REG - Rio Tinto - Rio Tinto submits improved proposal for TRQ

Rio TintoAnnouncement

24/08/2022 13:45

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RNS Number : 1102X  Rio Tinto PLC  24 August 2022

Rio Tinto submits improved full and fair proposal for Turquoise Hill

Rio Tinto has submitted an improved non-binding proposal to the Turquoise Hill
Board to acquire the approximately 49% of the issued and outstanding shares of
Turquoise Hill that Rio Tinto does not currently own (the "Improved
Proposal").

 

Under the terms of the Improved Proposal, Turquoise Hill minority shareholders
would receive C$40 in cash per Turquoise Hill share.

 

This proposal values the Turquoise Hill minority share capital at
approximately US$3.1 billion and represents a:

·      18% premium to Rio Tinto's initial proposal of C$34 per share;

·      56% premium to  Turquoise Hill's closing share price on the
Toronto Stock Exchange on 11 March 2022, the day prior to Rio Tinto's initial
proposal; and

·      109% premium to Turquoise Hill's closing share price on the
Toronto Stock Exchange prior to the January announcement of the reset of the
Oyu Tolgoi relationship.

 

Rio Tinto Chief Executive Jakob Stausholm said: "Rio Tinto believes this offer
not only provides full and fair value for Turquoise Hill shareholders, but is
in the best interests of all stakeholders as we work to move the Oyu Tolgoi
project forward. We will continue to take a disciplined approach to capital
allocation and strongly encourage the Board of Turquoise Hill to engage
constructively, and to support and recommend in favour of Rio Tinto's Improved
Proposal."

 

Since Rio Tinto made its initial proposal on 14 March 2022, the average share
price performance of Turquoise Hill's peers(( 1  (#_ftn1) ))( )has declined
35% in light of a deteriorating and more uncertain external environment.
Furthermore, Turquoise Hill has disclosed in its latest earnings results that
it needs to raise equity proceeds of more than US$1 billion to address its
current estimate of funding requirements.

 

The Improved Proposal reflects full and fair value for the Turquoise Hill
minority shareholders and delivers the certainty of cash at a material
premium.

 

The Improved Proposal has the same conditions as Rio Tinto's initial proposal,
including, but not limited to, (i) the full support of and a positive
recommendation by the Turquoise Hill Special Committee; (ii) no equity capital
is issued by Turquoise Hill pending completion of the transaction.

 

On Turquoise Hill's agreement with the terms of the Improved Proposal, Rio
Tinto is prepared to discuss appropriate further amendments to the updated
financing arrangements between Turquoise Hill and Rio Tinto dated 18 May 2022,
and provide Turquoise Hill with the necessary liquidity to operate through
completion of the transaction.

 

The Improved Proposal, which is expected to be conducted by way of a Canadian
plan of arrangement, will be subject to customary closing conditions,
including approval by a majority of the votes cast by Turquoise Hill minority
shareholders. The Improved Proposal is not subject to any financing condition
or due diligence.

 

No agreement has been reached between Rio Tinto and Turquoise Hill, and there
can be no assurance that any transaction will result from these discussions.
Even if a transaction is agreed, there can be no assurances as to its terms,
structure or timing.

 

Notes to editors

 

Given Rio Tinto's approximate 51% ownership in Turquoise Hill, the Improved
Proposal will be required to follow the rules set out in Canadian Multilateral
Instrument 61-101 - Protection of Minority Shareholders in Special
Transactions. This will require, among other things, a Special Committee of
the Turquoise Hill Board, which will not include any Rio Tinto nominees, to
assess the terms of the Improved Proposal. As part of that assessment the
Special Committee will need to obtain a formal valuation of the common shares
in Turquoise Hill by an independent valuator.

 

With the Special Committee's support, and after completion of the independent
valuation and agreement between Rio Tinto and Turquoise Hill on the terms and
conditions of the transaction, Turquoise Hill will schedule a meeting of its
shareholders to approve the transaction. The transaction must be approved by a
vote by (i) holders of 66 2/3% or more of the Turquoise Hill shares, and (ii)
a majority of the Turquoise Hill minority shareholders, in each case of those
shares voted at the meeting.

 

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

 

The valuation of Turquoise Hill minority shareholdings at US$3.1 billion is
based on a Canadian dollar exchange rate of US$0.771 as at 23 August 2022.

 

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.

 

This announcement is authorised for release to the market by, and 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 any definitive offer will be made, whether the definitive offer will
be accepted and approved, whether any agreement will be executed, or whether
this or any other transaction will be approved and 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

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 Media Relations, Americas   Investor Relations, Australia

 Simon Letendre              Amar Jambaa
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                           M +61 472 865 948
 Malika Cherry
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 Investor Relations, UK

 Menno Sanderse

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 David Ovington

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 Clare Peever

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 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

 

 

 1  Based on the simple average share price performance, between 11th March
2022 (being the last trading day immediately prior to Rio Tinto's proposal)
and 23 August 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.

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