Turquoise Hill Share Slip After Shareholder Pentwater Increases Stake
16 Setembro 2022 - 01:04PM
Dow Jones News
By Adriano Marchese
One of Turquoise Hill Resources Ltd.'s largest shareholder has
been buying more shares in the company days after a court dismissed
all its claims against the Canadian miner.
At 11:15 a.m. ET, shares of Turquoise Hill were trading 1.9%
lower at C$40.23, but are up more than 93% since the beginning of
the year.
On Thursday evening, Pentwater Capital Management LP said that
funds and accounts over which it and its affiliates exercise
control and direction acquired a total of 2.5 million more shares
of Turquoise Hill, or around 1.2% of the issued and outstanding
common shares.
Pentwater said that prior to Thursday's acquisition, it had also
acquired other common shares on Sept. 13, 14 and 15 for a total of
4.2 million shares, or about 2.1% of the issued outstanding common
shares.
Pentwater expects the global transition to a greener economy
will drive the price and demand for copper higher, and said it
expects Turquoise Hill to generate more than 10.5 billion Canadian
dollars ($7.94 billion) of free cash flow through 2030 at its
conservative price projection of copper at $3.50 a pound. If the
price of copper were to reach $4.00 a pound, it could generate cash
flow of almost C$14.2 billion, it said.
On Sept. 5, Rio Tinto PLC, which owns 51% of Turquoise Hill and
has a 66% interest in the Oyu Tolgoi project, entered a binding
agreement with Turquoise Hill Resources to acquire the remaining
shares in Turquoise Hill it doesn't already own.
The cash offer was for C$43 a share, but Pentwater criticized
the proposed price on the grounds that it "significantly
undervalues the common shares."
At the proposed price, an equity value of C$8.65 billion is
implied, which it said is a fraction of the free cash flow that
Pentwater expects Turquoise Hill to generate over the next
decade.
Pentwater doesn't support the proposed plan of arrangement, and
said it is evaluating a number of legal alternatives with respect
to their proposed plan of arrangement, one of which is the exercise
of dissent rights, which entitles any dissenting shareholder to
require that their shares be acquired by the buyer for their fair
value.
In the period between Sept. 13 and Friday, shares in Turquoise
Hill have remained fairly steady, with lows around C$40.18 and a
high of C$40.60 a share, below Rio Tinto's proposed offer
price.
In September, Pentwater was dealt a blow when a federal court in
New York dismissed all claims against Turquoise Hill and three
executives of deliberately misleading investors about the costs and
progress at its mine in Mongolia. The claims were first made
against Turquoise Hill and the executives in a putative class
action lawsuit in October 2020, with Pentwater Capital as lead
plaintiff.
Pentwater had alleged that the company and three of its
executives violated U.S. securities laws by making false or
misleading statements about the progress and expected cost of the
Oyu Tolgoi underground mine, developed in partnership with Rio
Tinto.
With the new shares acquired in recent days, the Pentwater funds
now have beneficial ownership of 27.7 million shares, representing
almost 14% of the total issued and outstanding common shares.
Write to Adriano Marchese at adriano.marchese@wsj.com
(END) Dow Jones Newswires
September 16, 2022 11:49 ET (15:49 GMT)
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