Rio to redeem debt

The tender offer is designed to reduce interest payments on the Rio debt by taking advantage of Harrah's lower borrowing costs. The actual savings won't be known until the costs associated with the refinancing are computed.

The tender offer covers all of Rio's $125 million of 9.5 percent senior subordinated notes due 2007 and $100 million of its 10.625 percent senior subordinated notes due 2005.

The payment for each $1,000 principal amount of notes will be computed May 13 unless the offer is extended beyond the scheduled May 15 expiration date.

The price will result in a yield to the first redemption date of the notes equal to 50 basis points over the yield of specific U.S. Treasury notes used as reference securities.

Rio is also soliciting consents to eliminate or modify negative covenants and will pay a consent fee of $20 per $1,000 principal amount of notes to holders who tender their notes and consents by April 30.

Morgan Stanley & Co. and NationsBanc Montgomery Securities are acting as dealer managers and consent solicitation agents. MacKenzie Partners Inc. is the information agent.

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