BMO Capital Markets Investment Banking Pitch Book
BMO Capital Markets
Transaction Overview (Based on Term Sheet Seen August 31, 2022)
KEY TERMS AND CONDITIONS
Structure
Consideration
Conditions
Transaction
Timing
Rio Tinto to acquire all of the issued and outstanding
common shares of Turquoise Hill that it does not already
own (Rio Tinto owns 102.2 mm shares of the Company, or
50.8% of shares outstanding) by way of a plan of
arrangement, as agreed upon in principle and outlined in
the term sheet that Turquoise Hill and Rio Tinto have
proposed to enter into
Each Turquoise Hill minority share to be exchanged for
C$43 in cash from Rio Tinto
Receipt of (1) 66 2/3% of votes cast by Turquoise Hill's
common shareholders; and () a simple majority of votes
cast by Turquoise Hill's minority shareholders
In accordance with the rules set out in Canadian
Multilateral Instrument 61-101, the transaction requires
among other things, a formal valuation to be delivered
Concurrently with entering into the arrangement
agreement, the Heads of Agreement will be amended as
follows:
H Increase of the Rio Tinto US$400 mm early advance to
US$650 mm, with potential for subsequent increase of
up to US$100 mm
图
Extension of the date by which the minimum US$650
mm² initial equity offering must be conducted to
March 31, 2023, subject to May 31, 2023 outside date;
commitment from Rio Tinto for pro rata participation
Rio Tinto making available US$362 mm, should it be
needed, on the same terms as the early advance
facility to satisfy Turquoise Hill's December 31, 2022
project finance principal repayment obligation
The transaction is also subject to the receipt of court
approval and other customary closing conditions for
transactions of this nature
Announcement Date: August [31], 2022
Target Closing: Q4 2022 (subject to receipt of regulatory
approvals)
SUMMARY OF PROPOSED TERMS
Consideration
Offer Price
Implied Equity Value
Premiums
Premium to Unaffected
Premium to HUSP
Spot Premium
Bid Bump
P/NAV
Model
Street
(3)
Source: Company Rings, FactSet, stretch
1. Additional upsie it, on 14-Feb-23, it is anticipated that the funding shortfall for Turquoise Hill and its subsidiaries for
March 2023 will exosed the amount remaining available under the Early Advance (based on a US$200 mm minimum
cash balance), the parties shall in good faith discuss increasing the Early Advance by the lesser of such funding shortfall
and US$100 mm.
2 Offering subject to increase to the amount drawn under the Early Advance, should that be greater than US$650 mm.
(CS/share)
11-Mar-22
(Initial Bid
(C5 mm)
23-Aug-22 (%)
(Revised Bid)
*
(ratio)
(ratio)
Turquoise Hill
Benchmark (C$)
$25.68
$16.42
$27.97
$36.12
$34.00
$60.49
2441
$55.12
3. Hypothetical Unaffected Share Prics, TRO's hypothetical
share price based on median peer performance, Peers
include Capstone, Ero, Filo, First Quantum, Hudbay.
Ivanhoe, Los Andes, Lundin Mining, NGEL Solaris.
SolGold, and Western Copper.
Median excluding restricted brokers
Rio Tinto
Proposal
$43.00
Minority/ 100%
$4,258 / $8,653
67%
162%
54%
19%
26%
0.71x
0.78x
PROJECT ASTERIXView entire presentation