Rio Tinto says it will return $US3.2 billion ($4.4 billion) to shareholders from the cash raised in the recent sale of coal assets via a share buyback.
Rio said it would conduct an off-market share buyback for up 41.2 million Rio Tinto Ltd shares, worth about $2.7 billion, as well as on-market purchases of Rio Tinto plc shares.
The buyback was mooted at the time of the release of the company’s interim results in August. Rio said the size of the next buyback of plc shares will be announced in mid-November.
Rio Tinto CEO J-S Jacques said in yesterday’s statement that “Returning $US3.2 billion of coal disposal proceeds demonstrates our commitment to capital discipline and providing sector-leading shareholder returns.
“We continue to focus our portfolio on those assets which provide the highest returns and growth, which will ensure that we continue to deliver superior value to our shareholders in the short, medium and long-term”.
The company said in yesterday’s statement that “the aggregate maximum consideration and timing of the new on-market purchases by Rio Tinto plc under the Programme will be announced following the completion of the off-market buy-back tender for Rio Tinto Limited shares, which is expected to be on 12 November 2018.”
“This is in addition to the existing Rio Tinto plc buy-back programmes, of which $US1.7 billion in shares remain to be purchased and which will be completed no later than 27 February 2019.”
The $US3.2 billion of net disposal proceeds is derived from the completed sales of Hail Creek and Valeria (pre-tax $US1.7 billion), Winchester South (pre-tax $US200 million) and Kestrel (pre-tax $US2.25 billion).
The sale of Rio Tinto’s Aluminium Dunkerque smelter in northern France for $US500 million, subject to final adjustments, is yet to be completed.
“As announced on 14 September, Hydro has withdrawn its offer to acquire the ISAL smelter in Iceland ($US345 million) following initial feedback from the European Commission. The timing and form of shareholder returns in respect of further proceeds arising from disposals still to be completed will be announced with the 2018 full year results,” Rio said yesterday.
Even though the capital returns had been previously flagged, investors still sent the shares up 3.5% yesterday to end at $78.10, in a weaker wider market.
