Rio Tinto has carefully considered the concerns raised by
minority shareholders of Turquoise Hill Resources Ltd. (“Turquoise
Hill”) in relation to the dissent and dispute resolution provisions
in the agreements (the “Agreements”) it entered into with certain
funds and other entities related to Pentwater Capital Management LP
and SailingStone Capital Partners LLC (the “Named Securityholders”)
that were previously announced on 1 November 2022. Rio Tinto in
good faith has been negotiating with the Special Committee of
Turquoise Hill on comparable provisions for other minority
shareholders. However, notwithstanding the parties best efforts,
those negotiations have been unsuccessful.
Rio Tinto has now agreed to terminate the Agreements with the
Named Securityholders. While Rio Tinto’s proposed transaction to
acquire, by way of a plan of arrangement (the “Arrangement”), the
approximately 49% of the issued and outstanding shares of Turquoise
Hill that Rio Tinto does not own for C$43.00 per share in cash (the
“Proposed Transaction”) will proceed, there is no assurance that
any of the Named Securityholders will continue to withhold their
vote or whether any of them will vote for or against the
Arrangement. Copies of the termination agreements are being
publicly filed by Rio Tinto as part of its 13D amendment in the
U.S.
All minority shareholders of Turquoise Hill will have access to
the same dissent rights and statutory process through the Yukon
Courts for Rio Tinto’s Proposed Transaction as described in
Turquoise Hill’s circular dated 27 September 2022 (the “Circular”).
To further support the Proposed Transaction, Rio Tinto irrevocably
commits to:
- Waive the 12.5% dissent condition in respect of the
Arrangement, provided that Turquoise Hill shares for which dissent
is validly exercised do not exceed 17.5% of Turquoise Hill shares
outstanding;
- Pay C$34.40 per share (the “Upfront Payment”) to any Turquoise
Hill shareholder who validly dissents and elects to receive such
amount (an “Electing Shareholder”), within two business days of the
effective date of the Arrangement (the “Effective Date”);
- Pay to an Electing Shareholder interest at the Canada 1 Year
Treasury Bill Yield on any balance of “fair value” that becomes
payable under the dissent process over and above the Upfront
Payment up to C$43 per share calculated from the Effective Date to
the date of payment, provided that no other interest shall be
payable to an Electing Shareholder in respect of any fair value
payment; and
- Allow any oppression claims by any Turquoise Hill minority
shareholders, including Electing Shareholders, against Turquoise
Hill, Rio Tinto or their respective affiliates, to survive the
Arrangement and be pursued following the Effective Date, where such
claims are served on or provided to Turquoise Hill and Rio Tinto no
later than seven days following the Effective Date.
Rio Tinto Copper Chief Executive Bold Baatar said: “We have
acknowledged feedback received from minority shareholders and
returned to the proposal originally unanimously recommended by the
Turquoise Hill Special Committee. We will work with the Turquoise
Hill Special Committee to secure a new shareholder meeting date so
that the Proposed Transaction can be voted on by minority
shareholders as soon as practicable. We continue to believe that a
premium of 67% for their shares and removal of financial
uncertainty is an attractive proposition for minority
shareholders.”
Further details on the procedure to become an Electing
Shareholder and how an oppression claim can be served on or
provided to Turquoise Hill and Rio Tinto will be provided on or
before 23 November 2022.
Rio Tinto confirms that there is no floor or minimum to the
determination of “fair value” under any dissent proceedings and no
assurance that dissenting shareholders will receive the full
C$43.00 for their shares. The dissent process is a time consuming
and lengthy process that introduces uncertainty in relation to the
consideration to be received and the potential for substantial
legal costs to the dissenting shareholder. Rio Tinto intends to
vigorously defend all proceedings and claims. Additional details
regarding the dissent process are described in the Circular. It is
recommended that minority shareholders seek independent legal
advice if they wish to exercise their dissent rights.
Rio Tinto is making the irrevocable commitments outlined above
to all minority shareholders of Turquoise Hill. Rio Tinto confirms
that it has no other agreement, commitment or understanding with
any of the Named Securityholders as to how they will vote in
respect of the Arrangement, whether they will continue to exercise
their dissent rights, how any dissent proceedings or claims will be
conducted or otherwise dealt with, or regarding any other
matter.
As previously announced by Turquoise Hill, the Special Meeting
of shareholders to vote on the Proposed Transaction has been
postponed. Rio Tinto has requested the Turquoise Hill Special
Committee to proceed with a shareholder meeting for the Arrangement
as soon as possible.
The Proposed Transaction represents Rio Tinto’s best and final
all-cash transaction price of C$43.00 per share, which provides
Turquoise Hill minority shareholders the option to realise
significant and immediate value. This represents a premium of 67%
to Turquoise Hill’s closing price of C$25.68 per share on 11 March
2022, the day prior to Rio Tinto’s initial public proposal to
acquire Turquoise Hill. Since 11 March 2022, publicly traded peer
copper producer share prices have declined by 24%1.
Rio Tinto is continuing to work towards the completion of the
Proposed Transaction that will simplify governance, improve
efficiency and create greater certainty of funding for the
long-term success of the Oyu Tolgoi copper project.
Rio Tinto Canadian early warning disclosure
Rio Tinto currently beneficially owns 102,196,643 common shares
of TRQ, representing approximately 51% of the issued and
outstanding common shares of TRQ. Rio Tinto also has anti-dilution
rights that permit it to acquire additional securities of Turquoise
Hill so as to maintain its proportionate equity interest in TRQ
from time to time.
A copy of the related early warning report may be obtained from
Rio Tinto’s Group Company Secretary. The head office of TRQ is
located at 1 Place Ville-Marie, Suite 3680, Montreal, Quebec,
Canada H3B 3P2.
Additional disclosures
This press release does not constitute an offer to buy or sell
or the solicitation of an offer to sell or buy any securities. Any
offers, solicitations or offers to buy, or any sales of securities
will be made in accordance with registration and other requirements
under applicable law.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. All statements other than statements of historical facts
included in this release, are forward-looking statements. The words
“intend”, “forecast”, “project”, “anticipate”, “estimate”, “plan”,
“believes”, “expects”, “may”, “should”, “will”, “target”, “pursue”,
“seek” or similar expressions, commonly identify such
forward-looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors which may
cause actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Among the
factors that could cause actual results to differ materially
include, but are not limited to, those relating to whether the
Arrangement will be consummated. Rio Tinto expressly disclaims any
obligation or undertaking (except as required by applicable law,
the UK Listing Rules, the Disclosure Guidance and Transparency
Rules of the Financial Conduct Authority and the Listing Rules of
the Australian Securities Exchange) to release publicly any updates
or revisions to any forward-looking statement contained herein to
reflect any change in its expectations with regard thereto or any
change in events, conditions or circumstances on which any such
statement is based. All information provided in this press release,
including the forward-looking statements herein, speak only as of
the date of this press release.
This announcement contains inside information.
The person responsible for arranging and authorising the release
of this announcement on behalf of Rio Tinto is Steve Allen, Group
Company Secretary.
LEI: 213800YOEO5OQ72G2R82
Classification: 3.1. Information disclosed under article 19 of
the Market Abuse Regulation.
____________________ 1 Based on the simple average share price
performance, between 11 March 2022 (being the last trading day
immediately prior to Rio Tinto’s proposal) and 16 November 2022, of
Southern Copper, Freeport, First Quantum and Lundin Mining,
representing Turquoise Hill’s disclosed peer set in its most recent
results presentation, however excluding OZ Minerals.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221117006089/en/
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