticking higher), A +0.8%

Companies trading higher in after hours in reaction to news: STEM +36.4% (enters into an asset purchase agreement with BOCO Silicon Valley to sell certain stem and progenitor cell lines that have been researched, studied or manufactured by the Company since 2007), PRTS +5.5% (light volume; announces a $5 mln stock repurchase program and extends its credit agreement), LZB +5% (ticking higher; La-Z-Boy signs an agreement to acquire the license for the La-Z-Boy brand in the United Kingdom and Ireland from Furnico effective January 1, 2017), CSV +5% (light volume; acquires Rich & Thompson Funeral Services in Burlington & Graham, North Carolina; financial details not disclosed), ACRS +3.5% (announces that two pivotal Phase 3 trials of its lead product candidate A-101 40% Topical Solution met all primary and secondary endpoints), MOMO +1.2% (higher despite Alibaba confirming lowered active stake)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: MTSI -3.6%

Companies trading lower in after hours in reaction to news: LNTH -9.2% (announces public offering of 3 mln shares of common stock by the co and selling shareholders), PDLI -8.9% (announces proposed $150 mln public offering of new convertible senior notes due 2021), FLXN -7.8% (commences an underwritten public offering to issue and sell shares of its common stock), NVTA -6.2% (announces a $40 mln underwritten public offering of common stock), VSAT -2.6% (commences an underwritten public offering of 6,500,000 shares of its common stock), SGYP -2.1% (enters into privately-negotiated exchange agreement with OrbiMed Advisors LLC and OrbiMed Capital related to its 7.50% Convertible Senior Notes due 2019), SAEX -0.9% (following 23% move higher on Tuesday; also Chief Accounting Officer Trisha Gerber agrees to step down following the change of control of the Company that occurred in connection with its comprehensive restructuring in July), AXL -0.7% (downgraded to Sector Weight from Overweight at KeyBanc)

>>> US Close Dow +0.29% S&P +0.75% Nasdaq +1.10% Russell +0.27%

Closing Market Summary: Bonds and Stocks Advance as Election Shift Slows

The stock market ended the Tuesday affair on a higher note as investors continued to adjust their post-election positioning. The Nasdaq Composite (+1.1%) finished well ahead of the S&P 500 (+0.8%) while the Dow Jones Industrial Average (+0.3%) lagged, but still notched its seventh consecutive gain. The three indices have rallied between 1.7% and 4.3% so far in November.

The Dow Jones Industrial Average (+0.2%) began the day under pressure as some mild profit taking developed. Large cap names that make up the price-weighted average have seen a stream of inflows in recent days as speculation mounts regarding increased US fiscal spending. This, in turn, has driven up inflation expectations.

The reflationary trade has boosted sectors more directly linked to the potential implementation of large-scale public works projects -- financials (+0.1%; month-to-date: +12.2%), industrials (+0.3%; month-to-date: +7.3%), and materials (+0.4%; month-to-date: +3.5%) -- while pressuring rate-sensitive groups -- telecom services (+2.1%; month-to-date: -1.2%) and utilities (+1.7%; month-to-date: -5.6%). Today's action, however, saw a bounce for sectors that were oversold on a short term basis.

The bond market also enjoyed a reprieve from short-term oversold conditions. The yield on the 2-yr note finished flat at 1.00% while the yield on the benchmark 10-yr note declined three basis points to 2.23%. The yield on the 2-yr note is up 15 basis points from October's settlement while the yield on the benchmark 10-yr note has gained 40 basis points so far in November. The Treasury complex shrugged off largely upbeat economic data and somewhat hawkish jawboning from Federal Reserve officials.

The energy sector (+2.7%) finished in the lead as crude oil futures rebounded. WTI crude finished the day higher by 5.9% ($45.87/bbl; +$2.57) ahead of this evening's inventory data from the American Petroleum Institute. The Department of Energy will also release weekly stockpile data tomorrow at 10:30 ET.

In the technology sector (+1.3%), large cap tech names rebounded from recent selling interest. Alphabet (GOOG 758.49, +22.41) and Facebook (FB 117.20, +2.12) gained a respective 3.0% and 1.8%. The two have been under pressure in recent days as market leadership shifted away from F.A.N.G. names. Top-weighted Apple (AAPL 107.11, +1.40) added 1.3%, narrowing its post-election loss to 3.6%. Separately, the PHLX Semiconductor Index settled higher by 1.9%.

The economically-sensitive financial sector (+0.1%) finished at the bottom of the leaderboard, but still extended its November gain to 12.2%. The sector has been bolstered by the reflationary trade in recent sessions as sharp steepening in the yield curve boosted the group's earnings prospects. Furthermore, speculation has arisen that the sector may face less regulation under President-elect Trump's administration. The SPDR S&P Bank ETF (KBE 40.20, +0.20) finished higher by 0.5% after beginning the day with a 2.4% loss. The broader sector is up 2.3% so far this week. 

Biotechnology pulled back from its recent gain as the iShares Nasdaq Biotechnology ETF (IBB 290.91, -2.18) slipped 0.7%. The sub-industry has gained in recent days as investors dial back expectations for drug pricing regulations under a GOP-led Congress and Trump White House. The broader health care sector has gained 4.5% this month, but remains down 2.4% so far in 2016. 

Today's trading volume was above the average of 986 million as more than 1.1 billion shares changed hands at the NYSE floor.

Today's economic data included Retail Sales for October, Import/Export Prices for October, Empire Manufacturing for November, and Business Inventories for September: 

  • Retail sales increased 0.8% in October (Briefing.com consensus +0.6%) on top of an upwardly revised 1.0% increase (from +0.6%) for September.
  • Excluding autos, retail sales also jumped 0.8% (Briefing.com consensus +0.5%) on top of an upwardly revised 0.7% increase (from +0.5%) for September.
  • Import prices increased 0.5% in October, but were down 0.1% excluding fuel. Export prices increased 0.2% in October and they were also up 0.2%, excluding agriculture.
    • October marked the seventh time in the last eight months that import prices have risen. Export price have risen in six of the past seven months.
  • The Empire Manufacturing Survey for November checked in at 1.5 (Briefing.com consensus -0.5) versus -6.8 in October.
  • Total business inventories increased 0.1% in September (Briefing.com consensus +0.2%) after increasing 0.2% in August.

For more on these economic releases, be sure to visit Briefing.com's Economic Calendar page.

Tomorrow's economic data will include the 7:00 ET release of the weekly MBA Mortgage Index and the 8:30 ET release of October PPI (Briefing.com consensus +0.3%). Meanwhile, October Industrial Production (Briefing.com consensus +0.2%) and Capacity Utilization (Briefing.com consensus 75.5%) will cross the wires at 9:15 ET. The day's data will be capped off with the November NAHB Housing Market Index (Briefing.com consensus 64) and September Net Long-Term TIC Flows, which will be released at 10:00 ET and 16:00 ET, respectively. 

  • Russell 2000: +14.8% YTD
  • Dow Jones: +8.6% YTD
  • S&P 500: +6.7% YTD
  • Nasdaq Composite: +5.4% YTD


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FT : Rio faces new questions about giant Guinea project

Rio faces new questions about giant Guinea project
Company lawyers found emails about $10.5bn payment to consultant more than a year ago

Rio Tinto’s lawyers uncovered more than a year ago internal emails about a questionable $10.5m payment to a consultant, but the mining company did not alert law enforcement authorities and investors about the matter until last week.

The Anglo-Australian group said on November 9 it had notified authorities after discovering emails from 2011 that referred to the payment to the consultant, who helped head off a threat to Rio’s claim to the giant Simandou iron ore project in Guinea.

In the emails, seen by the Financial Times, Alan Davies, the executive in charge of Simandou, discusses with Tom Albanese, then chief executive, and Sam Walsh, then head of iron ore, paying a $10.5m fee to François Polge de Combret, a former top French banker and classmate of Guinea’s president.

Following an internal inquiry begun in August, Rio said last week it had referred the matter to law enforcement authorities in the UK, the US and Australia. The company now faces years of scrutiny and the risk of large fines if it is found to have broken anti-corruption laws.

Rio has suspended Mr Davies, the only one of the three executives in the email chain still at the company. He has not responded to requests for comment.

Rio said last week it discovered the emails in August, after they were anonymously posted online.

But two people with knowledge of the matter told the FT that the emails had been uncovered last year by lawyers working for the company on a legal dispute about the Simandou project.

The law firm, Quinn Emanuel, declined to comment. It reported to the department of Debra Valentine, the Rio executive in charge of legal and regulatory matters.

Ms Valentine had been due to retire next May but stepped down early following last week’s revelations. She could not be reached for comment.

The dispute over Simandou dates back to 2008, when the Guinean dictator of the day stripped Rio of the rights to the northern half of the project and handed them to BSG Resources, the mining arm of Israeli diamond tycoon Beny Steinmetz’s family conglomerate. BSGR went on to agree a $2.5bn deal to bring in Vale of Brazil as its partner.

In 2011, Rio secured its claim to the remaining half of Simandou with a $700m payment to the then new government of President Alpha Condé — a deal which, the emails indicate, Mr de Combret helped to facilitate. The ex-Lazard banker declined to comment.

In 2014, an inquiry launched by the Condé government concluded that BSGR had won its rights to half of Simandou through a bribery scheme. The government cancelled those rights and has yet to reissue them.

Rio reacted in April 2014 by bringing a racketeering lawsuit in New York in which it claimed BSGR, Mr Steinmetz, Vale and others had conspired to steal its Simandou rights.

The case was thrown out on a technicality in November 2015 but not before the parties had embarked on discovery — the process whereby claimants and defendants exchange material ahead of a trial.

An October 2014 court filing by Vale’s lawyers specified the information it wanted Rio to hand over. One section demanded: “All Documents regarding or constituting communications between Rio Tinto and any Third Party relating to Rio Tinto’s rights to Simandou Blocks 1 and 2.”

This was a reference to the half of the deposit that had been taken from Rio and handed to BSGR.

The 2011 emails that triggered the internal inquiry by Rio in August appear to fall squarely within the scope of Vale’s request for disclosure.

For instance, Mr Davies writes in one of the emails that, thanks to Mr de Combret’s efforts, “there is also now a glimmer of possibility that we may be able to move ourselves into a useful position in relation to [blocks] 1 and 2”.

People with knowledge of the matter said Rio’s lawyers came across the emails as they compiled documents to be disclosed in the discovery process.

It is unclear whether, after Quinn Emanuel found the emails, Ms Valentine’s department took any action, or contacted Mr Walsh, who in January 2013 had succeeded Mr Albanese as chief executive.

The FT has been unable to obtain comment from Mr Walsh, who stepped down as Rio chief executive in July. Mr Albanese has declined to comment.

Following Rio’s disclosures last week, Guinea’s government said it “had no knowledge, at the time in 2011, that Mr Polge de Combret acted in any capacity on behalf of … Rio Tinto”.

It added that it had “received no specific allegation of corruption” but that it would “follow any development in the self-reporting procedures initiated by Rio Tinto closely and will conduct all investigations that may be necessary to assist the relevant authorities with their mission”.

Jean-Sébastien Jacques, Rio’s current chief executive, told staff this week that the company did not take “lightly” a decision to contact regulators about the $10.5m payment to Mr de Combret. He added the company was taking “this situation very seriously”.

BSGR has always maintained it did nothing wrong in Guinea and that it was the victim of a plot by the government and its allies to confiscate its rights illegally. The company has seized on recent allegations of bribery against the Condé government in a separate legal case as well as Rio’s disclosures last week to argue that it is being vindicated.