REG - Rio Tinto - Update - Transaction with Turquoise Hill Resources

Rio TintoAnnouncement

18/11/2022 07:00

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RNS Number : 8372G  Rio Tinto PLC  18 November 2022

 

 18 November 2022

 

Update on Transaction with Turquoise Hill Resources

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  (#_ftn1) .

 

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.

 

 

 

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

 

 Media Relations, UK         Media Relations, Australia

 Matthew Klar                Matt Chambers

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 David Outhwaite             Jesse Riseborough

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 Media Relations, Americas

 Simon Letendre

M +514 796 4973

Malika Cherry

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 Investor Relations, UK

                             Investor Relations, Australia

 Menno Sanderse

 M: +44 7825 195 178         Tom Gallop

M +61 439 353 948

Amar Jambaa
 David Ovington

                           M +61 472 865 948
 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

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riotinto.com

 1  (#_ftnref1) 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.

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