11th Mar 2005 07:01
Rio Tinto PLC11 March 2005 Rio Tinto off-market buy-back tender Rio Tinto has announced the details of an off-market buy-back tender for RioTinto Limited shares, which was foreshadowed on 3 February 2005 as part of theGroup's US$1.5 billion capital return programme. Subject to shareholder approval, which will be sought at the annual generalmeetings (AGMs) in London and Sydney in April 2005, Rio Tinto Limited willinvite shareholders to tender Rio Tinto Limited shares at discounts of between 8to 14 per cent to the Market Price(1), or as a Final Price Tender(2). The finalbuy-back price will be the largest discount ("Buy-Back Discount") to the MarketPrice that enables Rio Tinto Limited to repurchase the targeted amount ofcapital. Broadly, Rio Tinto Limited is targeting to repurchase the equivalent of aroundUS$300-400 million (A$400-500 million) of capital under the buy-back tender, butthe ultimate size of the buy-back will be dependent on shareholder demand andmarket conditions at the time. For example, in the event of excess demand at anattractive price, Rio Tinto Limited may significantly increase the size of thebuy-back. Rio Tinto Chairman, Paul Skinner, said that the off-market buy-back tender is animportant feature of the Group's intention to return surplus capital toshareholders and is a very efficient way for Rio Tinto Limited to buy back itsshares. "The buy-back tender will enable Rio Tinto Limited to buy back shares at adiscount of at least eight per cent to the Market Price and will benefit bothparticipating and non-participating shareholders. "Given our diverse shareholder base and the level of our available Australianfranking credits, we believe that this tender, coupled with the increaseddividend, is an optimal mechanism to return capital to shareholders." The Australian Taxation Office has agreed that, for Australian tax purposes, thebuy-back price will comprise: - a capital component of A$4.00; and - a fully franked dividend component equal to the difference between the buy-back price and A$4.00. For the purposes of capital gains tax calculations, the deemed capital proceedsthat shareholders will receive on disposal of their shares under the buy-backwill be A$4.00 plus an amount equal to the excess of the Tax Value(3) over thebuy-back price. Rio Tinto Limited does not intend to buy back shares at a pricethat exceeds the Tax Value. Under the buy-back tender, Rio Tinto Limited intends to buy back all sharestendered by eligible shareholders who tender their shares as a Final PriceTender or who tender their shares at a discount greater than or equal to theBuy-Back Discount, subject to any scale back. All shares bought back by RioTinto Limited will be bought back at the final buy-back price, even if they aretendered at a discount that equates to a lower price. Rio Tinto Limited will not buy back any shares tendered by shareholders at adiscount smaller than the Buy-Back Discount, or any shares that are tenderedspecifying a minimum price that is greater than the final buy-back price. If the total number of shares tendered as a Final Price Tender or at a discountgreater than or equal to the Buy-Back Discount is greater than the number ofshares Rio Tinto Limited determines to repurchase, tenders will be scaled back.The scale back provisions have been designed so that eligible shareholders whotender their shares as a Final Price Tender or who tender their shares at adiscount greater than or equal to the Buy-Back Discount should not be left witha holding of 200 or less shares. Rio Tinto Limited shareholders with a registered holding at the close ofbusiness on 1 March 2005 will be entitled to receive the 2004 final dividend(Australian 58.29 cents per share) even if they tender their shares in thebuy-back. Shareholders who participate in Rio Tinto Limited's DividendReinvestment Plan and wish to tender all their shares in the buy-back, mayconsider withdrawing from the Dividend Reinvestment Plan by 16 March 2005 toavoid the possibility of being left with a small parcel of shares after thebuy-back. Withdrawal from the Dividend Reinvestment Plan can be arranged bycontacting the share registrar on 1800 813 292 toll free within Australia or +613 9415 4030 if calling from outside Australia. The buy-back timetable is outlined below. Eligible shareholders will be sent thebuy-back booklet containing the terms and conditions of the buy-back tender inmid April 2005. Details in relation to the buy-back tender will also beincluded in the materials to be sent to shareholders prior to the AGM. Event Date Ex-date for determination of entitlements to the buy-back(4) 18 March 2005 Shares purchased after this date will not satisfy the 45-day rule(5) 24 March 2005 Record date for determination of entitlements to the buy-back 24 March 2005 Rio Tinto plc AGM 14 April 2005 Tender period opens 18 April 2005 Rio Tinto Limited AGM 29 April 2005 Tender period closes - tenders must be received by 9pm (Melbourne time) 6 May 2005 Announcement of the buy-back price and scale-back (if any) No later than 10 May 2005 Buy-back proceeds dispatched to participating shareholders No later than 17 May 2005 * Rio Tinto Limited reserves the right to change any of these dates or times butdoes not expect to do so. Completion of the buy-back tender is subject toshareholder approval by Rio Tinto Limited and Rio Tinto plc shareholders at the2005 annual general meetings. In any event, Rio Tinto Limited retains thediscretion to buy back a lesser number of shares than indicated or no shares atall. Participation in the buy-back tender is voluntary. Shareholders should seektheir own professional advice (including tax advice) about the implications ofparticipating in the buy-back in light of their particular circumstances. For any queries on the buy-back, shareholders may call 1300 657 022 toll freewithin Australia or +613 9415 4137 if calling from outside Australia, or visitour website at www.riotinto.com. For further information, please contact: LONDON AUSTRALIA Media Relations Media Relations Lisa Cullimore Ian Head Office: +44 (0) 20 7753 2305 Office: +61 (0) 3 9283 3620 Mobile: +44 (0) 7730 418 385 Mobile: +61 (0) 408 360 101 Investor Relations Investor Relations Richard Brimelow Dave Skinner Office: +44 (0) 20 7753 2326 Office: +61 (0) 3 9283 3628 Mobile: +44 (0) 7753 783 825 Mobile: +61 (0) 408 335 309 Susie Creswell Office: +61 (0) 3 9283 3639 Mobile: +61 (0) 418 933 792 Website: www.riotinto.com -------------------------- (1) 'Market Price' means the volume weighted average price (as defined, whichwill exclude certain trades not considered to be 'at market') of Rio TintoLimited ordinary shares sold on the ASX during the five trading days up to andincluding the closing date of the buy-back tender period. (2) A 'Final Price Tender' means a tender in which the shareholder elects toreceive the final buy-back price determined through the tender process. (3) The Tax Value is calculated by adjusting A$40.02 by the movement in RioTinto plc's share price from the close of trading in London on 2 February 2005(£16.85) to the opening of trading in London on the day the tender period closes(currently expected to be 6 May 2005). (4) Shares acquired on the ASX on an ex-entitlement basis on or after this datewill not receive an entitlement to participate in the buy-back. (5) Shares acquired after this date will generally not satisfy the 45-day rulefor the purposes of being eligible for the franking entitlements, assuming thebuy-back price is determined on 9 May 2005. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Rio Tinto