# Rio Tinto to acquire full ownership of Turquoise Hill

- Link: https://www.directorstalkinterviews.com/rio-tinto-to-acquire-full-ownership-of-turquoise-hill/4121080218
- Published: 2022-09-01T07:49:37+01:00
- Author: Amilia Stone

**[Rio Tinto plc](https://www.directorstalkinterviews.com/ftse-company/rio-tinto-plc/rio.l)**(
[LON:RIO](https://www.directorstalkinterviews.com/ftse-company/rio-tinto-plc/rio.l))
and Turquoise Hill Resources Ltd. 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 agreement has the unanimous approval of the independent Special Committee of
Turquoise Hill’s Board of Directors, 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.

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. 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, 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.”

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