7th Feb 2007 07:00
BHP Billiton PLC07 February 2007 7 February 2007Number 04/07 BHP BILLITON ANNOUNCES INCREASED CAPITAL MANAGEMENT PROGRAMME INCLUDING AN OFF-MARKET BUY-BACK OF BHP BILLITON LIMITED SHARES BHP Billiton today announced a US$10 billion increase to the US$3 billioncapital management programme that was announced in August 2006. This amount willbe returned to shareholders over the next 18 months through a series ofbuy-backs. The next stage in the capital management programme will be theimplementation of an off-market buy-back with a targeted maximum of A$3.25billion (US$2.5 billion) of BHP Billiton Limited shares. At the same time, BHPBilliton will continue to repurchase shares on-market in BHP Billiton Plc on anopportunistic basis. This programme continues BHP Billiton's outstanding trackrecord of meeting its capital management commitment and delivering value toshareholders. This increase of the capital management program is in addition tothe increased interim dividend also announced today. BHP Billiton's Chairman, Don Argus, said "the increase in the Company's capitalmanagement programme reflects the Board's continued commitment to generatinglong-term, sustainable shareholder value. The Board of BHP Billiton continuesits absolute commitment to capital discipline. Our confidence in the Company'soutlook and strong cash generative capability has underpinned our decision tocontinue to announce sizeable returns to our shareholders. "In August 2006 we announced a capital management initiative of US$3 billion tobe returned to shareholders over an 18 month period. In the six months sincethen, we have returned US$1.7 billion through a series of on-market buy-backs ofthe BHP Billiton Plc stock at an average price per share of US$18.23. Today wehave increased the programme by a further US$10 billion. We will start this withan off-market buy-back of BHP Billiton Limited shares at a discount of no lessthan 10 per cent. This is our third sizeable capital return announcement withina 12 month period and in aggregate amounts to US$15 billion. "Our financial strength means we are well positioned to fund our US$17.5 billionpipeline of projects and capture other value enhancing opportunities as theyarise. At the same time, we are able to maintain a robust capital structure andcontinue with our progressive dividend policy, as well as undertake thisadditional $10 billion return to shareholders," Mr Argus said. BHP Billiton's Chief Executive Officer, Chip Goodyear, said "At the conclusionof today's initiative we will have repurchased approximately 16.9 per cent ofthe shares on issue since November 2004. We will have also returned US$26.6billion to shareholders through capital initiatives and dividends since June2001. This has occurred during a period when we have pursued significant organicgrowth and acquisition opportunities as well as establishing a strong trackrecord in executing against our announced initiatives promptly and effectively,"he said. Undertaking both an off-market and on-market buy-back, coupled with an increasedinterim dividend allows the entire BHP Billiton global shareholder base toparticipate, both directly and indirectly, in this initiative. The off-marketbuy-back provides an optimal means for maximising economic value for allshareholders. The resulting increase in the Company's Earnings Per Share meansall BHP Billiton Limited and BHP Billiton Plc shareholders, including those notparticipating in the buy-back process and regardless of location and tax status,benefit from an off-market buy-back. In addition, because shares are purchasedat a minimum discount of 10% to the market price, a greater number of shares canbe bought back for the same total cost, compared with buying back at marketprice. The value of the remaining shares will therefore be enhanced through theincreased earnings, cash flow and return on equity attributable to each share. The capital management programme will be funded from cash and borrowings. Giventhe strength of BHP Billiton's financial position, it will remain stronglycapitalised after completion of the programme in line with the Company's solid Acredit rating and will not compromise its ability to fund the strong pipeline oforganic growth projects. The Board of BHP Billiton has concluded that the proposed off-market buy-backcan be completed without negatively affecting the ability of BHP BillitonLimited to pay fully franked dividends for the foreseeable future. Details of the Off-Market Buy-BackBHP Billiton Limited will repurchase shares under the off-market buy-back at adiscount of at least 10% to the volume weighted average price of BHP BillitonLimited shares over the five trading days up to and including the closing dateof the buy-back ("Market Price"). Eligible shareholders of BHP Billiton Limitedmay tender some or all of their shares at discounts of between 10% and 14%inclusive (at 1% intervals) to the Market Price, or as a final price tender(which is simply an election to receive the final buy-back price). The finalbuy-back price will be determined according to the tenders lodged by eligibleshareholders and the Market Price. Eligible shareholders may choose to participate in the off-market buy-back forvarious reasons and in so doing may take account of the tax benefits that onlyarise under the Australian taxation regime. BHP Billiton does not anticipatethat shareholders who are resident outside Australia will participate, as theyare likely to obtain a better outcome by selling their shares on-market.Excluded foreign persons, including shareholders in the US, US persons andresidents of Canada will not be eligible to participate in the buy-back. ADRsand restricted employee shares may not be tendered into the buy-back. For Australian tax purposes, the buy-back price received by participatingshareholders will comprise the following: a) a capital component of A$2.50 per share; and b) a fully franked deemed dividend equal to the buy-back price less A$2.50. For the purpose of Capital Gains Tax calculations, the capital proceeds will bethe A$2.50 capital component plus an amount equal to the excess of the Tax Value(1) over the buy-back price. (1) Tax Value will be calculated pursuant to the ATO guidelines (detailed in TaxDetermination 2004/22) which effectively provide that the Tax Value will be thefive day VWAP of BHP Billiton Limited shares on the ASX up to and including 6February 2007 and will be adjusted for the movement in the BHP Billiton Plcshare price from the closing price on the London Stock Exchange on 6 February2007 to the opening price on the London Stock Exchange on the closing date ofthe buy-back (23 March 2007) Under the off-market process, BHP Billiton Limited will buy all shares tenderedby eligible shareholders who elect to receive the final buy-back price or whotender their shares at a discount greater than or equal to the final buy-backdiscount determined under the tender process, subject to any required scaleback. The operation of the scale back has been structured to ensure thateligible registered shareholders with small holdings are not disadvantaged. Allshares that are accepted by BHP Billiton Limited will be bought back at thefinal buy-back price, even if they are tendered at a discount that represents aprice below the final buy-back price. BHP Billiton Limited will not buy back any shares tendered by shareholders at aprice above the final buy-back price. Although the maximum target buy-back sizeis A$3.25 billion (approximately US$2.5 billion), the Company may vary the sizeof the buy-back depending on tenders lodged by shareholders and marketconditions. In particular the Company may buy back significantly less than thetarget maximum amount if the relative value of repurchasing BHP Billiton Limitedshares rather than BHP Billiton Plc shares materially reduces by the end of thetender period. The final size of the off-market buy-back will not be materiallymore than A$3.25 billion which will enable BHP Billiton to continue to pay fullyfranked dividends under its progressive dividend policy. Eligible shareholders will be sent the buy-back booklet containing the terms andconditions of the off-market buy-back by 28 February 2007. The booklet cannot besent into the United States or Canada. Off-Market Buy-Back Timetable(2) The indicative timetable for the off-market buy-back is outlined below.Event DateBuy-back announcement 7 February 2007 Cut-off date for franking entitlement under 45-day rule(3) 8 February 2007 Shares quoted ex-entitlement to participate in the buy-back on the ASX(shares acquired on the ASX on or after this date will not typically 12 February 2007confer an entitlement to participate in the buy-back)Determination of eligible shareholders entitled to participate in thebuy-back (record date) 16 February 2007 Completion of mail out of buy-back documents to eligible shareholders 28 February 2007 Buy-back tender period opens 5 March 2007 Buy-back tender period closes - tenders must be received by 7.00pm (AEST) 23 March 2007 Announcement of the buy-back price and any scale back 26 March 2007 Buy-back proceeds dispatched/credited to participating shareholderscompleted No later than 2 April 2007 Shareholders who have any enquiries in relation to the off-market buy-back maycontact BHP Billiton's buy-back enquiry line on 1300 558 547 toll free withinAustralia or +61 3 9415 4633 if calling from outside Australia, or visit ourwebsite www.bhpbilliton.com. Shareholders should seek their own professionaladvice (including tax advice) about the implications of participating in thebuy-back in their own individual circumstances. (2)While BHP Billiton does not anticipate any changes to these times and dates,it reserves the right to vary them without notification. (3)Shares acquired after this date will generally not satisfy the 45-day rulefor the purposes of calculating an Australian taxpayer's tax credits. Further information on BHP Billiton can be found on our website:www.bhpbilliton.com Australia United KingdomSamantha Evans, Media Relations Mark Lidiard, Investor & Media RelationsTel: +61 3 9609 2898 Mobile: +61 400 693 915 Tel: +44 20 7802 4156 Mobile: +44 7769 934 942email: [email protected] email: [email protected] Belcher, Investor Relations lltud Harri, Media RelationsTel: +61 3 9609 3952 Mobile: +61 417 031 653 Tel: +44 20 7802 4195 Mobile: +44 7920 237 246email: [email protected] email: [email protected] United States South AfricaTracey Whitehead, Investor & Media Relations Ivan Arriagada, Investor RelationsTel: US +1 713 599 6100 or UK +44 20 7802 4031 Tel: SA +27 11 376 2121 or UK +44 20 7802 4183Mobile: +44 7917 648 093 Mobile: +44 7769 936 227email: [email protected] email: [email protected] Important notice: Not for distribution or release in or into the United States or Canada. This press release does not constitute, or form part of, any offer or invitationto sell, or any solicitation of any offer to purchase any securities in anyjurisdiction, nor shall it or the fact of its distribution be relied on inconnection with any contract thereof. No indications of interest in the buy-backare sought by this press release, which relates to the BHP Billiton capitalmanagement programme. Shareholders who are (or nominees who hold BHP BillitonLimited shares on behalf of or for the account of persons who are) in the UnitedStates or US persons, (within the meaning of Regulation S under the UnitedStates Securities Act 1933,) residents of Canada or who are otherwise excludedforeign persons will not be eligible to participate in the off-market buy-backdescribed in this press release. ADRs and restricted employee shares may not betendered into the buy-back. Buy-back documents, including the booklet describingthe terms of the buy-back and tender forms, when issued, will not to bedistributed or sent into the United States or Canada. BHP Billiton Limited ABN 49 004 028 077 BHP Billiton Plc Registration number 3196209Registered in Australia Registered in England and WalesRegistered Office: Level 27, 180 Lonsdale Street Melbourne Registered Office: Neathouse Place London SW1V 1BH UnitedVictoria 3000 KingdomTelephone +61 1300 554 757 Facsimile +61 3 9609 3015 Telephone +44 20 7802 4000 Facsimile +44 20 7802 4111 The BHP Billiton Group is headquartered in Australia This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
BHP Group