Failure of the transaction proceeding would result in Turquoise Hill shareholders foregoing 67% premium to the unaffected share price and Turquoise Hill needing to address several near-term financing and funding requirements
To learn more on how to vote your shares, go to www.turquoisehillacquisition.com
MONTREAL--(BUSINESS WIRE)-- The independent directors of the Board of Turquoise Hill Resources Ltd. (TSX: TRQ) (NYSE: TRQ) (“Turquoise Hill” or the “Company” and the “Special Committee” respectively) today commented on Institutional Shareholder Services’ (“ISS”) recommendation in connection with the previously announced proposed plan of arrangement pursuant to which, among other things and subject to the satisfaction or waiver of all applicable conditions precedent, Rio Tinto International Holdings Limited (“Rio Tinto”) would acquire the approximately 49% of the issued and outstanding common shares of Turquoise Hill that Rio Tinto and its affiliates do not currently own for C$43.00 per share in cash (the “Arrangement”).

Turquoise Hill Board Chair, Peter Gillin, said, “This is a complex situation, and the ISS report acknowledges that in considering the Arrangement, that there are downside near-term risks that must be weighed by minority shareholders in considering how to vote.”

ISS in its report cautioned Turquoise Hill minority shareholders, stating:

“Ultimately, there are serious downside risks that would accompany non-approval of the proposal, and any shareholder voting against the deal should devote the time necessary to fully understand them.”
“…it is important to consider the downside risks of non-approval. As discussed above, there is an immediate risk that TRQ share price will decline.”
“These equity issuances could not only be dilutive to minority shareholders, but they draw attention to another important consideration. Namely, TRQ would still be subject to development risks on a standalone basis.”
ISS ultimately determined that the discount to NAV implicit in the Rio Tinto offer price outweighed the downside risks that shareholders could face in rejecting the Arrangement. Mr. Gillin added, “Following almost six months of deliberations and with the assistance of its financial advisor, the independent directors comprising the Special Committee concluded that the price offered in the Arrangement is fair (including on the basis of NAV multiples) and provides a substantial premium to Minority Shareholders for relinquishing the future upside in the Oyu Tolgoi project while relieving them from the downside risks inherent in the further development and funding of the project.”

“The Special Committee, as did ISS, recognize that different shareholders have different risk tolerances and different outlooks on various factors. Ultimately each shareholder will make their own assessment and collectively determine whether the Arrangement is approved.”

The Board’s recommendation that minority shareholders vote FOR the transaction has been supported by two proxy advisory firms, Egan-Jones Proxy Services and Glass Lewis. In its report Egan-Jones said "Based on the review of publicly available information on strategic, corporate governance and financial aspects of the proposed transaction, Egan-Jones views the proposed transaction to be a desirable approach in maximizing shareholder value. After careful consideration, we believe that approval of the transaction is in the best interests of its shareholders and its advantages and opportunities outweigh the risks associated to the transaction. We recommend a vote FOR this Proposal."

In recommending FOR the transaction, Glass Lewis noted that the Company undertook a comprehensive review and concluded that, when balanced against the elevated risk profile, including near-term financing risks, “…Rio Tinto’s current offer represents a reasonable exit price and compelling market premium for minority shareholders…”

Recommendation of the Board Remains FOR the Arrangement Resolution

The Board of Directors (excluding the conflicted directors) continues to unanimously recommend that Turquoise Hill’s minority shareholders vote FOR the resolution to approve the Arrangement based on the comprehensive evaluation by the Special Committee, assisted by professional advisors, emphasizing the following:

after an extensive review process, including a market canvass, the Special Committee did not identify any alternatives that were more attractive and determined that the transaction is the only value maximising option expected to be available to Turquoise Hill’s minority shareholders given Rio Tinto’s contractual rights and control position over the Company, the project and available financing alternatives;
the all-cash offer of C$43.00 delivers certainty of value and immediate liquidity at a 67% premium to the unaffected closing share price on March 11, 2022, the last trading day prior to Rio Tinto’s initial proposal;
in considering Rio Tinto’s offers, while the price of copper fell and the shares of our peer group declined by 35%, the independent Special Committee remained resolute in refusing to accept a transaction that would not fairly compensate minority shareholders for the long-term promise of Oyu Tolgoi. Through its robust and unwavering commitment, the Special Committee secured two increases in the offer price, for a total increase of C$9.00 or 26% relative to the C$34.00 that Rio Tinto offered in March 2022;
the C$43.00 per share offer is within the fair value range determined by the independent valuation of TD Securities Inc.; and
the recommendation of the Special Committee takes into consideration the financing and funding risks as well as the potential challenges facing Turquoise Hill in the event the Arrangement is not approved.
Vote FOR the Transaction Today

Your vote is important no matter how many shares you own. Shareholders must vote prior to 10:30 a.m. (Montreal Time) on October 28, 2022.

For more details on how to vote, shareholders are encouraged to visit www.turquoisehillacquisition.com.

How To Vote

If you are a registered shareholder, we are asking you to take two actions.

First, your vote is important regardless of how many shares of Turquoise Hill you own. Shareholders are encouraged to vote in advance of the Meeting. If you are a registeredshareholder, whether or not you plan to attend the Meeting, to vote your shares at the Meeting, you can either return a duly completed and executed form of proxy to the Company’s transfer agent, TSX Trust Company (the “Transfer Agent”), Proxy Department, by mail at: TSX Trust, 1200-1 Toronto Street, Toronto, Ontario M5C 2V6, or TST Trust Company, 1600-2001 Robert-Bourassa Blvd., Montréal, Québec H3A 2A6, or via the internet at www.tsxtrust.com/vote-proxynot later than 10:30 a.m. (Montréal time) on October 28, 2022 or, if the Meeting is adjourned or postponed, 48 hours, excluding Saturdays, Sundays and statutory holidays, prior to the commencement of the reconvened Meeting. If you hold shares through a broker, investment dealer, bank, trust company or other intermediary (a “Beneficial Shareholder”), you should follow the instructions provided by your intermediary to ensure your vote is counted at the Meeting.

Second, if the Arrangement is approved and completed, before Rio Tinto can issue the consideration for your shares, the depositary will need to receive the applicable letter of transmittal completed by you if you are a registered shareholder, together with the certificates representing the shares and any additional documents that may be required. If you are a Beneficial Shareholder, you will receive payment for your shares through your financial intermediary if the Arrangement is completed.

Questions

If you have any questions about voting your proxy and the information contained in this press release in connection with the Meeting please contact our proxy solicitation agent and strategic shareholder advisor, Kingsdale Advisors, at 1-888-370-3955 (toll-free in North America), or by calling collect at 416-867-2272 (outside of North America) or by email at contactus@kingsdaleadvisors.com.

About Turquoise Hill

Turquoise Hill is an international mining company focused on the operation and continued development of the Oyu Tolgoi copper-gold mine in Mongolia, which is the Company’s principal and only material mineral resource property. Turquoise Hill’s ownership of the Oyu Tolgoi mine is held through a 66% interest in Oyu Tolgoi LLC; Erdenes Oyu Tolgoi LLC, a Mongolian state-owned entity, holds the remaining 34% interest.