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BHP Billiton PLC21 March 2005 PART 2 11. THE BHP BILLITON GROUP 11.1 Overview of the BHP Billiton Group The BHP Billiton Group was created through the Dual Listed Companies (DLC) merger on 29 June 2001 of BHP Limited (now BHP Billiton Limited) and Billiton Plc (now BHP Billiton Plc). BHP Billiton Limited and BHP Billiton Plc continue to exist as separate companies but operate on a combined basis and are run by a unified management team. Shareholders in each company have equivalent economic and voting rights in the BHP Billiton Group as a whole. The global headquarters of the BHP Billiton Group are located in Melbourne, Australia. The DLC structure maintains pre-existing primary listings on ASX (through BHP Billiton Limited) and the London Stock Exchange (through BHP Billiton Plc) along with a secondary listing on the Johannesburg Stock Exchange (through BHP Billiton Plc) and ADR listings on the New York Stock Exchange. The BHP Billiton Group is the world's largest diversified resources group. It holds industry leader or near industry leader positions in major commodity businesses including aluminium, energy coal and metallurgical coal, copper, ferro-alloys, iron ore, silver, lead and titanium minerals, and has substantial interests in oil, gas, liquefied natural gas, nickel, diamonds and zinc. The BHP Billiton Group has created twin marketing hubs, in Singapore and The Hague, to ensure innovative customer solutions and superior customer service. BHP Billiton has 35,000 employees working in more than 100 operations in approximately 20 countries. 11.2 Where to find further information on the BHP Billiton Group Further information about the BHP Billiton Group can be found at www.bhpbilliton.com. In addition, information on the BHP Billiton Group can be found on ASX's website at www.asx.com.au. 12. REASONS FOR THE ACQUISITION BHP Billiton expects that the acquisition of WMC Resources will provide a number of benefits. These include the following: • WMC Resources' nickel business comprises an outstanding set of assets, in terms of operating capability, country risk, scale and environmental standards, which will complement BHP Billiton's existing nickel business. The combined business will have a range of operations, products and technologies that will provide a robust and flexible platform for further growth. • BHP Billiton will have operating control of two of the world's four largest copper deposits. BHP Billiton's track record in developing and operating Escondida, the world's largest copper mine, ideally equips it to maximise the value of the large, long-life Olympic Dam resource base. Olympic Dam is the world's fourth largest copper resource and one of the world's 10 largest gold deposits. • The acquisition of WMC Resources will establish BHP Billiton as a major producer of uranium with the largest resource base in the world. Uranium is an important energy source in an increasingly energy intensive world. Not only is this valuable on a stand-alone basis but it complements BHP Billiton's existing energy portfolio of oil, gas and coal. • The inclusion of WMC Resources' businesses and opportunities in BHP Billiton's portfolio enhances its options to develop the production necessary to supply raw materials to high growth markets in the decades ahead. • BHP Billiton is best placed to maximise synergies in the nickel and copper business, marketing and other corporate functions. BHP Billiton will eliminate duplicate functions by using the proven systems and processes that were successfully used following the BHP Billiton merger in 2001. The annual corporate cost efficiencies are estimated to total A$115 million (US$91 million), with a one-time cost of A$120 million (US$95 million). PART E - AUSTRALIAN TAX CONSEQUENCES 13. AUSTRALIAN TAX IMPLICATIONS FOR WMC RESOURCES SHAREHOLDERS The following is a general description of the Australian income and capital gains tax consequences for shareholders on disposing of their WMC Resources Shares, in return for cash consideration. The comments set out below are relevant to WMC Resources shareholders who hold their WMC Resources Shares as capital assets for the purpose of investment and who do not (and would not) hold those shares in connection with the conduct of a business or under an Employee Share Scheme. These comments relate to WMC Resources Shares, and not to options or other rights held over WMC Resources Shares. Certain WMC Resources shareholders, such as those engaged in a business of trading or investment, those who acquired their WMC Resources Shares for the purpose of resale at a profit or those which are banks, insurance companies or superannuation funds, will or may be subject to special or different tax consequences peculiar to their circumstances. WMC Resources shareholders who are not resident in Australia for tax purposes should also take into account the tax consequences, under the laws of their country of residence, as well as under Australian law. The following is based upon taxation law and practice in effect at the date of this Bidder's Statement. It is not intended to be an authoritative or complete analysis of the taxation laws of Australia, as they apply to the specific circumstances of any particular shareholder. Each shareholder is advised to seek independent professional advice regarding the Australian tax consequences of disposing of their WMC Resources Shares according to their own particular circumstances. 14. SHAREHOLDERS WHO ARE AUSTRALIAN RESIDENTS The disposal of WMC Resources Shares which were acquired or are deemed to have been acquired on or after 20 September 1985 and which are held on capital account, will generally have Australian capital gains tax (CGT) implications. The disposal of such WMC Resources Shares pursuant to the Offer will constitute a CGT event for CGT purposes. The time of the CGT event will be the time at which the condition in clause 5.1(b) is satisfied, unless that condition is satisfied before your acceptance of the Offer in which case the time of the CGT event will be the time you accept the Offer. The latest of these times is referred to below as "Effective Acceptance". The CGT implications of a disposal of WMC Resources Shares pursuant to the acceptance of the Offer will depend upon a number of factors, including whether the WMC Resources Shares were acquired by shareholders under the Demerger and, if so, whether or not shareholders choose or have chosen CGT rollover relief in respect of the WMC Resources Shares they acquired as a result of the Demerger (CGT Demerger Relief). (a) WMC Resources Shares acquired under the Demerger - CGT Demerger Relief chosen If a shareholder chooses or has chosen CGT Demerger Relief in respect of WMC Resources Shares acquired under the Demerger: (i) the shareholder is taken to have acquired WMC Resources Shares: (A) before 20 September 1985, if the WMC Resources Parent Shares to which the WMC Resources Shares are attributable were acquired or deemed to be acquired before 20 September 1985; and (B) on or after 20 September 1985, if the WMC Resources Parent Shares to which the WMC Resources Shares are attributable were acquired on or after 20 September 1985; (ii) the cost base for CGT purposes of the WMC Resources Shares is a reasonable proportion of the cost base of the WMC Resources Parent Shares held before the Demerger. WMC Resources shareholders must base their apportionment on the actual market values of WMC Resources Parent Shares and WMC Resources Shares just after the Demerger, or an anticipated reasonable approximation of those market values. This is consistent with the Australian Tax Office's public ruling in relation to the demerger of the WMC Resources Parent Shares, Class Ruling CR 2002/81, issued on 13 November 2002 as amended by addenda dated 4 December 2002 and 12 December 2002. • Pre-CGT Shareholdings There should be no CGT implications arising on disposal of the WMC Resources Shares, where the WMC Resources Shares are held on capital account and deemed to have been acquired before 20 September 1985. • Post-CGT Shareholdings For WMC Resources Shares acquired under the Demerger that are attributable to WMC Resources Parent Shares acquired on or after 20 September 1985, a capital gain or loss will arise depending on the difference between: • the value of the capital proceeds (the cash received); and • the cost base, indexed cost base or reduced cost base of the WMC Resources Shares, worked out in accordance with the above basis of apportionment. • Calculating the capital gain or loss on WMC Resources Shares acquired under the Demerger The method of calculating the capital gain or loss depends on whether the shareholder is an individual, company, trust or superannuation fund, the period of time the WMC Resources Shares have been held (or are deemed to have been held (see below)), and when the shareholder originally acquired the WMC Resources Parent Shares (as WMC Limited shares) to which WMC Resources Shares acquired under the Demerger are attributable (relevant WMC Resources Parent Shares). If the relevant WMC Resources Parent Shares were acquired before 21 September 1999 but on or after 20 September 1985), the shareholder can choose to index the cost base of WMC Resources Shares acquired under the Demerger attributable to them. Indexation is calculated by reference to changes in the Consumer Price Index from the calendar quarter in which the WMC Resources Parent Shares were acquired until the calendar quarter ended 30 September 1999. Relevant shareholders who acquired WMC Resources Parent Shares on or after 21 September 1999, or who acquired WMC Resources Parent Shares before 21 September 1999 (but on or after 20 September 1985) and did not choose to index the cost base in the manner described above, may claim a CGT discount in calculating the amount of the capital gain, in the circumstances described below. Subject to the special provisions which apply to listed investment companies (and which are not described in this section), companies are not entitled to this CGT discount. An individual, trustee of a trust or complying superannuation entity may choose to claim a CGT discount if the shareholder has held or is deemed to have held the WMC Resources Shares for a least 12 months. In determining whether a shareholder has held WMC Resources Shares acquired under the Demerger for at least 12 months, where the CGT Demerger Relief is or has been chosen, the shares will be deemed to have been acquired by the shareholder at the time when the relevant WMC Resources Parent Shares were acquired (as WMC Limited shares). Where a shareholder is an individual, trust or complying superannuation fund that is deemed to have held WMC Resources Shares for 12 months or longer at the time of Effective Acceptance, the discount capital gain provisions should apply. This means that: • if the shareholder is an individual, only one-half of the capital gain (without any allowance for indexation for inflation in the cost base of the WMC Resources Shares) will be taxable; or • if the shareholder is a complying superannuation fund, only two-thirds of the capital gain (without any allowance for indexation for inflation in the cost base of the WMC Resources Shares) will be taxable. The methodology for trusts is more complex and has not been described in this section. Trustees should obtain specific tax advice in this regard. Any available capital loss of the shareholder will be applied to reduce the realised nominal gain before multiplying the resulting net amount by one-half or two-thirds (as the case may be) to calculate the discounted capital gain that is assessable. A capital loss may be used to offset capital gains derived in the same or subsequent years of income (subject to satisfying certain conditions), but cannot be offset against ordinary income, and cannot be carried back to offset capital gains arising in earlier income years. (b) WMC Resources Shares acquired under the Demerger - CGT Demerger Relief not chosen A shareholder who acquired WMC Resources Shares under the Demerger but who does not choose or has not chosen CGT Demerger Relief will be treated as having acquired the WMC Resources Shares as at the date of the Demerger. To the extent that the shareholder acquired the relevant WMC Resources Parent Shares before 20 September 1985, the WMC Resources Shares are treated as having been acquired for their market value as at the date of the Demerger. To the extent that the shareholder acquired the relevant WMC Resources Parent Shares on or after 20 September 1985, the cost base for CGT purposes of the WMC Resources Shares is a reasonable proportion of the cost base of the WMC Resources Parent Shares held before the Demerger. WMC Resources shareholders must base their apportionment on the actual market values of WMC Resources Parent Shares and WMC Resources Shares just after the Demerger, or an anticipated reasonable approximation of those market values. This is consistent with the Australian Tax Office's public ruling in relation to the demerger of the WMC Resources Parent Shares, Class Ruling CR 2002/81, issued on 13 November 2002 as amended by addenda dated 4 December 2002 and 12 December 2002. Where a shareholder who is an individual, trust or complying superannuation fund acquired the WMC Resources Shares under the Demerger and has held the WMC Resources Shares for 12 months or longer at the time of Effective Acceptance but who does not choose or has not chosen CGT Demerger Relief, the discount capital gain provisions should apply. This means that: (i) if the shareholder is an individual or trust, only one-half of the capital gain (without any allowance for indexation for inflation in the cost base of the WMC Resources Shares) will be taxable; or (ii) if the shareholder is a complying superannuation fund, only two-thirds of the capital gain (without any allowance for indexation for inflation in the cost base of the WMC Resources Shares) will be taxable. Any available capital loss of the shareholder will be applied to reduce the realised nominal gain before multiplying the resulting net amount by one-half or two-thirds (as the case may be) to calculate the discounted capital gain that is assessable. If the WMC Resources Shares acquired under the Demerger are owned by another category of shareholder (for example, a company), the discount capital gain method is not available. A capital gain on the WMC Resources Shares, being any excess of the value of the capital proceeds over the unindexed cost base of the WMC Resources Shares, will be assessable in full. (c) WMC Resources Shares acquired since the Demerger For a shareholder who acquired WMC Resources Shares since the Demerger (and has not held the shares for at least 12 months at the time of Effective Acceptance), a capital gain on the WMC Resources Shares (being any excess of the value of the capital proceeds over the cost base of the WMC Resources Shares) will be assessable in full. Where a shareholder who is an individual, trust or complying superannuation fund has held the WMC Resources Shares for 12 months or longer at the time of Effective Acceptance, the discount capital gain provisions should apply. This means that: (i) if the shareholder is an individual or trust, only one-half of the capital gain (without any allowance for indexation for inflation in the cost base of the WMC Resources Shares) will be taxable; or (ii) if the shareholder is a complying superannuation fund, only two-thirds of the capital gain (without any allowance for indexation for inflation in the cost base of the WMC Resources Shares) will be taxable. Any available capital loss of the shareholder will be applied to reduce the realised nominal gain before multiplying the resulting net amount by one-half or two-thirds (as applicable) to calculate the discounted capital gain that is assessable. If the WMC Resources Shares are owned by another category of shareholder (for example, a company), the discount capital gain method is not available. A capital gain on the WMC Resources Shares, being any excess of the value of the capital proceeds over the unindexed cost base of the WMC Resources Shares, will be assessable in full. 15. SHAREHOLDERS WHO ARE NOT AUSTRALIAN RESIDENTS A shareholder who is a non-resident of Australia and holds the WMC Resources Shares on capital account will not have a taxable capital gain in Australia if that shareholder (together with any associates) has not, at any time during the 5 years immediately preceding the disposal, owned 10 per cent or more of the issued share capital in WMC Resources. If this requirement is not satisfied, then Australian CGT will be applicable. 16. GST On the basis of current GST law, the disposal of WMC Resources Shares pursuant to the Offer would not be subject to GST, with the exception of GST payable on any brokerage charged by your Controlling Participant for carrying out your instructions under clause 3.2 of this Bidder's Statement. PART F - ADDITIONAL INFORMATION 17. BIDDER'S INTENTIONS 17.1 Introduction This clause 17 sets out BHP Billiton's intentions in respect of the businesses, assets and employees of WMC Resources on the basis of facts and information concerning WMC Resources which are known to it as at the date of this document. BHP Billiton Lonsdale's intentions are identical to the intentions of BHP Billiton as set out in this clause. 17.2 Acquisition of outstanding WMC Resources Shares and WMC Resources Options If, as a result of the Offers, BHP Billiton Lonsdale becomes entitled to acquire outstanding WMC Resources Shares compulsorily under Part 6A.1 of the Corporations Act, BHP Billiton Lonsdale presently intends to proceed with compulsory acquisition of those WMC Resources Shares and also any WMC Resources Shares which come into existence within the period of six weeks after BHP Billiton Lonsdale gives the compulsory acquisition notice (referred to in section 661B(1) of the Corporations Act) due to the exercise of WMC Resources Options. BHP Billiton Lonsdale then intends to procure that WMC Resources is removed from the Official List of ASX. If, as a result of the Offers, BHP Billiton Lonsdale becomes entitled to acquire compulsorily any WMC Resources Shares which come into existence after the period of six weeks after BHP Billiton Lonsdale gives the compulsory acquisition notice due to the exercise of WMC Resources Options under Part 6A.2 of the Corporations Act, BHP Billiton Lonsdale presently intends to proceed with the compulsory acquisitions of those WMC Resources Shares. BHP Billiton intends to seek to acquire outstanding WMC Resources Options, or to have WMC Resources procure the cancellation of the outstanding WMC Resources Options, at a price equal to the value of the underlying WMC Resources Shares at the price offered under the Offers, less the exercise price for those options. If, as a result of the Offers, BHP Billiton Lonsdale then becomes entitled to acquire any outstanding WMC Resources Options compulsorily under Part 6A.2 of the Corporations Act, BHP Billiton Lonsdale presently intends to proceed with the compulsory acquisition of those WMC Resources Options. 17.3 Intentions for WMC Resources as a wholly owned subsidiary The intentions of BHP Billiton, if WMC Resources becomes a wholly owned subsidiary, are set out in this clause 17.3. (a) Strategic review BHP Billiton intends to conduct a detailed review of WMC Resources' assets and operations to evaluate their performance, prospects and strategic relevance to BHP Billiton and seek to identify ways in which BHP Billiton can use its extensive resources and expertise to develop further WMC Resources' businesses. (b) Corporate and head office functions BHP Billiton intends to: (i) seek the resignation of the existing directors of WMC Resources and appoint nominees of BHP Billiton in their place; (ii) consolidate WMC Resources' corporate head office functions with those of BHP Billiton and close WMC Resources' corporate offices; and (iii)review opportunities to consolidate those offices principally supporting WMC Resources' operations and marketing activities with those of the relevant BHP Billiton Customer Sector Group (CSG). BHP Billiton will close those WMC Resources offices where the relevant services can be provided more efficiently using its existing resources. (c) Integration of WMC Resources operations In addition to the general evaluation and review process described above, BHP Billiton intends to pursue efficiencies which may be available to the WMC Resources operations as part of the BHP Billiton Group. These include: (i) sharing of infrastructure and technical, operational and project management expertise; (ii) seeking to renegotiate contracts for the supply of goods and services to the WMC Resources group to take advantage of BHP Billiton Group global procurement activities; (iii)consolidating WMC Resources' financing arrangements with those of BHP Billiton; and (iv) marketing WMC Resources products through BHP Billiton's customer focused marketing platform. Subject to BHP Billiton's strategic review of WMC Resources described above and the comments below, BHP Billiton intends to integrate WMC Resources' business units into BHP Billiton to the extent set out below and otherwise intends to continue to operate the WMC Resources businesses as they are currently conducted. Nickel WMC Resources' nickel operations will become part of the Stainless Steel Materials CSG that primarily services the stainless steel industry, supplying nickel and ferrochrome products. BHP Billiton intends to pursue opportunities for WMC Resources' nickel operations to share infrastructure and expertise with BHP Billiton's Ravensthorpe project in Western Australia. Most of the administrative and managerial functions of BHP Billiton's nickel operations are conducted from offices in Brisbane. WMC Resources' nickel operations are managed from Perth. These activities will be combined in a single office, the location of which will depend on the outcome of BHP Billiton's evaluation and review process. • Olympic Dam Olympic Dam will become part of the Base Metals CSG that provides base metal concentrates to customer smelters and copper cathodes to rod and brass mills and casting plants. The Base Metals CSG will evaluate the feasibility of a possible expansion of Olympic Dam into a combined open pit and underground operation. • Fertiliser WMC Resources' fertiliser operation will be reviewed to consider whether the business should be retained or divested. Subject to the outcome of BHP Billiton's review of the fertiliser operations, the present expectation is that this business will probably be sold. • Corridor Sands The Corridor Sands mineral sands project in Mozambique will become part of the Diamonds and Specialty Products CSG that includes BHP Billiton's 50 per cent interest in Richards Bay Minerals, a heavy mineral sands mine and smelter. • Exploration It is expected that WMC Resources' exploration programme will be combined with BHP Billiton's. This process will involve a review by BHP Billiton of the prospectivity of WMC Resources' exploration properties in the context of opportunities currently available to BHP Billiton to determine which should be developed further and which should be curtailed or divested. (d) Employees BHP Billiton expects that the rationalisation of WMC Resources' corporate head office functions will result in a substantial number of the employees currently required to support those functions being made redundant in compliance with all applicable regulatory requirements and their contractual rights. BHP Billiton does not expect that the integration will result in a significant number of redundancies at WMC Resources' operations. 17.4 Intentions for WMC Resources as a partly owned subsidiary This clause 17.4 sets out BHP Billiton's intentions if, following the close of the Offer, WMC Resources becomes a controlled entity but not a wholly owned subsidiary of BHP Billiton. (a) General intentions BHP Billiton intends to seek to implement, to the extent possible and appropriate, the steps mentioned in clause 17.3 above. (b) Restrictions The extent to which BHP Billiton will be able to implement these intentions will be subject to: (i) the law and the ASX Listing Rules, in particular in relation to related party transactions and conflicts of interests; (ii) the legal obligation of the directors of WMC Resources to act in the best interests of WMC Resources shareholders as a whole; and (iii)the outcome of the strategic review referred to in clause 17.3(a). Any transactions between members of the BHP Billiton Group and WMC Resources required to effect those steps will be entered into on arm's length terms. BHP Billiton will seek any necessary approval of other WMC Resources shareholders, as required by law, to implement those steps. (c) Specific intentions BHP Billiton also intends, in the circumstances described in this clause 17.4 to: (i) maintain WMC Resources as a listed company, subject to satisfying ASX's requirements with respect to maintaining a sufficient spread of shareholders; (ii) replace some of the members of the Board of Directors of WMC Resources, including the Chairman, with nominees of BHP Billiton so that the number of BHP Billiton's nominees is approximately proportionate to BHP Billiton's holding of WMC Resources shares; and (iii)review WMC Resources' overall capital management (including dividend policy) to ensure it is appropriate, having regard to any capital funding requirements of WMC Resources identified in BHP Billiton's strategic review. 17.5 Other Intentions Except as described above (including in clause 17.3(d)), it is the intention of BHP Billiton, on the basis of the facts and information concerning WMC Resources which are known to it at the date of this Bidder's Statement, that the present employees of WMC Resources will continue to be employed by WMC Resources. In addition, except as described above, it is the intention of BHP Billiton, on the basis of the facts and information concerning WMC Resources which are known to it at the date of this Bidder's Statement, that: (a) the businesses of WMC Resources will be continued in substantially the same manner as they are presently being conducted; (b) no major changes will be made to the businesses of WMC Resources; and (c) there will not be any redeployment of the fixed assets of WMC Resources. 18. SOURCES OF CASH CONSIDERATION 18.1 Cash consideration The total amount that BHP Billiton Lonsdale would be required to pay for WMC Resources Shares if BHP Billiton Lonsdale acquires all of the WMC Resources Shares in which it (or its associates) do not already have a relevant interest, and assuming that none of the WMC Resources Options is exercised, is A$9,201,344,781. The total amount that BHP Billiton Lonsdale would be required to pay for WMC Resources Shares if BHP Billiton Lonsdale acquires all of the WMC Resources Shares in which it (or its associates) do not already have a relevant interest, and assuming that all of the WMC Resources Options in which it (or its associates) do not already have a relevant interest are exercised and BHP Billiton Lonsdale acquires all of the WMC Resources Shares issued as a result, is approximately A$9,250,131,447. 18.2 BHP Billiton commitment to fund BHP Billiton Lonsdale BHP Billiton Lonsdale will fund the cash consideration payable to shareholders using cash provided to it by a member or members of the BHP Billiton Group. BHP Billiton has unconditionally and irrevocably agreed with BHP Billiton Lonsdale to ensure that sufficient funds are provided to BHP Billiton Lonsdale to enable BHP Billiton Lonsdale to meet its payment obligations under the Offer. 18.3 Sources of BHP Billiton Group funds The funds to be provided by BHP Billiton to BHP Billiton Lonsdale described above will be sourced by BHP Billiton from a combination of: (a) drawdowns under a BHP Billiton Group committed bank facility (see below); (b) proceeds from the issue of debt securities under BHP Billiton Group capital markets programs (see below); and (c) drawdowns under new bank facilities to be arranged by the BHP Billiton Group (see below). BHP Billiton has not decided what proportion of the funds will be drawn from any of these funding sources. 18.4 Committed bank facility The BHP Billiton Group has, at the date of this Bidder's Statement, a committed undrawn bank facility available for general corporate purposes totalling US$2.0 billion with the financiers listed below. Each of the financiers participates equally in the facility. Provided certain conditions precedent are met, this facility is available for drawdown by certain members of the BHP Billiton Group, within periods of up to three business days after the giving of a drawdown notice. The obligations of the borrowers under this facility are guaranteed by BHP Billiton Limited and BHP Billiton Plc. BHP Billiton is able to satisfy any relevant conditions precedent in the facility and expects to continue to satisfy such conditions. The financiers under the facility are: (a) ABN AMRO Bank N.V., (b) Australian and New Zealand Banking Group Ltd; (c) Bank of America, N.A.; (d) Barclays Bank Plc; (e) BNP Paribas; (f) Citibank, N.A.; (g) Credit Suisse First Boston; (h) Deutsche Bank AG; (i) HSBC Bank Plc; (j) JPMorgan Chase Bank; (k) Mizuho Corporate Bank, Ltd; (l) National Australia Bank Limited; (m) RBC Finance B.V.; (n) Sumitomo Mitsui Banking Corporation Europe Limited; (o) The Bank of Tokyo-Mitsubishi, Ltd; (p) The Royal Bank of Scotland Plc; and (q) UBS Limited. 18.5 Capital markets programs The BHP Billiton Group has, at the date of this Bidder's Statement, a number of capital markets programs under which it may issue debt securities to assist funding the cash consideration payable to WMC Resources shareholders. These programs include: (a) A$2.0 billion commercial paper program allowing for the issue of commercial paper by a member of the BHP Billiton Group for general corporate purposes, and guaranteed by BHP Billiton Limited. No amount has been drawn under this program as at the date of this Bidder's Statement; and (b) US$2.0 billion commercial paper program allowing for the issue of commercial paper by certain members of the BHP Billiton Group for general corporate purposes, and guaranteed by BHP Billiton Limited and BHP Billiton Plc. No amount has been drawn under this program as at the date of this Bidder's Statement. BHP Billiton has not decided which of these capital markets programs, if any, it will use to issue debt securities. 18.6 Proposed new bank facilities In addition to the above facilities and programs, ABN AMRO Bank N.V., Bank of America, N.A., BNP Paribas, Citibank, N.A., Deutsche Bank AG London, and HSBC Bank Plc (Banks) have signed an underwriting commitment letter dated 17 March 2005 with BHP Billiton Limited (Commitment Letter), under which the Banks confirm that they will underwrite 100 per cent of certain new facilities totalling US$6.5 billion. The new facilities will be: (a) US$5.5 billion bank term facility, comprising a US$3 billion tranche repayable in 18 months (which may be extended for a further six months) and a US$2.5 billion tranche repayable in five years. The facility may be used to fund the Offer and for related purposes, or for any other purpose agreed with the lenders; and (b) US$1.0 billion bank revolving credit facility repayable in four and a half years which is available for general corporate purposes. The intention is to syndicate the above facilities to other relationship banks of BHP Billiton. However, successful syndication is not a condition precedent to funding under the facilities. The Commitment Letter included agreed forms of the facility documents. The facility documents are expected to be signed shortly and, in any event, before BHP Billiton Lonsdale becomes obliged to pay the consideration for WMC Resources Shares under clause 6 of the Offer. Aside from the differences in the terms of the new facilities noted above, the new facility documents are broadly similar to the existing bank facility referred to in clause 18.4 above. The obligations of the borrowers under these new facilities are guaranteed by BHP Billiton Limited and BHP Billiton Plc. BHP Billiton expects to be able to satisfy any relevant conditions precedent to funding in the new facilities. 19. INFORMATION ON SECURITIES IN WMC RESOURCES 19.1 Capital Structure of WMC Resources The following information on the securities in WMC Resources is based upon documents lodged by WMC Resources with ASX as at the date this Bidder's Statement is lodged with ASIC. (a) WMC Resources Shares WMC Resources is listed on the ASX and the New York Stock Exchange through American Depositary Receipts (ADRs). Each ADR represents four WMC Resources Shares. The Depositary is The Bank of New York. The total number of issued WMC Resources Shares is 1,172,145,832. (b) WMC Resources Options The total number of WMC Resources Options on issue which could be converted into WMC Resources Shares of an equivalent number is 6,214,862. 19.2 BHP Billiton Lonsdale relevant interest in WMC Resources securities The number of securities of each class in which BHP Billiton Lonsdale had a relevant interest in (as at the dates specified) is shown below: --------------------------------------------------------------------------- Class At date of this Bidder's At date first Offer Statement is sent --------------------------------------------------------------------------- WMC Resources Shares Nil Nil WMC Resources Options Nil Nil --------------------------------------------------------------------------- 19.3 BHP Billiton Lonsdale's voting power in WMC Resources BHP Billiton Lonsdale's voting power in WMC Resources (as at the dates specified) is shown below: At date of this Bidder's At date first Offer Statement is sent --------------------------------------------------------------------------- Voting power in WMC Resources Nil Nil --------------------------------------------------------------------------- 19.4 Acquisition by BHP Billiton Lonsdale of WMC Resources Shares during previous four months During the period beginning four months before the date on which this Bidder's Statement is lodged with ASIC and ending the day before that date of the Offer, neither BHP Billiton Lonsdale nor any associate of BHP Billiton Lonsdale has provided, or agreed to provide, consideration for a WMC Resources Share. 19.5 Inducing benefits given by BHP Billiton Lonsdale during previous four months Except as set out in this Bidder's Statement, during the period beginning four months before the date on which this Bidder's Statement is lodged with ASIC and ending the day before that date of the Offer, neither BHP Billiton Lonsdale nor any associate of BHP Billiton Lonsdale, gave, or offered to give or agreed to give a benefit to another person that is not available under the Offers and was likely to induce the other person, or an associate of the other person, to: (a) accept an Offer; or (b) dispose of WMC Resources Shares. 19.6 Economic exposure to WMC Resources Shares Between November 2004 and January 2005, BHP Billiton Limited, through one of its finance subsidiaries, BHP Billiton Finance Limited (BHP Billiton Finance), entered into a number of "equity swap" contracts with Deutsche Bank AG, Sydney Branch (Deutsche Bank). These contracts provide BHP Billiton Finance with an economic exposure equivalent to 50,624,000 WMC Resources Shares (being approximately 4.32 per cent of the total number of issued WMC Resources Shares). Under those contracts, BHP Billiton Finance derives profits from increases, and incurs losses from decreases, in the market price of specified numbers of WMC Resources Shares from an initial price specified in each relevant contract (the calculation prices). The calculation prices were determined by reference to the prevailing market price for WMC Resources Shares at the time the relevant contracts were entered into, and are within a range of A$6.9411 to A$7.2000 with a volume weighted average of A$7.1288. BHP Billiton Finance is also credited with an amount equivalent to any distributions on the notional shares. The contracts require BHP Billiton Finance to pay commissions and other fees to Deutsche Bank (including a fee calculated by reference to an interest rate over the term of the contract). The contracts are entirely cash settled on termination and do not permit delivery of shares to BHP Billiton Finance (or any other BHP Billiton entity) to satisfy payment obligations. BHP Billiton Finance has no right to acquire, or control the acquisition or disposal of, any WMC Resources Shares under those contracts. 19.7 Deutsche Bank appointment By a release dated 7 March 2005, BHP Billiton announced to the London Stock Exchange and ASX that following market speculation, BHP Billiton confirmed it had appointed Deutsche Bank AG to assess the feasibility of acquiring a stake in WMC Resources. Subsequently on 8 March 2005, BHP Billiton announced to the London Stock Exchange and ASX that a decision was made not to acquire any shares. 20. OTHER MATERIAL INFORMATION 20.1 Conditions The conditions of the Offer are set out in clause 5.1. Further details on some of these conditions are set out below. BHP Billiton Lonsdale will use all reasonable endeavours to ensure the conditions contained in paragraphs 5.1(b) to 5.1(e) are satisfied as soon as possible after the date of this Bidder's Statement. (a) Minimum Acceptance Condition The Offer is subject to a 90 per cent minimum acceptance condition. BHP Billiton Lonsdale will not waive the 90 per cent minimum acceptance condition unless it considers that it is in BHP Billiton's best interest to do so at the relevant time. (b) FIRB BHP Billiton Lonsdale is a foreign person for the purposes of the FATA as a result of being a member of the BHP Billiton Group. The Offer is subject to the approval or non-objection of the Treasurer (who receives advice from FIRB) under Part II of the FATA (see clause 5.1(b)). Approval will not be given to the Offer if the Treasurer, on advice from FIRB, considers that the result of the takeover will be contrary to the national interest. BHP Billiton Lonsdale has lodged an application with FIRB. BHP Billiton Lonsdale is confident that the transaction is consistent with the government's foreign investment policy and expects FIRB approval to be given in due course. (c) ACCC The TPA prohibits acquisitions of shares that have the effect or are likely to have the effect of substantially lessening competition in an Australian market. The Offer is subject to the approval or non-objection of the ACCC (see clause 5.1(e)). BHP Billiton has approached the ACCC seeking informal clearance in relation to the Offer and to provide the ACCC with a detailed submission. BHP Billiton Lonsdale does not expect that the Offer will raise any substantive competition concerns in Australia. (d) European Union merger control The Offer is subject to the approval or non-objection of the European Commission (see clause 5.1(d)). The notification to the European Commission is expected to be submitted on 21 March 2005. BHP Billiton Lonsdale does not expect that the Offer will raise any substantive competition concerns in the European Union. (e) Hart-Scott-Rodino The Offer is subject to the expiry of all waiting periods without regulatory action being taken under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 (see clause 5.1(c)). BHP Billiton has filed a formal notification with the Federal Trade Commission and the Antitrust Division of the Department of Justice. BHP Billiton Lonsdale does not expect that the Offer will raise any substantive competition concerns in the United States. (f) Other regulatory action or approvals The Offer is subject to all other necessary regulatory Approvals being obtained (see clause 5.1(f)). BHP Billiton Lonsdale will be making other necessary notifications and filings with other antitrust and competition regulators. BHP Billiton Lonsdale does not expect that the Offer will raise any substantive competition concerns in any relevant jurisdiction. The Offer is also subject to certain regulatory actions not being taken (see clause 5.1(g)). BHP Billiton Lonsdale is not presently aware of any particular regulatory action which has triggered or may trigger the condition in clause 5.1(g), other than orders or decisions which would trigger a breach of the conditions in clauses 5.1(b) to 5.1(f). (g) No material acquisitions, disposals or changes The Offer is subject to there being no material acquisitions, disposals or changes in the conduct of WMC Resources' business (see clause 5.1(j)). Any such acquisitions, disposals or new commitments by WMC Resources or any of its subsidiaries would potentially frustrate the Offer and deny WMC Resources shareholders the opportunity to participate in the benefits accruing to them under the Offer. WMC Resources is in the best position to advise its shareholders whether or not this condition and other conditions regarding changes in the business of WMC Resources (see clauses 5.1(h), 5.1(i) and 5.1(l)) will be satisfied. (h) Non-existence of certain rights The Offer is subject to there being no existing agreements or arrangements under which other parties have a right to terminate or vary a material agreement or arrangement with WMC Resources, or acquire a material asset of WMC Resources, as a result of BHP Billiton Lonsdale's acquisition of WMC Resources Shares (see clause 5.1(k)). WMC Resources is best placed to advise its shareholders whether or not such agreements or arrangements exist and, if such agreements or arrangements do exist, whether the other parties to such agreements or arrangements are likely to waive or vary their rights. (i) Stock market decline The Offer is subject to the S&P/ASX 200 Index not falling below 3,500 on any trading day during the period from and including the Announcement Date to the end of the Offer Period (see clause 5.1(m)). On the day before the date of this Bidder's Statement, the S&P/ASX 200 Index closed at 4,249.1. The lowest level at which the S&P/ASX 200 Index has closed in the last 12 months has been 3,345.5 on 17 May 2004. 20.2 Xstrata Offer Under the Xstrata Offer, Xstrata has offered to acquire from WMC Resources shareholders their WMC Resources Shares for A$7.00 per share (adjusted for WMC Resources' 2004 final dividend of 20 cents per WMC Resources Share). The Xstrata Offer is scheduled to close at 7:00 pm Sydney time on 24 March 2005, unless extended or withdrawn before then. On 8 March 2005, Xstrata plc made the following announcement to the London Stock Exchange: "Xstrata plc notes today's announcement by BHP Billiton of an agreed cash offer of AUD7.85 per share for all of the issued share capital of WMC Resources Ltd. In the light of this announcement, Xstrata confirms that it will not be increasing its unconditional offer of AUD7.00 per share due to close on 24 March 2005." 20.3 Xstrata Offer withdrawal rights Under the terms of the Xstrata Offer, WMC Resources shareholders who accepted the Xstrata Offer were entitled to withdraw their acceptances. However, the withdrawal rights under the Xstrata Offer terminated on 17 March 2005. Accordingly, persons who accepted the Xstrata Offer are no longer entitled to withdraw their acceptances under that offer. 20.4 Deed of Undertaking BHP Billiton has entered into a Deed of Undertaking with WMC Resources dated 8 March 2005. • BHP Billiton Bid Under the Deed, BHP Billiton agreed to make, or procure that a wholly-owned subsidiary makes, a takeover bid to WMC Resources shareholders on certain agreed terms (the Bid). The consideration BHP Billiton is required to offer WMC Resources shareholders is A$7.85 per WMC Resources Share in cash. The Deed sets out the conditions of the Bid, being those set out in clause 5 of this Bidder's Statement. • Break fee Under the Deed, WMC Resources undertakes to pay BHP Billiton A$92 million (plus any GST) if: (a) the following occur: (i) before the end of the offer period under the Bid, a Competing Proposal is announced or open for acceptance; and (ii) a person acquires an interest in all or a substantial part of the assets of WMC Resources or a relevant interest in more than 50 per cent of the voting shares of WMC Resources under that Competing Proposal, or WMC Resources enters into an agreement to operate under a dual listed company, or similar, structure; and (iii)in the case of a Competing Proposal that is a takeover bid made under Chapter 6 of the Corporations Act, the Competing Proposal becomes free from any defeating conditions either before or after the end of the offer period under the Competing Proposal; or (b) any WMC Resources director does not recommend the Bid or withdraws or adversely modifies an earlier recommendation or recommends a Competing Proposal (or announces to do any of the foregoing); (c) WMC Resources or any of its directors does (or omits to do) anything (whether or not it may be permitted by the terms of the Deed) which results in any of the conditions of the Bid being breached and BHP Billiton does not declare the Bid free of the breached condition (which BHP Billiton is under no obligation to do); or. (d) WMC Resources breaches the no solicitation obligations under the Deed (see below). A Competing Proposal is any proposal (including a scheme of arrangement) or offer (not including the Xstrata Offer but including any increase by Xstrata of the consideration offered under the Xstrata Offer other than the increase announced on 2 February 2005) that would if completed substantially in accordance with its terms, result in: (a) any person other than BHP Billiton acquiring: (i) an interest in all or a substantial part of the assets of WMC Resources, including an interest in the Olympic Dam operation, WMC Resources' Nickel operation or the Corridor Sands mineral sands project; or (ii) a relevant interest in more than 50 per cent of the voting shares of WMC Resources; or (b) WMC Resources and another person operating under a dual listed company, or similar, structure. If BHP Billiton does not acquire beneficial ownership of 50.1 per cent or more of WMC Resources Shares and accepts a Competing Proposal in respect of any WMC Resources Shares acquired after the date of the Deed or otherwise disposes of any such WMC Resources Shares, then any profit for BHP Billiton on such disposal (net of tax payable by BHP Billiton) may be offset against the break fee amount payable to BHP Billiton. • Bid conditions Under the Deed, WMC Resources has agreed not to do (or omit to do) anything which will, or is likely to, result in any of the conditions of the Bid being breached. Nothing in this obligation prevents WMC Resources or the WMC Resources Board from taking, or failing to take, action where to do otherwise would, in the reasonable opinion of the WMC Resources Board, constitute a breach of the duties of the directors of WMC Resources. BHP Billiton has agreed to use its best endeavours to ensure satisfaction of the regulatory approval conditions of the Bid. No solicitation Under the Deed, WMC Resources has agreed, for a period of 90 days after the date of the Deed, that it must not and must ensure that its employees, officers and to the extent that it is reasonably ableRelated Shares:
BHP Group