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BIL
BIBLT
BIL - BHP Billiton Plc - Reiterates the compelling logic of its three for one
share proposal to combine with Rio Tinto
BHP Billiton Plc
Share code: BIL
ISIN: GB0000566504
12 December 2007
Number 37/07
BHP BILLITON REITERATES THE COMPELLING LOGIC OF ITS THREE FOR ONE SHARE PROPOSAL
TO COMBINE WITH RIO TINTO
HIGHLIGHTS(1)
* Since 2001 BHP Billiton has created significantly greater shareholder value
than Rio Tinto
* Compared to Rio Tinto, BHP Billiton has delivered superior production growth
and invested more capital in development, delivering projects on time and on
budget
* BHP Billiton has a superior growth profile to Rio Tinto due to its deeper ,
longer-term inventory of projects and development options focused on large-
scale, high-margin brownfield expansions
* BHP Billiton`s growth prospects are based on a broad range of substantial tier
one assets including:
- Western Australia Iron Ore: characterised by large, high-grade orebodies
clustered around key infrastructure with significant expansion options
- Olympic Dam (Australia): a world-class resource with conceptual staged
expansions to increase production to 730ktpa copper, 19ktpa uranium and
800kozpa gold
- Nickel: world`s third largest producer of nickel metal with conceptual
studies to at least double production at Cerro Matoso (Colombia)
- Petroleum: rapidly increasing production profile over the next few years
from projects currently in execution with further growth opportunities
being pursued
* These outstanding growth prospects underpin BHP Billiton`s proposal to Rio
Tinto of three BHP Billiton shares for one Rio Tinto share (reflecting a 41 per
cent Rio Tinto shareholder interest in the combination) which it continues to
believe offers Rio Tinto shareholders compelling value
* BHP Billiton will continue to seek an opportunity to discuss its proposal with
Rio Tinto given the significant incremental value that can only be unlocked
through a combination of the two companies
1 Introduction
On 1 November 2007, the Board of BHP Billiton wrote to the Board of Rio
Tinto proposing a combination of their respective companies to create an
organisation without peer in the natural resources industry. The Board of
BHP Billiton has sought, and continues to seek, to engage in discussions
with the Board of Rio Tinto with a view to obtaining its support and
recommendation for this proposal. To date, Rio Tinto has not agreed to
these discussions.
The proposal made to Rio Tinto involved a combination of BHP Billiton and
Rio Tinto to be completed by two inter-conditional schemes of arrangement,
with each Rio Tinto shareholder receiving three BHP Billiton shares for
each Rio Tinto share held.
This share exchange ratio implied a premium of approximately 28 per cent to
the combined volume weighted average market capitalisations of Rio Tinto
Limited and Rio Tinto plc over the month ended 31 October 2007 (being the
last date prior to BHP Billiton`s approach to Rio Tinto), based on volume
weighted average BHP Billiton share prices over the same period. Based on
BHP Billiton`s closing share prices on 9 November 2007, the total
consideration offered to shareholders of Rio Tinto Limited and Rio Tinto
plc represents a premium of approximately 15 per cent to the combined
market capitalisations of Rio Tinto Limited and Rio Tinto plc on 8 November
2007 and 7 November 2007, respectively, being market capitalisations
reflecting closing prices of Rio Tinto Limited and Rio Tinto plc shares
immediately prior to BHP Billiton`s announcement on 8 November 2007 in
response to speculation about a potential offer for Rio Tinto at a premium.
Since the public presentation of the proposal, BHP Billiton has completed
an extensive global programme of shareholder meetings. The feedback from
those meetings has confirmed a clear understanding of the industrial logic
of the proposed combination.
BHP Billiton is considering its possible next steps and continues to talk
to shareholders about their views. In the course of those conversations,
and recognising that BHP Billiton`s all share proposal requires an
assessment of relative values, a number of shareholders have requested a
more detailed picture of the relative performance and outlook of the two
companies and, in particular, BHP Billiton`s contribution to the proposed
combination.
Accordingly, BHP Billiton has released a copy of a presentation to be made
by Marius Kloppers in London this morning which will be simultaneously
webcast.
This presentation puts into context why BHP Billiton continues to believe
that its proposal of three BHP Billiton shares for one Rio Tinto share
remains compelling. The presentation will facilitate further discussions
with shareholders, which will provide further input to BHP Billiton as to
whether there is a basis for taking the proposal forward.
2 Unlocking Value
Marius Kloppers said:
"Our proposal to Rio Tinto is about value and, in particular, it is about
unlocking material value through the combination that would otherwise be
lost.
As well, as an all share proposal, our proposition is about relative value,
relative performance and relative contribution to the proposed combination.
In seeking to justify not engaging with us to discuss our proposal, Rio
Tinto has claimed that the proposal "significantly undervalues Rio Tinto
and its prospects". This statement is clearly at odds with the market`s
assessment of the relative value of the two companies before our
announcement and with the material and sustained relative outperformance by
BHP Billiton since the formation of the BHP Billiton DLC in 2001.
This demonstrated outperformance has generated a superior Total Shareholder
Return for BHP Billiton shareholders and BHP Billiton`s superior growth
prospects position us well to continue our outperformance.
Just as BHP Billiton undertook a range of timely initiatives to establish
our outperformance, so it has also taken the initiative to propose a
combination of these two companies. Our proposal would unlock material
additional value and enhance the future prospects for the combined company
to continue our strong performance in relation to other resource companies,
for the benefit of both sets of shareholders.
No shareholder is being asked to sell out at this stage of the cycle.
Instead, Rio Tinto shareholders are being asked to participate in building
an even better company and, as part of that opportunity, receive
substantial additional value through the three for one exchange ratio.
For us to achieve the benefits for shareholders that we have proposed, we
need the approval of both Rio Tinto and BHP Billiton shareholders. Both
sets of shareholders must have an incentive and see value in our proposal.
We continue to believe that our proposal is compelling and in the interests
of both sets of shareholders."
3 Further Detail of the Presentation(2)
3.1 Superior shareholder value creation
* At the formation of the BHP Billiton DLC in 2001, BHP Billiton`s market
capitalisation exceeded that of Rio Tinto by US$7bn. BHP Billiton`s market
capitalisation has since grown at a compound annual growth rate of 37 per
cent compared to Rio Tinto`s of 29 per cent. As a consequence, at the date
of the BHP Billiton proposal, the BHP Billiton market capitalisation
exceeded that of Rio Tinto by more than US$100bn
* BHP Billiton has continually invested in the development of its business
throughout the cycle, delivering growth projects on time and below budget;
BHP Billiton`s investment in organic growth projects since the formation of
the BHP Billiton DLC has been more than double that of Rio Tinto
* BHP Billiton has far exceeded Rio Tinto`s production growth (calculated
on a copper units equivalent basis) since the formation of the BHP Billiton
DLC, with a compound annual growth rate of 8 per cent per annum, compared
with Rio Tinto at 4 per cent per annum
* Since 2002, this has translated to superior compound annual growth rates
for Earnings Per Share (50 per cent p.a. vs 37 per cent p.a.) and ordinary
Dividends Per Share (29 per cent p.a. vs 11 per cent p.a.), and it has
delivered superior Total Shareholder Returns relative to Rio Tinto (30 per
cent p.a. vs 23 per cent p.a.)
3.2 Superior growth profile
* BHP Billiton has 17 major projects in execution representing capital
expenditure of US$12.3bn (our share); 12 major projects in feasibility
representing capital expenditure of US$6.1bn plus future options estimated
at more than US$50bn. BHP Billiton`s total project pipeline is more than
US$70bn
* BHP Billiton`s project pipeline is diverse by commodity and is targeted
towards high-margin businesses in low-risk geographies. BHP Billiton
expects to deliver future EBITDA with greater security and lower risk per
dollar of capital expenditure
3.3 Growth options in selected commodity groups and assets
3.3.1 Iron ore
* BHP Billiton`s Western Australian iron ore business is characterised by
large, high-grade orebodies, clustered around key infrastructure. The
three mining hubs that have been developed and the closer geographic
proximity of BHP Billiton`s mineralised assets means that future
development and expansion is expected to involve relatively less new
transport infrastructure than that likely to be required by the spread of
Rio Tinto`s resources
* There is a high level of equity ownership of the underlying resources (85
per cent -100 per cent) and operations
* On an equity basis, BHP Billiton`s compound annual growth rate in the
development of its Pilbara iron ore production is expected to exceed that
of Rio Tinto over both the combined 1990-2006 actual and 2007-2018 forecast
periods
* BHP Billiton`s additional targeted mineralisation position is similar in
size to that of Rio Tinto with a number of significant expansion options.
On an equity basis, BHP Billiton`s additional targeted Pilbara iron ore
mineralisation exceeds that of Rio Tinto
* Infrastructure expansion plans are well advanced. The rail system can be
developed to meet BHP Billiton`s future growth plans and BHP Billiton`s
port capacity expansion at Port Hedland`s inner harbour is in progress,
with well advanced plans to take its inner harbour capacity to 200Mtpa. In
addition, there is strong government support for an ultimate expansion of
the outer harbour to more than 400Mtpa, meaning total port capacity at Port
Hedland would exceed 700Mtpa for all users
* While neither BHP Billiton nor Rio Tinto "needs" the other`s iron ore
business, the combination would unlock incremental value and efficiencies
that are unique to the combination. This would result in an ability to
deliver more tonnes to customers faster than would be possible were the two
companies to remain separate
3.3.2 Olympic Dam
* Studies have indicated that the Olympic Dam orebody (100 per cent owned)
is the world`s fourth largest copper deposit; largest uranium deposit and
the fifth largest gold deposit based on remaining resources. Unlike other
prospective global copper developments, Olympic Dam is an operating mine
and a brownfield development site in a first-world location
* BHP Billiton is today confirming that its preferred expansion concept
is based on a three stage project configuration
* BHP Billiton`s conceptual studies of brownfield expansion plans
(Stages 1-3) would take production up to 730ktpa copper, 19ktpa uranium
and 800kozpa gold; this represents larger prospective copper production
than the aggregate of Rio Tinto`s identified growth projects (including
Peruvian and Mongolian reenfield development options)
3.3.3 Nickel
* BHP Billiton is currently the world`s third largest producer of nickel
metal, with the Cerro Matoso asset presenting an opportunity for further
significant production growth
* Conceptual studies for a third and fourth line at Cerro Matoso as well as
the Heap Leach project have revealed the potential to at least double
nickel production at this operation within 10 years
* Nickel West (Australia) features five brownfield development projects out
to 2014 and Ravensthorpe is scheduled to enter production in calendar year 2008
3.3.4 Petroleum
* BHP Billiton`s petroleum business has a strong history of successful
discovery and development and has a rapidly increasing production profile
over the next few years from projects currently in development
* BHP Billiton estimates that future production growth until 2010 at a 10.5
per cent compound annual growth rate is underpinned by more than six firm
projects in execution
* BHP Billiton have had significant success over the last five years in
deepwater Gulf of Mexico with multiple finds, in Trinidad with Angostura,
and in Western Australia with Stybarrow, Pyrenees and Macedon
* BHP Billiton`s development pipeline after 2010 has an extensive project
slate including Scarborough, Browse and Thebe opportunities in Western
Australia
* Major new resources are also being pursued in deep water Gulf of Mexico,
Malaysia, Colombia, South Africa and the Falkland Islands
3.4 Conclusion
* Any argument that Rio Tinto was or is "undervalued" relative to BHP
Billiton cannot be sustained and is not supported by the relative
performance of and outlook for the two companies
* BHP Billiton has been the superior performer and it has delivered
superior operational and earnings performance over the period since the
formation of the BHP Billiton DLC as demonstrated by the expansion of the
market capitalisation difference from US$7bn in 2001 to in excess of
US$100bn at the date of the proposal to Rio Tinto
* BHP Billiton`s superior track record is clearly demonstrable in its
greater compound annual growth of Total Shareholder Returns (30 per cent vs
23 per cent) over the same period
* BHP Billiton offers outstanding standalone growth prospects, represented
by a US$70bn growth pipeline featuring a focus on high EBITDA margin
businesses, and broad geographic and commodity diversity
* The proposal to combine BHP Billiton and Rio Tinto would unlock
substantial value and is logical and compelling. While each company
features high-quality businesses and growth pipelines, the incremental
earnings arising from the combination would add to the returns to both sets
of shareholders. This incremental return cannot be replicated by any other
combination. If not harvested, this value will be lost, to the detriment
of both sets of shareholders
* The proposal incorporates a premium of 28 per cent to the combined volume
weighted average market apitalizations of Rio Tinto Limited and Rio Tinto
plc over the month ended 31 October 2007 (being the last date prior to BHP
Billiton`s approach to Rio Tinto), based on volume weighted average BHP
Billiton share prices over the same period. If the two companies had merged
on a nil premium basis at that time, Rio Tinto shareholders would have
owned 36 per cent of the combined company and the share exchange ratio
would have been 2.4:1. Each Rio Tinto shareholder is being offered three
BHP Billiton shares for each Rio Tinto share, up from the 2.4 ratio implied
by the market values prior to the BHP Billiton approach. This means Rio
Tinto shareholders would own 41 per cent of the combined company, up from
the 36 per cent before the approach. This is a material value uplift but,
as well, Rio Tinto shareholders would share in the additional value
unlocked by the combination each and every year that they remain a
shareholder
* It is clearly and simply a compelling proposal. It is, however, a
combination that must create value and benefit for shareholders of BHP
Billiton as well as Rio Tinto
* BHP Billiton looks forward to the opportunity to discuss its proposal
with Rio Tinto
4 Further Details
There will be a joint presentation to analysts and investors on this
announcement in London at 9:00 AM GMT (8:00 PM AEDT) today at Goldman Sachs
International, River Court Building, 120 Fleet Street, London EC4A 2BB,
with a web casting facility on BHP Billiton`s web site
(www.bhpbilliton.com). There will also be a dial-in conference call
facility for the presentation. Dial-in details are:
Australia: +61 29 274 0790 or 1800 444 103
Canada: 1 866 228 9189
Hong Kong: +852 3009 5027
Japan: +81 3 357 08179 or 00531 440 034
New Zealand: 64 9 912 1386 or 0508 555 365
South Africa: 0800 99 1273
Singapore: +65 6823 2087 or 800 448 1303
UK caller paid: +44 207154 2683 or 0800 358 5268
US caller paid: +1 480 248 5081 or 1 800 762 8779
Emergency back-up (US): + 1 480 248 5081
A recording of the presentation will be accessible through BHP Billiton`s
web site - www.bhpbilliton.com.
Contacts:
Australia United Kingdom
Samantha Evans, Media Relations Andre Liebenberg, Investor
Tel: +61 3 9609 2898 Relations
Mobile: +61 400 693 915 Tel: +44 20 7802 4131
email: Samantha.Evans@bhpbilliton.com Mobile: +44 7920 236 974
email:
Andre.Liebenberg@bhpbilliton.com
Don Carroll, Investor Relations Illtud Harri, Media Relations
Tel: +61 3 9609 2686 Tel: +44 20 7802 4195
Mobile: +61 417 591 938 Mobile: +44 7920 237 246
email: Don.A.Carroll@bhpbilliton.com email: Illtud.Harri@bhpbilliton.com
United States South Africa
Tracey Whitehead, Investor & Media Alison Gilbert, Investor Relations
Relations Tel: SA +27 11 376 2121
Tel: US +1 713 599 6100 or UK +44 20 7802 4183
or UK +44 20 7802 4031 Mobile: +44 7769 936 227
Mobile: +44 7917 648 093 Email:
email: Tracey.Whitehead@bhpbilliton.com Alison.Gilbert@bhpbilliton.com
This announcement is for information purposes only and does not constitute an
offer or invitation to acquire or dispose of any securities or investment advice
or a proposal to make a takeover bid in any jurisdiction.
The directors of BHP Billiton accept responsibility for the information
contained in this announcement. Having taken all reasonable care to ensure that
such is the case, the information contained in this announcement is, to the best
of the knowledge and belief of the directors of BHP Billiton, in accordance with
the facts and contains no omission likely to affect its import.
The release, publication or distribution of this announcement in jurisdictions
other than the United Kingdom and Australia may be restricted by law and
therefore any persons who are subject to the laws of any other jurisdiction
should inform themselves about, and observe, any applicable requirements. This
announcement has been prepared for the purposes of complying with English and
Australian law and the UK City Code and the information disclosed may not be the
same as that which would have been disclosed if this announcement had been
prepared in accordance with the laws of other jurisdictions.
It is possible that this announcement could or may contain forward looking
statements that are based on current expectations or beliefs, as well as
assumptions about future events. Reliance should not be placed on any such
statements because of their very nature, they are subject to known and unknown
risks and uncertainties and can be affected by other factors that could cause
actual results, and BHP Billiton`s plans and objectives, to differ materially
from those expressed or implied in the forward looking statements.
None of the statements concerning expected cost savings, revenue benefits (and
resulting incremental EBITDA) and EPS accretion in this announcement should be
interpreted to mean that the future earnings per share of the enlarged BHP
Billiton group for current or future financial years will necessarily match or
exceed the historical or published earnings per share of BHP Billiton, and the
actual cost savings and revenue benefits (and resulting EBITDA enhancement) may
be materially greater or less than estimated.
There are several factors which could cause actual results to differ materially
from those expressed or implied in forward looking statements. Among the
factors that could cause actual results to differ materially from those
described in the forward looking statements are BHP Billiton`s ability to
successfully combine the businesses of BHP Billiton and Rio Tinto and to realise
expected synergies from that combination, changes in the global, political,
economic, business, competitive, market and regulatory forces, future exchange
and interest rates, changes in tax rates and future business combinations or
dispositions.
BHP Billiton does not undertake any obligation (except as required by law, the
Listing Rules of ASX Limited or the rules of the UK Listing Authority and the
London Stock Exchange) to revise or update any forward looking statement
contained in this announcement, regardless of whether those statements are
affected as a result of new information, future events or otherwise.
This announcement does not constitute an offer to sell or invitation to purchase
any securities or the solicitation of any vote or approval in any jurisdiction.
Goldman Sachs International and its affiliates, and Gresham Partners are acting
for BHP Billiton and no-one else in connection with the proposals referred to in
this document and will not be responsible to any other person for providing the
protections afforded to their respective clients, or for providing advice in
relation to such proposals or any other transaction, arrangement or matter
referred to herein.
In connection with BHP Billiton`s proposed combination with Rio Tinto by way of
the proposed Schemes of Arrangement ("Schemes"), the new BHP Billiton shares to
be issued to Rio Tinto shareholders under the terms of the Schemes have not
been, and will not be, registered under the US Securities Act of 1933, as
amended, or under the securities laws of any state, district or other
jurisdiction of the United States, and no regulatory clearances in respect of
the new BHP Billiton shares have been, or (possibly with certain limited
exceptions) will be, applied for in any jurisdiction of the United States. It
is expected that the new BHP Billiton shares will be issued in reliance upon the
exemption from the registration requirements of the US Securities Act provided
by Section 3(a)(10) thereof.
In the event that the proposed Schemes do not qualify (or BHP Billiton otherwise
elects pursuant to its right to proceed with the transaction in a manner that
does not qualify) for an exemption from the registration requirements of the US
Securities Act, BHP Billiton would expect to register the offer and sale of
securities it would issue to Rio Tinto US shareholders and Rio Tinto ADS holders
by filing with the SEC a Registration Statement (the "Registration Statement"),
which will contain a prospectus ("Prospectus"), as well as other relevant
materials. No such materials have yet been filed. This communication is not a
substitute for any Registration Statement or Prospectus that BHP Billiton may
file with the SEC.
U.S. INVESTORS AND U.S. HOLDERS OF RIO TINTO SECURITIES AND ALL HOLDERS OF RIO
TINTO ADSs ARE URGED TO READ ANY REGISTRATION STATEMENT, PROSPECTUS AND ANY
OTHER DOCUMENTS MADE AVAILABLE TO THEM AND/OR FILED WITH THE SEC REGARDING THE
POTENTIAL TRANSACTION, AS WELL AS ANY AMENDMENTS AND SUPPLEMENTS TO THOSE
DOCUMENTS, IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.
If and when filed, investors and security holders will be able to obtain a free
copy of the Registration Statement, the Prospectus as well as other relevant
documents filed with the SEC at the SEC`s website (http://www.sec.gov), once
such documents are filed with the SEC. Copies of such documents may also be
obtained from BHP Billiton without charge, once they are filed with the SEC.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Takeover Code (the "Code"), if any
person is, or becomes, "interested" (directly or indirectly) in 1 per cent or
more of any class of "relevant securities" of any of BHP Billiton Plc, BHP
Billiton Limited, Rio Tinto plc or Rio Tinto Limited, all "dealings" in any
"relevant securities" of that company (including by means of an option in
respect of, or a derivative referenced to, any such "relevant securities") must
be publicly disclosed by no later than 3.30 pm (London time) on the London
business day following the date of the relevant transaction.
The relevant disclosure must also include details of all "interests" or
"dealings" in any class of "relevant securities" of the other company which is
part of its DLC structure. Therefore, if, for example, a disclosure is being
made in respect of a dealing in securities of BHP Billiton Plc, an accompanying
disclosure must also be made of interests or short positions held in securities
of BHP Billiton Limited, even if the person`s interest or short position is less
than 1 per cent of the relevant class. The same approach should be adopted in
respect of securities of Rio Tinto plc and Rio Tinto Limited. Therefore, each
disclosure should consist of two Rule 8.3 disclosure forms, one for the Plc arm
of the DLC structure and one for the Limited arm of the DLC structure, released
as one announcement.
This requirement will continue until the date on which the "offer period" ends.
If two or more persons act together pursuant to an agreement or understanding,
whether formal or informal, to acquire an "interest" in "relevant securities" of
BHP Billiton Plc, BHP Billiton Limited, Rio Tinto plc or Rio Tinto Limited, they
will be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant
securities" of either BHP Billiton or Rio Tinto by BHP Billiton or Rio Tinto, or
by any of their respective "associates", must be disclosed by no later than
12.00 noon (London time) on the London business day following the date of the
relevant transaction.
A disclosure table, giving details of the companies in whose "relevant
securities" "dealings" should be disclosed, and the number of such securities in
issue, can be found on the Takeover Panel`s website at
www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic
exposure, whether conditional or absolute, to changes in the price of
securities. In particular, a person will be treated as having an "interest" by
virtue of the ownership or control of securities, or by virtue of any option in
respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be found on the
Panel`s website. If you are in any doubt as to whether or not you are required
to disclose a "dealing" under Rule 8, you should consult the Panel.
APPENDIX I
Bases and Sources of Information
(a) Unless otherwise stated, financial and other information concerning BHP
Billiton and Rio Tinto has been extracted or derived from the interim
statements, preliminary results, investor presentations and the annual
report and accounts of each company for the relevant periods, or from
published sources or from BHP Billiton management sources.
(b) Unless otherwise stated, average share prices and market capitalisations
throughout this announcement reflect volume-weighted averages.
(c) The market value of BHP Billiton Limited shares is based on the closing
price of a BHP Billiton Limited share of A$46.10, provided by the
Australian Securities Exchange on 31 October 2007, being the last date
prior to BHP Billiton`s approach to Rio Tinto.
(d) The market value of BHP Billiton Plc shares is based on the closing middle-
market price of a BHP Billiton Plc share of GBP18.31, provided by the
London Stock Exchange on 31 October 2007, being the last date prior to BHP
Billiton`s approach to Rio Tinto.
(e) The volume weighted average closing share price over the calendar month
ended 31 October 2007, being the last date prior to BHP Billiton`s approach
to Rio Tinto, is A$45.77 for BHP Billiton Limited and GBP17.99 for BHP
Billiton Plc.
(f) The market value of BHP Billiton Limited shares is based on the closing
price of a BHP Billiton Limited share of A$42.47, provided by the
Australian Securities Exchange on 9 November 2007, being the last
practicable date prior to BHP Billiton`s announcement of 12 November.
(g) The market value of BHP Billiton Plc shares is based on the closing middle-
market price of a BHP Billiton Plc share of GBP16.28, provided by the
London Stock Exchange on 9 November 2007, being the last practicable date
prior to BHP Billiton`s announcement of 12 November.
(h) As at 9 November 2007 (being the last practicable date prior to BHP
Billiton`s announcement of 12 November 2007) there were 2,256,993,546 BHP
Billiton Plc shares (including 20,072,510 BHP Billiton Plc shares held by
BHP Billiton Limited) and 3,358,359,496 BHP Billiton Ltd shares in issue.
(i) The market value of Rio Tinto Limited shares is based on the closing price
of a Rio Tinto Limited share of A$110.00, provided by the Australian
Securities Exchange on 31 October 2007, being the last date prior to BHP
Billiton`s approach to Rio Tinto.
(j) The market value of Rio Tinto plc shares is based on the closing middle-
market price of a Rio Tinto plc share of GBP44.90, provided by the London
Stock Exchange on 31 October 2007, being the last date prior to BHP
Billiton`s approach to Rio Tinto.
(k) The volume weighted average closing share price over the calendar month
ended 31 October 2007, being the last date prior to BHP Billiton`s approach
to Rio Tinto is A$109.20 for Rio Tinto Limited and GBP43.09 for Rio Tinto
plc.
(l) The market value of Rio Tinto Limited shares is based on the closing price
of a Rio Tinto Limited share of A$130.90, provided by the Australian
Securities Exchange on 9 November 2007, being the last practicable date
prior to BHP Billiton`s announcement of 12 November.
(m) The market value of Rio Tinto plc shares is based on the closing middle-
market price of a Rio Tinto plc share of GBP56.24, provided by the London
Stock Exchange on 9 November 2007, being the last practicable date prior to
BHP Billiton`s announcement of 12 November.
(n) As at 9 November 2007 (being the last practicable date prior to BHP
Billiton`s announcement of 12 November 2007) there were 456,815,943 Rio
Tinto Limited shares and 997,082,015 Rio Tinto plc shares in issue. Rio
Tinto plc, through THA Holdings Australia Pty Limited, holds 171,072,520
shares in Rio Tinto Limited.
(o) All references to the share capital or market capitalisation of Rio Tinto
Limited refer to the publicly traded shares, or free float, of Rio Tinto
Limited, which excludes the Rio Tinto Limited shares held by a wholly-owned
subsidiary of Rio Tinto plc.
(p) All references to the share capital or market capitalisation of BHP
Billiton exclude shares held as treasury shares and shares currently held
by BHP Billiton Limited in BHP Billiton Plc and not yet cancelled.
(q) The exchange rate of 2.077 US$/GBP and 0.927 US$/A$ on 31 October 2007.
(r) The exchange rate of 2.095 US$/GBP and 0.914 US$/A$ on 9 November 2007.
APPENDIX II
Definitions
"GBP" United Kingdom pounds sterling;
"A$" Australian dollars;
"Alcan" Alcan, Inc;
"Australia" the Commonwealth of Australia, its states,
territories and possessions;
"BHP Billiton" BHP Billiton Plc or BHP Billiton Limited, or both,
or the BHP Billiton group, as the context may
require;
"Board" or "Directors" means the directors of Rio Tinto plc and Rio Tinto
Limited, or the directors of BHP Billiton Plc and
BHP Billiton Limited, or the directors of the
combined group, as the context may require;
"EBITDA" Earnings before Interest, Taxes, Depreciation and
Amortisation;
"Financial Services Authority" the UK Financial Services Authority, which is
an independent non-governmental body given
statutory powers by the Financial Services and
Markets Act 2000;
"Listing Rules" the listing rules of the UK Listing Authority;
"Panel" the UK Panel on Takeovers and Mergers;
"Rio Tinto ADSs" Rio Tinto plc`s American Depositary Shares
representing four Rio Tinto plc shares per
American Depositary Share and listed on the New
York Stock Exchange;
"Rio Tinto" Rio Tinto plc or Rio Tinto Limited, or both, or
the Rio Tinto group, as the context may require;
"SEC" United States Securities and Exchange Commission;
"UK City Code" the UK City Code on Takeovers and Mergers;
"UK Listing Authority" the Financial Services Authority acting in its
capacity as the competent authority for the
purposes of Part VI of the Financial Services and
Markets Act 2000;
"United Kingdom" the United Kingdom of Great Britain and Northern
Ireland;
"US Securities Act" US Securities Act of 1933, as amended from time to
time; and
"US$" United States dollars.
(1) Further details are contained in this announcement
(2) This section is a summary of the key points that are made in BHP Billiton`s
presentation titled "BHP Billiton and Rio Tinto: A Matter of Value"
released today. A copy of the presentation is available on
www.bhpbilliton.com.
Date: 12/12/2007 09:59:01 Produced by the JSE SENS Department.
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