Rio Tinto to acquire full ownership of Turquoise Hill
Turquoise Hill Board of Directors unanimously recommends minority shareholders vote in favour of Rio Tinto’s best and final offer of C$43 per share in cash
LONDON–(BUSINESS WIRE)– Rio Tinto has entered into a binding agreement (the “Arrangement Agreement”) to acquire all of the remaining shares of Turquoise Hill Resources that Rio Tinto does not currently own (the “Transaction”).
The Independent Directors of Turquoise Hill have unanimously recommended that Turquoise Hill minority shareholders vote in favour of the Transaction and, together with senior officers of Turquoise Hill, have entered into voting support agreements with respect to all of the Turquoise Hill shares they own or control.
The Transaction delivers significant value to Turquoise Hill minority shareholders with the certainty of an all-cash offer of C$43 per share, which is Rio Tinto’s best and final offer. 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.
Rio Tinto has agreed to provide Turquoise Hill with secured short-term liquidity during the Transaction period of up to US$1.1 billion (subject to certain pre-conditions), which would need to be repaid from an equity raising from shareholders in the first half of 2023 if the Transaction is not approved by shareholders. Turquoise Hill has estimated that it requires US$3.6 billion of additional funding in total to complete the project. It aims to address this through a funding plan including renegotiating debt repayment dates, which requires the unanimous consent of participating lenders. The success of this debt renegotiation and certain other funding plans is uncertain and, if unsuccessful, could require further equity contributions from shareholders. The Transaction delivers certainty for the financing needs of Oyu Tolgoi and alleviates any further funding risks for shareholders.
Rio Tinto Chief Executive Jakob Stausholm said: “This Transaction will simplify governance, improve efficiency and create greater certainty of funding for the long-term success of the Oyu Tolgoi project. Rio Tinto’s offer guarantees Turquoise Hill’s minority shareholders outstanding value through a significant all-cash premium for their shares. After extensive negotiations, the terms of the transaction are final and there will be no further price increase. We look forward to working with the Turquoise Hill Board of Directors to ensure Turquoise Hill shareholders are able to realise the significant and immediate value of the Transaction.”
Rio Tinto Copper Chief Executive Bold Baatar said: “Rio Tinto will work in direct partnership with the Government of Mongolia and Erdenes Oyu Tolgoi to realise the full potential of the Oyu Tolgoi project for the benefit of all stakeholders. This Transaction rewards all minority shareholders with an exceptional premium of 67% for their shares and brings the financial certainty necessary to ensure the Oyu Tolgoi project can be developed without having to ask minority shareholders to contribute further significant funds.”
The Transaction will be implemented by way of a Canadian Plan of Arrangement and require the approval of 66.67% of votes cast by all 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. Details of the Transaction and Arrangement Agreement will be provided in the management information circular to be mailed to Turquoise Hill shareholders.
