TIDMRIO
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 Melbourne 3000
United Kingdom Australia
T +61 3 9283 3333
T +44 20 7781 2000 Registered in Australia
Registered in England ABN 96 004 458 404
No. 719885
This announcement is authorised for release to the market by
Steve Allen, Rio Tinto's Group Company Secretary.
riotinto.com
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