[PRNewswire] Elliott Sends Letter and Presentation to the Directors ...(2/2)
-- Elliott Sends Letter and Presentation to the Directors of BHP Billiton Outlining Shareholder Value Unlock Plan
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(LONDON, April 10, 2017 PRNewswire=연합뉴스) ABOUT ELLIOTT
Founded in 1977, Elliott manages two funds, Elliott Associates, L.P. and Elliott International, L.P., with assets under management totaling more than US$32.7 billion. Elliott's investors include pension plans, sovereign wealth funds, hospital and university endowments, charitable foundations, funds-of-funds, individuals and families, and employees of the firm.
With tens of millions of beneficiary stakeholders located on five continents, Elliott's primary focus is on risk control, stability, and steady growth of capital. Today, Elliott has offices in New York, London, Hong Kong and Tokyo. Elliott is a multi-strategy hedge fund, carrying out a diverse range of investment activities. Its strategies include actively managed equity investments in which Elliott's objectives include promoting shareholder value and good corporate governance for the benefit of all shareholders.
[1] Together with this letter we are today making publicly available a presentation that details the points set out below, including our related analysis (the "Presentation"). The Presentation and this letter are available at our website http://www.valueunlockplanforbhp.com.
[2] Founded in 1977, Elliott Management Corporation ("EMC") manages the two Elliott Funds, with assets under management totalling more than US$32.7 billion as at the date of this letter. Elliott Advisors (HK) Limited ("Elliott") is an affiliate of the Elliott Funds and EMC.
[3] In addition to their long economic interest in PLC, the only other BHP positions that the Elliott Funds and their affiliates hold are the rights to acquire up to approximately 0.4% of the issued shares in Limited. The Elliott Funds may at any time increase or reduce their holdings of, or economic exposure in respect of, any BHP entity's shares or other equity or debt securities. See the important information which is set out in the Appendix to this letter for further details.
[4] The "US petroleum business" means BHP's US onshore petroleum assets and its Gulf of Mexico assets.
[5] Based on DLC structures with a combined market capital of over US$15bn.
[6] As announced by Unilever on April 6, 2017.
[7] When Limited, as an Australian tax resident company, pays tax on its income it can record that tax paid as franking credits. Limited then attaches those franking credits to any dividend it makes, or to any income component of a share buyback which it
undertakes. Those franking credits can then be used by Australian tax resident shareholders who receive them to offset their own
liability to Australian tax on the dividend income, or income component of any share buyback consideration, which it receives from Limited. Further detail on franking credits, their potential wastage in the current DLC structure and their monetization is set out in the Appendix to the Presentation.
[8] Calculated by EBITDA contribution split for the last reported twelve month period, excluding third-party products and unnamed assets. Based on Elliott estimates of asset ownership between Limited and PLC, using the asset split at the time of the DLC inception and assumes (i) no subsequent intra-group asset transfers between PLC and Limited; and (ii) that assets located in Australia that were acquired from Western Mining were acquired by, and continue to be held directly or indirectly by, Limited.
[9] Based on last reported figures.
[10] Unification would be implemented by way of inter-conditional share-for-share schemes of arrangement of each of Limited and
PLC under which Limited and PLC shareholders would become shareholders in a single unified BHP public company listco incorporated in England & Wales, which would 100% own both of then-delisted Limited and PLC.
[11] Whilst unlocked franking credits could only be used by Australian tax resident shareholders, non-tendering shareholders should benefit from incremental accretion and share demand resulting from monetization of BHP's substantial franking credit balance.
[12] The Foreign Investment Review Board of Australia, which would review a unification transaction involving a resulting single unified BHP public company listco which is incorporated in England & Wales.
[13] Free cash flows from operations less free cash flows from investing and dividends, assuming the current 50% payout ratio of net income. Calculated by Elliott as the average of the figures produced by analysts at major international investment banks.
[14] The assumptions utilized in calculating this figure are described in the Presentation.
[15] The assumptions utilized in calculating this figure are described in the Presentation.
[16] Assumes annual off-market share buybacks starting at US$6bn and then utilizing excess cash flow whilst maintaining a 1.3x net debt / EBITDA target thereafter. Cash flow levels are Elliott's estimates based on a 1.3x net debt / EBITDA target. Also assumes share price appreciates annually based on constant multiples and that BHP conducts annual buybacks at a 14% discount to the post annual EPS accretion share price.
[17] The NPV is calculated in respect of (i) the increased share price implied by the EPS accretion, applied to the reduced number of shares in issue post buybacks; and (ii) the capital returned through the discounted off-market share buybacks up to June 2022.
[18] "A" grade credit rating means an "A-, A or A+" credit rating. This could be retained whilst maintaining a net debt/EBITDA ratio of 1.3x (or other appropriate metric).
[19] Please see the Presentation for further details.
[20] These per-share numbers are in respect of the current aggregate number of BHP shares in issue, except for the franking credits from buybacks number, which is based on the number of Limited shares currently in issue.
[21] Enterprise value measured before demerger of BHP's US petroleum business. Assumes that the BHP share price post-unification would be the weighted average (by number of shares in issue at Limited and PLC) of the current share prices of Limited and PLC. The post-unification (before demerger) enterprise value is therefore assumed to remain the same as BHP's current enterprise value.
[22] Valuation based on mean values of US petroleum and unified core BHP shown in the valuation slides in the Presentation.
[23] Valuation based on the NPV of (i) the increase in core BHP's share price implied by the EPS accretion from the share buybacks which are proposed by Elliott in the Presentation, applied to the reduced number of shares in issue post buybacks; and (ii) the capital thereby returned to shareholders.
[24] NPV of franking credits released from Elliott's proposed discounted off-market buyback program.
[25] Assumes US$2.5bn of BHP's existing net debt is allocated to the US petroleum business (c. 0.9x net debt / consensus 18E EBITDA).
[27] In addition to their long economic interest in PLC, the only other positions that the Elliott Funds and their affiliates hold in or relating to BHP are the rights to acquire up to approximately 0.4% of the issued shares in Limited.
[26] The analysts' views mentioned in this letter shall not be taken to mean or imply (i) that the research reports referred to are a representative sample of all research reports on the topics concerned; or (ii) that the authors of the reports or their employing banks/brokers endorse in any way the Value Unlock Plan or the views set out in this letter. We have emboldened, by way of emphasis, certain parts of the original text of the analysts' views which appear in this letter.
Source: Elliott Advisors (UK) Limited
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-- Elliott Sends Letter and Presentation to the Directors of BHP Billiton Outlining Shareholder Value Unlock Plan
[편집자 주] 본고는 자료 제공사에서 제공한 것으로, 연합뉴스는 내용에 대해 어떠한 편집도 하지 않았음을 밝혀 드립니다.
(LONDON, April 10, 2017 PRNewswire=연합뉴스) ABOUT ELLIOTT
Founded in 1977, Elliott manages two funds, Elliott Associates, L.P. and Elliott International, L.P., with assets under management totaling more than US$32.7 billion. Elliott's investors include pension plans, sovereign wealth funds, hospital and university endowments, charitable foundations, funds-of-funds, individuals and families, and employees of the firm.
With tens of millions of beneficiary stakeholders located on five continents, Elliott's primary focus is on risk control, stability, and steady growth of capital. Today, Elliott has offices in New York, London, Hong Kong and Tokyo. Elliott is a multi-strategy hedge fund, carrying out a diverse range of investment activities. Its strategies include actively managed equity investments in which Elliott's objectives include promoting shareholder value and good corporate governance for the benefit of all shareholders.
[1] Together with this letter we are today making publicly available a presentation that details the points set out below, including our related analysis (the "Presentation"). The Presentation and this letter are available at our website http://www.valueunlockplanforbhp.com.
[2] Founded in 1977, Elliott Management Corporation ("EMC") manages the two Elliott Funds, with assets under management totalling more than US$32.7 billion as at the date of this letter. Elliott Advisors (HK) Limited ("Elliott") is an affiliate of the Elliott Funds and EMC.
[3] In addition to their long economic interest in PLC, the only other BHP positions that the Elliott Funds and their affiliates hold are the rights to acquire up to approximately 0.4% of the issued shares in Limited. The Elliott Funds may at any time increase or reduce their holdings of, or economic exposure in respect of, any BHP entity's shares or other equity or debt securities. See the important information which is set out in the Appendix to this letter for further details.
[4] The "US petroleum business" means BHP's US onshore petroleum assets and its Gulf of Mexico assets.
[5] Based on DLC structures with a combined market capital of over US$15bn.
[6] As announced by Unilever on April 6, 2017.
[7] When Limited, as an Australian tax resident company, pays tax on its income it can record that tax paid as franking credits. Limited then attaches those franking credits to any dividend it makes, or to any income component of a share buyback which it
undertakes. Those franking credits can then be used by Australian tax resident shareholders who receive them to offset their own
liability to Australian tax on the dividend income, or income component of any share buyback consideration, which it receives from Limited. Further detail on franking credits, their potential wastage in the current DLC structure and their monetization is set out in the Appendix to the Presentation.
[8] Calculated by EBITDA contribution split for the last reported twelve month period, excluding third-party products and unnamed assets. Based on Elliott estimates of asset ownership between Limited and PLC, using the asset split at the time of the DLC inception and assumes (i) no subsequent intra-group asset transfers between PLC and Limited; and (ii) that assets located in Australia that were acquired from Western Mining were acquired by, and continue to be held directly or indirectly by, Limited.
[9] Based on last reported figures.
[10] Unification would be implemented by way of inter-conditional share-for-share schemes of arrangement of each of Limited and
PLC under which Limited and PLC shareholders would become shareholders in a single unified BHP public company listco incorporated in England & Wales, which would 100% own both of then-delisted Limited and PLC.
[11] Whilst unlocked franking credits could only be used by Australian tax resident shareholders, non-tendering shareholders should benefit from incremental accretion and share demand resulting from monetization of BHP's substantial franking credit balance.
[12] The Foreign Investment Review Board of Australia, which would review a unification transaction involving a resulting single unified BHP public company listco which is incorporated in England & Wales.
[13] Free cash flows from operations less free cash flows from investing and dividends, assuming the current 50% payout ratio of net income. Calculated by Elliott as the average of the figures produced by analysts at major international investment banks.
[14] The assumptions utilized in calculating this figure are described in the Presentation.
[15] The assumptions utilized in calculating this figure are described in the Presentation.
[16] Assumes annual off-market share buybacks starting at US$6bn and then utilizing excess cash flow whilst maintaining a 1.3x net debt / EBITDA target thereafter. Cash flow levels are Elliott's estimates based on a 1.3x net debt / EBITDA target. Also assumes share price appreciates annually based on constant multiples and that BHP conducts annual buybacks at a 14% discount to the post annual EPS accretion share price.
[17] The NPV is calculated in respect of (i) the increased share price implied by the EPS accretion, applied to the reduced number of shares in issue post buybacks; and (ii) the capital returned through the discounted off-market share buybacks up to June 2022.
[18] "A" grade credit rating means an "A-, A or A+" credit rating. This could be retained whilst maintaining a net debt/EBITDA ratio of 1.3x (or other appropriate metric).
[19] Please see the Presentation for further details.
[20] These per-share numbers are in respect of the current aggregate number of BHP shares in issue, except for the franking credits from buybacks number, which is based on the number of Limited shares currently in issue.
[21] Enterprise value measured before demerger of BHP's US petroleum business. Assumes that the BHP share price post-unification would be the weighted average (by number of shares in issue at Limited and PLC) of the current share prices of Limited and PLC. The post-unification (before demerger) enterprise value is therefore assumed to remain the same as BHP's current enterprise value.
[22] Valuation based on mean values of US petroleum and unified core BHP shown in the valuation slides in the Presentation.
[23] Valuation based on the NPV of (i) the increase in core BHP's share price implied by the EPS accretion from the share buybacks which are proposed by Elliott in the Presentation, applied to the reduced number of shares in issue post buybacks; and (ii) the capital thereby returned to shareholders.
[24] NPV of franking credits released from Elliott's proposed discounted off-market buyback program.
[25] Assumes US$2.5bn of BHP's existing net debt is allocated to the US petroleum business (c. 0.9x net debt / consensus 18E EBITDA).
[27] In addition to their long economic interest in PLC, the only other positions that the Elliott Funds and their affiliates hold in or relating to BHP are the rights to acquire up to approximately 0.4% of the issued shares in Limited.
[26] The analysts' views mentioned in this letter shall not be taken to mean or imply (i) that the research reports referred to are a representative sample of all research reports on the topics concerned; or (ii) that the authors of the reports or their employing banks/brokers endorse in any way the Value Unlock Plan or the views set out in this letter. We have emboldened, by way of emphasis, certain parts of the original text of the analysts' views which appear in this letter.
Source: Elliott Advisors (UK) Limited
(끝)
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