REG - Rio Tinto - Rio Tinto and TRQ reach agreement in principle

Rio TintoAnnouncement

01/09/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220901:nRSA8647Xa&default-theme=true

RNS Number : 8647X  Rio Tinto PLC  01 September 2022

 1 September 2022

 

Rio Tinto and Turquoise Hill reach agreement in principle for Rio Tinto to
acquire full ownership of Turquoise Hill for C$43 per share in cash

Rio Tinto and Turquoise Hill Resources Ltd. ("Turquoise Hill") have reached an
agreement in principle for Rio Tinto to acquire the approximately 49% of the
issued and outstanding common shares of Turquoise Hill that Rio Tinto does not
currently own for C$43 per share in cash (the "Transaction"). The agreement
has the unanimous approval of the independent Special Committee of Turquoise
Hill's Board of Directors (the "Special Committee"), and values the Turquoise
Hill minority share capital at approximately US$3.3 billion.

 

The purchase price of C$43 per share in cash represents Rio Tinto's best and
final offer and a premium of:

·      67% to Turquoise Hill's closing price of C$25.68 per share on 11
March 2022, being the day prior to Rio Tinto's initial public non-binding
proposal to acquire Turquoise Hill; and

·      125% to Turquoise Hill's closing price of C$19.12 per share on 24
January 2022, being the day before agreeing on a path forward between the
Government of Mongolia, Turquoise Hill and Rio Tinto that enabled commencement
of the underground mine at Oyu Tolgoi ("OT").

The Transaction is to be implemented by way of a plan of arrangement under the
Business Corporations Act (Yukon) and both companies intend to expeditiously
finalise an arrangement agreement (the "Arrangement Agreement"). An
announcement will be made with details of the Arrangement Agreement once
executed.

 

The Transaction will require the approval of 66.67% of votes cast by
shareholders of Turquoise Hill (including Rio Tinto) and the approval of a
simple majority of the votes cast by minority shareholders of Turquoise Hill.
A special meeting of shareholders of Turquoise Hill to approve the Transaction
is expected as early as possible in the fourth quarter of 2022 and, if
approved, the Transaction is expected to close shortly thereafter.

 

Rio Tinto and Turquoise Hill have also agreed in principle to the following
amendments to the financing Heads of Agreement ("HoA"), to become effective
concurrently with the execution of the Arrangement Agreement, to support
Turquoise Hill in addressing near term liquidity:

·      Increasing the early advance facility agreed in May to US$650
million from US$400 million, provided that if there is an anticipated funding
shortfall for March 2023 the parties will in good faith discuss increasing the
early advance facility by up to an additional US$100 million;

·      Extending the outside date by which the initial equity of US$650
million must be raised and early advance facility repaid from 31 December 2022
to 31 March 2023 and potentially to 31 May 2023 in the event of regulatory
delays to the Arrangement Agreement;

·      In the event the Transaction has not been approved when the
December 2022 principal repayment obligation of US$362 million by Turquoise
Hill under the OT project finance facility arises, Rio Tinto has committed to
ensuring funds are available to Turquoise Hill. The funds for this payment
would be made available on the same terms as the Early Advance and being
repayable to Rio Tinto at the same time as the Initial Equity Offering; and

·      Providing to Turquoise Hill Rio Tinto's commitment to participate
pro rata in the Initial Equity Offering subject to certain pre-conditions set
forth in the HoA.

 

Rio Tinto Chief Executive Jakob Stausholm said: "Rio Tinto is committed to
moving Oyu Tolgoi forward in direct partnership with the Government of
Mongolia to realise its full potential for all stakeholders. This agreement
represents another significant step following the recent commencement of the
underground operations, and will simplify governance, improve efficiency and
create greater certainty of funding for the long-term success of the Oyu
Tolgoi project."

 

Rio Tinto Copper Chief Executive Bold Baatar said: "The transaction simplifies
the ownership structure of Oyu Tolgoi and enables Rio Tinto to focus on
working in partnership directly with Erdenes Oyu Tolgoi and the Government of
Mongolia to create long-term value for all stakeholders.

 

"Turquoise Hill minority shareholders will realise a significant and immediate
cash premium for their shares at a time when uncertainties inherent in the
development of the underground operations remain. Turquoise Hill will also
avoid the issuance of any equity component as part of the US$3.6 billion
incremental funding requirement through to the completion of the Oyu Tolgoi
project. Securing the approval of the Special Committee to our agreement in
principle, following extensive negotiations, was essential for Rio Tinto to
progress this proposed transaction."

 

Advisors

 

Credit Suisse, RBC Capital Markets and Rothschild & Co are acting as
financial advisors to Rio Tinto, and McCarthy Tétrault LLP and Sullivan &
Cromwell LLP are acting as legal advisors.

 

BMO Capital Markets is acting as the exclusive financial advisor to the
Turquoise Hill Special Committee and Blake, Cassels & Graydon LLP is
acting as its legal advisor. TD Securities has been retained by the Special
Committee as an independent valuator in accordance with applicable securities
laws.

 

Norton Rose Fulbright Canada LLP and Paul, Weiss, Rifkind, Wharton &
Garrison LLP are acting as Canadian and U.S. legal counsel, respectively, to
Turquoise Hill.

 

Notes to editors

 

If the Transaction is successful Rio Tinto will hold a 66% interest in Oyu
Tolgoi with the remaining 34% owned by the Government of Mongolia.

 

Rio Tinto Canadian early warning disclosure

 

Rio Tinto currently beneficially owns 102,196,643 common shares of Turquoise
Hill, representing approximately 51% of the issued and outstanding common
shares of Turquoise Hill. 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 Turquoise Hill 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 Turquoise Hill 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 Agreement will be executed, or whether this or any
other transaction 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 the release of this announcement on
behalf of Rio Tinto plc is Steve Allen, Group Company Secretary.

 

LEI: 213800YOEO5OQ72G2R82

Classification: 3.1. Information disclosed under article 19 of the Market
Abuse Regulation.

 

 

 

 

 

 Contacts  Please direct all enquiries to media.enquiries@riotinto.com

 

 Media Relations, UK         Media Relations, Australia

 Illtud Harri                Jonathan Rose

 M +44 7920 503 600          M +61 447 028 913

 Matthew Klar                Matt Chambers

 M+ 44 7796 630 637          M +61 433 525 739

 David Outhwaite             Jesse Riseborough

 M +44 7787 597 493          M +61 436 653 412

 Media Relations, Americas   Investor Relations, Australia

 Simon Letendre              Amar Jambaa
 M +514 796 4973

                           M +61 472 865 948
 Malika Cherry
 M  +1 418 592 7293

 Investor Relations, UK

 Menno Sanderse

 M: +44 7825 195 178

 David Ovington

 M +44 7920 010 978

 Clare Peever

 M +44 7788 967 877

 Rio Tinto plc               Rio Tinto Limited

 6 St James's Square         Level 43, 120 Collins Street

London SW1Y 4AD

United Kingdom             Melbourne 3000

 T +44 20 7781 2000          Australia

Registered in England

 No. 719885

                             T +61 3 9283 3333

                             Registered in Australia

                             ABN 96 004 458 404

 

This announcement is authorised for release to the market by Steve Allen, Rio
Tinto's Group Company Secretary.

 

riotinto.com

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCXFLBBLKLXBBZ