Rio Tinto's takeover of Turquoise Hill postponed again as Quebec regulator steps in
ca.finance.yahoo.com
Naimul Karim
Mon, November 7, 2022 at 11:00 a.m.·2 min read
A Turquoise Hill Resources Ltd. shareholder vote on Rio Tinto Ltd.’s attempt to take full control of the Montreal-based miner has been postponed for a second time after Quebec’s securities regulator decided to review the transaction.
Turquoise Hill on Sunday said it has postponed the vote to Nov. 15 from Nov. 8, because Autorité des marchés financiers (AMF) is in discussions with Rio Tinto regarding the “dissent rights and procedures available to holders of minority shares.”
Exercising these rights opens a door for a shareholder to sell its shares at a price it believes is fair in the event a company makes a decision it does not agree with.
In this case, investment firms Pentwater Capital Management LP and SailingStone Capital Partners LLC, which own about 15.14 per cent and 2.2 per cent of Turquoise Hill, respectively, had previously said Rio Tinto’s $43-per-share offer, which amounts to US$3.3 billion, was significantly undervalued.
But hours after the original shareholder vote scheduled for Nov. 1 was postponed to Nov. 8, Rio Tinto said those two shareholders agreed to withhold their votes and exercise their dissent rights instead.
Rio Tinto also agreed to increase the number of dissenting shares allowed to 17.5 per cent of Turquoise Hill shares, from 12.5 per cent.
If the deal closes on Nov. 15, both Pentwater and SailingStone will initially receive $34.40 for each of their shares, with the remaining amount to be paid once dissent proceedings are finalized by arbitration.
On Sept. 5, Rio Tinto made a third offer to purchase the 49 per cent of Turquoise Hill it doesn’t already own after previous bids of $34 and $40 per share were rejected.
The deal requires approval from two-thirds of Turquoise Hill shareholders, including Rio Tinto. It also requires a simple majority of the votes cast by Turquoise Hill’s minority shareholders, which include Pentwater and SailingStone.
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Turquoise Hill runs the Oyu Tolgoi mine in Mongolia, which it has said is one of the world’s largest new copper-gold mines. Through five mineralized deposits, the mine, which started operating in 2013, has the potential to operate for about 100 years, according to Turquoise Hill, which owns 66 per cent of the mine. The Mongolian government owns the rest.
In 2022, the mine is expected to produce 110,000 to 150,000 tonnes of copper and 150,000 to 170,000 ounces of gold. Production is expected to increase next year since the Oyu Tolgoi board has approved the start of the mine’s underground operations, with first production expected in 2023.
At 10:45 a.m. ET on Monday, shares of Turquoise Hill were trading at $41.78, down 18 cents.
• Email: nkarim@postmedia.com | Twitter: naimonthefield |
