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BIL
BIBLT
BIL - BHP Billiton Plc - Rio Tinto Offers No Longer In The Best Interests Of BHP
Billiton Shareholders
BHP Billiton Plc
JSE Code: BIL
ISIN: GB0000566504
25 November 2008
Number 38/08
RIO TINTO OFFERS NO LONGER IN THE BEST INTERESTS OF BHP BILLITON SHAREHOLDERS
The BHP Billiton Board today decided that it no longer believes that completion
of the offers for Rio Tinto would be in the best interests of BHP Billiton
shareholders.
BHP Billiton Chairman, Don Argus, said today`s decision was first and foremost
about BHP Billiton shareholder value and risks to that shareholder value.
"We have said that we would only seek to complete the transaction if it was in
the best interests of BHP Billiton`s shareholders. While we have not changed
our view of the basic industrial logic of the combination, or of the longer term
prospects for natural resource demand growth driven by emerging economies, we
have concerns about the continued deterioration of near term global economic
conditions, the lack of any certainty as to the time it will take for conditions
to improve and the risks that these issues imply for shareholder value."
Marius Kloppers, BHP Billiton`s CEO, said:
"We have previously said that similar cultures and the overlap of key assets and
infrastructure make this a compelling combination. Recent global events and
associated falls in commodity prices have, however, altered risk dimensions.
BHP Billiton is very focussed on balance sheet strength. Accordingly, the
greater debt exposure of the combination plus the difficulty of divesting assets
have increased the risks to shareholder value to an unacceptable level."
Commodity price falls in the last month are illustrated by reference to the LME
copper cash price. Over the 12 month period to 21 October 2008 the fall was
approximately 43%. In the one month to 21 November 2008 the fall was 23%. These
falls are paralleled by market movements. For example, for the 12 month period
the ASX S&P/ASX 200 index fell by 36% and, for the one month period it fell by
21%.
Regarding antitrust requirements, BHP Billiton has received clearance without
remedies from the US Department of Justice and the Australian Competition and
Consumer Commission. BHP Billiton understands that the European Commission will
require divestments in iron ore and metallurgical coal to deal with its
concerns. In the normal range of economic conditions BHP Billiton would have
been prepared to offer remedies which we believe would have been both acceptable
and manageable.
However, given the current economic circumstances and uncertainty regarding our
ability to achieve fair divestment values in the required time frames, these
remedies would contribute to the cost and risk of the transaction. Against this
background BHP Billiton will not offer any remedies to the European Commission
antitrust authorities, and BHP Billiton expects that without remedies European
Commission clearance will be withheld. The European Commission`s formal review
process will likely continue until early to mid January 2009.
Other key elements that have substantially increased the risks to shareholder
value for the combined company to unacceptable levels include:
- The prospective level of debt of the combined company, compared to the
possible cash-flows required to service and repay that debt against the
background of difficult economic conditions over the near term; and
- Concerns regarding the ability to divest other non-core assets already
flagged for divestment by Rio Tinto including Rio Tinto Alcan Packaging and
Rio Tinto Alcan Engineered Products which impacts the ability to reduce
debt and requires the continued management of these complex businesses.
If, despite BHP Billiton offering no remedies, European Commission clearance
were to occur, BHP Billiton would be required to seek the approval of its
shareholders in Extraordinary General Meetings. Were this to happen, BHP
Billiton`s directors intend to recommend that its shareholders vote against
approving the transaction.
BHP Billiton intends to write off the costs of approximately $450 million
incurred in progressing this matter over the eighteen months up to today`s
announcement in the December 2008 half year results.
Despite the near term challenges, BHP Billiton is in a very strong position with
net debt of only US$6.3bn at 31 October, 2008 and a portfolio of assets that
will continue to deliver sound cash-flows.
Marius Kloppers said:
"BHP Billiton will continue to invest to be in a position to meet long term
customer demand. Our announcement today that the Board has approved RGP5, the
next major growth project for our iron ore business, demonstrates this. Our
strong balance sheet is a competitive advantage in times like these. Together
with our portfolio of long-life, low cost, expandable, Tier 1 assets, we believe
this places us in a better position than any other major mining company to deal
with these uncertain times. BHP Billiton`s priorities for cash flows remain to
invest in its core businesses, manage its balance sheet to a solid single A
credit rating, maintain its progressive dividend policy and return any surplus
cash to shareholders."
Disclaimer:
The directors of BHP Billiton Limited and BHP Billiton Plc ("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.
Subject to the above, neither BHP Billiton nor any of its directors, officers,
employees or advisers nor any other person makes any representation or warranty,
express or implied, as to, and accordingly no reliance should be placed on, the
fairness, accuracy or completeness of the information contained in this
announcement or of the views given or implied. To the extent permitted by law,
neither BHP Billiton nor any of its directors, officers, employees or advisers
nor any other person shall have any liability whatsoever for any errors or
omissions or any loss howsoever arising, directly or indirectly, from any use of
this information or its contents or otherwise arising in connection therewith.
Information about Rio Tinto plc and Rio Tinto Limited ("Rio Tinto") is based on
public information which has not been independently verified.
This announcement is for information purposes only and does not constitute or
form part of any offer for sale or issue of any securities or an offer or
invitation to purchase or subscribe for any such securities, nor shall it or any
part of it be relied on in connection with, any contract or investment decision,
nor does it constitute a proposal to make a takeover bid or the solicitation of
any vote or approval in any jurisdiction, nor shall there be any sale of
securities in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of
any such jurisdiction (or under an exemption from such requirements). No
offering of securities shall be made into the United States except pursuant to
registration under the US Securities Act of 1933, as amended, or an exemption
therefrom. Neither this announcement nor any copy of it may be taken or
transmitted or distributed or redistributed (directly or indirectly) in Japan or
Malaysia. The distribution of this document in other jurisdictions may be
restricted by law and persons into whose possession this document comes should
inform themselves about, and observe, any such restrictions.
Certain statements in this announcement are forward-looking statements
(including, without limitation, statements typically containing words such as
"intends," "expects," "anticipates," "targets," plans," "estimates" and words of
similar import.) These statements are based on current expectations and beliefs
and numerous assumptions regarding BHP Billiton`s present and future business
strategies and the environments in which BHP Billiton will operate in the future
and such assumptions, expectations and beliefs may or may not prove to be
correct and by their nature, are subject to a number of known and unknown risks
and uncertainties that could cause actual results, performance and achievements
to differ materially.
Factors that could cause actual results or performance to differ materially from
those expressed or implied in the forward-looking statements include, but are
not limited to, the risk factors discussed in BHP Billiton`s filings with the US
Securities and Exchange Commission ("SEC") (including in Annual Reports on Form
20-F) which are available at the SEC`s website (http://www.sec.gov). Save as
required by law or the rules of the UK Listing Authority and the London Stock
Exchange, the UK Takeover Panel, or the listing rules of ASX Limited, BHP
Billiton undertakes no duty to update any forward-looking statements in this
presentation.
References in this presentation to "$" are to United States dollars unless
otherwise specified.
Information Relating to the US Offer for Rio Tinto plc
In connection with the offer and sale of securities BHP Billiton would issue to
Rio Tinto plc US shareholders and Rio Tinto plc ADS holders, BHP Billiton has
filed with the SEC a Registration Statement on Form F-4 (the "Registration
Statement"), which contains a preliminary prospectus (the "Prospectus"), and
will file additional relevant materials with the SEC. This communication is not
a substitute for the Registration Statement or the Prospectus that BHP Billiton
has filed, or any amendments or supplements to those documents BHP Billiton may
file, with the SEC.
US INVESTORS AND US HOLDERS OF RIO TINTO PLC SECURITIES AND ALL HOLDERS OF RIO
TINTO PLC ADSs ARE URGED TO READ THE REGISTRATION STATEMENT, THE 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, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.
Investors and security holders are able to obtain a free copy of the
Registration Statement and the Prospectus as well as other relevant documents
filed with the SEC at the SEC`s website (http://www.sec.gov). Copies of such
documents may also be obtained from BHP Billiton without charge.
Information for US Holders of Rio Tinto Limited Shares
BHP Billiton Limited is not required to, and does not plan to, prepare and file
with the SEC a registration statement in respect of the Rio Tinto Limited Offer.
Accordingly, Rio Tinto Limited shareholders should carefully consider the
following:
The Rio Tinto Limited Offer will be an exchange offer made for the securities of
a foreign company. Such offer is subject to disclosure requirements of a foreign
country that are different from those of the United States. Financial statements
included in the document will be prepared in accordance with foreign accounting
standards that may not be comparable to the financial statements of United
States companies.
Information Relating to the US Offer for Rio Tinto plc and the Rio Tinto Limited
Offer for Rio Tinto shareholders located in the US
It may be difficult for you to enforce your rights and any claim you may have
arising under the US federal securities laws, since the issuers are located in a
foreign country, and some or all of their officers and directors may be
residents of foreign countries. You may not be able to sue a foreign company or
its officers or directors in a foreign court for violations of the US securities
laws. It may be difficult to compel a foreign company and its affiliates to
subject themselves to a US court`s judgment.
You should be aware that BHP Billiton may purchase securities of either Rio
Tinto plc or Rio Tinto Limited otherwise than under the exchange offer, such as
in open market or privately negotiated purchases.
Further information on BHP Billiton can be found on our Internet site:
www.bhpbilliton.com
Australia United Kingdom & South Africa
Samantha Evans, Media Andre Liebenberg, Investor Relations
Relations Tel: +44 20 7802 4131 Mobile: +44 7920
Tel: +61 3 9609 2898 Mobile: 236 974
+61 400 693 915 email: Andre.Liebenberg@bhpbilliton.com
email:
Samantha.Evans@bhpbilliton.co
m
Peter Ogden, Media Relations Illtud Harri, Media Relations
Tel: +61 3 9609 2812 Mobile: Tel: +44 20 7802 4195 Mobile: +44 7920
+61 428 599 190 237 246
Email: email: Illtud.Harri@bhpbilliton.com
Peter.Ogden@bhpbilliton.com
Leng Lau, Investor Relations United States
Tel: +61 3 9609 4202 Mobile: Scott Espenshade, Investor Relations
+61 403 533 706 Tel: +1 713 599 6431 Mobile: +1 713 208
email: 8565
Leng.Y.Lau@bhpbilliton.com email: Scott.Espenshade@bhpbilliton.com
Ruban Yogarajah, Media Relations
Tel: US +1 713 966 2907 or UK +44 20 7802
4033
Mobile: UK +44 7827 082 022
email: Ruban.Yogarajah@bhpbilliton.com
BHP Billiton Limited ABN 49 BHP Billiton Plc Registration
004 028 077 number 3196209
Registered in Australia Registered in England and Wales
Registered Office: 180 Registered Office: Neathouse
Lonsdale Street Melbourne Place London SW1V 1BH United
Victoria 3000 Kingdom
Telephone +61 1300 554 757 Telephone +44 20 7802 4000
Facsimile +61 3 9609 3015 Facsimile +44 20 7802 4111
The BHP Billiton Group is headquartered in Australia
Date: 25/11/2008 10:35:10 Produced by the JSE SENS Department.
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