(Reuters) -Canada's Turquoise Hill Resources Ltd said on Wednesday Rio Tinto will provide it interim debt funding of up to $400 million while it evaluates the Anglo-Australian miner's $2.7 billion bid for the company.
Rio Tinto in March had proposed to buy out the 49% of Turquoise Hill (TRQ) it does not already own for about $2.7 billion in cash, paving the way for direct ownership of the massive Oyu Tolgoi copper-gold mining project in Mongolia.
However, the offer has seen opposition from major Turquoise Hill shareholders, including activist investor Pentwater Capital Management, who said the offer was too low.
Last year, Pentwater Capital had filed a class action in New York against Rio Tinto for damages, alleging the miner concealed problems that plagued the long-delayed, over-budgeted Oyu Tolgoi mine for months.
Rio confirmed the revised arrangements, and said in its statement it would "enable TRQ to fund the ongoing development of the Oyu Tolgoi".
Rio said it had also agreed to extend the date by which TRQ can conduct an initial liquidity offering of at least $650 million to Dec. 31 from Aug. 31.
Turquoise Hill is a single-asset company holding 66% of Oyu Tolgoi, one of the world's largest known copper and gold deposits, 550 km (342 miles) south of Mongolia's capital Ulaanbaatar. The government of Mongolia owns the remaining 34%.
Rio and Turquoise Hill have had long-running disagreements over funding for the $6.93 billion expansion of the Oyu Tolgoi mine as costs and timelines overran, but they reached a deal in April.
Rio in January settled a long-running dispute with Mongolia over the economic benefits of the project, waiving $2.4 billion in debt owed to it by the Mongolian government.
(Reporting by Ruhi Soni in Bengaluru and Praveen Menon in Sydney; Editing by Maju Samuel and Lincoln Feast.)