Rio Tinto and Turquoise Hill enter into definitive arrangement agreement for Rio Tinto to acquire full ownership of Turquoise Hill


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 Ltd (TSX: TRQ) (NYSE: TRQ) (“Turquoise Hill”) which Rio Tinto not currently owned by you (the “Transaction”).

Turquoise Hill’s independent directors have unanimously recommended that Turquoise Hill’s minority shareholders vote in favor of the transaction and, together with Turquoise Hill’s senior executives, have entered into voting support agreements regarding all shares of Turquoise Hill that they own or control.

The transaction offers significant value to Turquoise Hill’s minority shareholders with the certainty of an all-cash offer of C$43 per share, which is Rio Tinto’s best and last offer. This represents a 67% premium to Turquoise Hill’s closing price of C$25.68 per share on March 11, 2022, the day before 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 conditions precedent), which is expected to be repaid from a raising of funds from shareholders in the first half of 2023 if the Transaction is not approved by shareholders. Turquoise Hill estimated that it would need a total of $3.6 billion in additional funding to complete the project. It aims to solve this problem through a financing plan including the renegotiation of debt repayment dates, which requires the unanimous consent of participating lenders. The success of this debt renegotiation and certain other financing plans is uncertain and, if unsuccessful, may require further capital contributions from shareholders. The transaction provides certainty of Oyu Tolgoi’s funding needs and mitigates any additional funding risk to shareholders.

Rio Tinto Chief Executive Jakob Stausholm said: “This transaction will simplify governance, improve efficiency and create greater funding certainty for the long-term success of the Oyu Tolgoi project. Rio Tinto’s offer guarantees Turquoise Hill’s minority shareholders exceptional value through a significant all-cash premium for their shares. After lengthy negotiations, the terms of the transaction are final and there will be no further price increases. We look forward to working with the Turquoise Hill Board of Directors to ensure Turquoise Hill shareholders are able to realize the significant and immediate value of the transaction.

Bold Baatar, Managing Director of Rio Tinto Copper, said: “Rio Tinto will work in direct partnership with the Government of Mongolia and Erdenes Oyu Tolgoi to realize 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 provides the financial security necessary to ensure that the Oyu Tolgoi project can be developed without having to ask minority shareholders to contribute significant additional funds.

The transaction will be implemented by way of a Canadian plan of arrangement and will require the approval of 66.67% of the votes cast by all shareholders of Turquoise Hill (including Rio Tinto) and the approval of a majority of the votes cast by the minority shareholders of Turquoise Colline. A special meeting of Turquoise Hill shareholders to approve the transaction is expected as soon as possible in the fourth quarter of 2022 and, if approved, the transaction is expected to close shortly thereafter. Details of the transaction and the arrangement agreement will be provided in the management information circular that will be mailed to shareholders of Turquoise Hill.


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 exclusive counsel to the Turquoise Hill Special Committee and Blake, Cassels & Graydon LLP is acting as legal counsel to the Special Committee. TD Securities was retained by the Special Committee as the independent valuator.

Norton Rose Fulbright Canada LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are acting as Canadian and US counsel to Turquoise Hill, respectively.

Notes to Editors

Turquoise Hill is an international mining company specializing in the operation of the Oyu Tolgoi copper-gold mine in Mongolia. Turquoise Hill owns 66% of the Oyu Tolgoi mine, with the government of Mongolia owning the remaining 34%. The total consideration payable will be US$3.3 billion1 which will be drawn from existing cash reserves.

Turquoise Hill had a pre-tax profit of US$993 million as of December 31, 2021 and a gross asset value of US$14,791 million as of June 30, 2022. Profits and gross assets are currently consolidated in Rio’s accounts. Tinto.

The transaction represents a 67% premium to Turquoise Hill’s closing price of C$25.68 per share on March 11, 2022, the day before Rio Tinto’s non-binding public proposal to acquire Turquoise Hill, and a premium 125% from Turquoise Hill’s closing price. of CA$19.12 per share on January 24, 2022, the day before an agreement on a way forward between the Government of Mongolia, Turquoise Hill and Rio Tinto that saw the start of the underground mine at Oyu Tolgoi.

If the transaction is successful, Rio Tinto will own a 66% stake in Oyu Tolgoi, with the remaining 34% held by Mongolia.

Rio Tinto Canada 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 which allow it to acquire additional securities of Turquoise Hill in order to maintain its proportionate interest in Turquoise Hill from time to time.

This announcement is authorized for publication on the market by, and a copy of the related early warning report may be obtained from the Corporate Secretary of the Rio Tinto Group.

Turquoise Hill’s head office 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 a solicitation of an offer to sell or buy, any securities. Any offer, solicitation or offer to buy or sell securities will be made in accordance with registration and other requirements under applicable law.

Forward-looking statements

This press release contains “forward-looking statements” within the meaning of the United States 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”, “expect”, “project”, “anticipate”, “estimate”, “plan”, “believe”, “expect”, “may”, “should”, ” will”, “aim”, “pursue”, “seek” or similar expressions generally identify such forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that 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. Rio Tinto expressly disclaims any obligation or undertaking (unless required by applicable law, the UK listing rules, the Financial Conduct Authority’s disclosure guidelines and transparency rules and the listing rules of the Australian Securities Exchange) to issue any update or revision to any forward-looking statement contained herein to reflect any change in its expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based. All information provided in this press release, including any forward-looking statements contained herein, speaks only as of the date of this press release.

The person responsible for arranging the publication of this announcement on behalf of Rio Tinto plc is Steve Allen, Group Corporate Secretary.

LEI: 213800YOEO5OQ72G2R82

Ranking: 3.1. Additional regulated information required to be disclosed under the law of a Member State.

This announcement is authorized for market distribution by Steve Allen, Corporate Secretary of the Rio Tinto Group.


1 Based on a CAD/USD exchange rate of 0.764. as of August 31, 2022.

Source link