Rio Tinto submits improved full and fair proposal for Turquoise Hill

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Algemeen advies 25/08/2022 06:18
LONDON--(BUSINESS WIRE)-- 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 peers1 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.

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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