This notice provides information regarding the Off-market buy-back by RIO

This off-market buy-back tender (Buy-Back) was announced to the market on Thursday, 20 September 2018. This Notice provides specific information to participants in relation to the Buy-Back and details the process for submitting a Tender through CHESS. Capitalised words in this Notice have the meanings given to them in Section 5.1 of the Buy-Back booklet that was released to ASX by RIO on Wednesday, 03 October 2018.

Background

Rio Tinto Limited (RIO) is targeting a Buy-Back of around 41.2 million of its Shares. RIO retains the discretion to decrease the size of the Buy-Back or not buy back any Shares.

RIO invites eligible shareholders to tender Shares at discounts of between 8% and 14% inclusive (at 1% intervals) to the Market Price.  The Market Price will be calculated as the VWAP (as defined in Section 5.1 of the booklet) of RIO ordinary shares over the five trading days up to and including the Closing Date (Friday, 09 November 2018), calculated to four decimal places, as determined by RIO after 4.00pm (Melbourne time) on the Closing Date.  The Buy-Back Price is the price per Share at which RIO will buy back Shares from Tenders it accepts in the Buy-Back, rounded up to the nearest cent, and will be calculated by applying the Buy-Back Discount selected by RIO to the Market Price.  Shareholders can specify a Minimum Price (being one of four prices set out on the Tender Form) in conjunction with their specified Tender Discount(s) and/or Final Price Tender.  If a shareholder nominates a Minimum Price, this will make the shareholder’s Tender conditional upon the Buy-Back Price being equal to or greater than the nominated Minimum Price.

For Australian tax purposes, the Buy-Back Price will comprise a capital component and a deemed dividend component. The Australian Taxation Office has indicated in a draft Class Ruling that shareholders whose Shares are bought back by RIO under the Buy-Back will receive a Capital Component of A$9.44 per Share with the balance of the Buy-Back Price deemed to be a fully franked dividend for Australian tax purposes. The Buy-Back will have different tax consequences for each shareholder, depending on their individual taxation circumstances and the Australian income taxation consequences for them.  The ATO will not issue the Class Ruling in a form that is binding on the Commissioner of Taxation until after completion of the Buy-Back. Further information on the Australian income tax implications of participating in the Buy-Back are set out in Section 2 of the booklet.

RIO intends to buy back all Shares tendered by eligible shareholders as a Final Price Tender or at a Tender Discount greater than or equal to the Buy-Back Discount, subject to any scale back or Minimum Price condition.  A shareholder whose Tender is accepted will be paid the Buy-Back Price for each Share that is bought back.  This will be the case even if they Tender their Shares at a Tender Discount greater than the Buy-Back Discount adopted by RIO.  

Each parcel of Shares tendered at a different Tender Discount or as a Final Price Tender is a separate Tender.

RIO will not buy back any Shares tendered by shareholders at a Tender Discount smaller than the Buy-Back Discount, or any Shares that are tendered specifying a Minimum Price that is greater than the Buy-Back Price. 

If the total number of Shares tendered as Final Price Tenders or at a Tender Discount greater than or equal to the Buy-Back Discount is greater than the number of Shares RIO determines to repurchase, successful Tenders may be scaled back. However, if there is a scale back, RIO will buy back a Priority Allocation (being 70 Shares, or such lesser number of Shares determined by RIO to be the Priority Allocation) successfully tendered by each shareholder.

Shareholders who hold 70 Shares or less must tender all of their Shares (at one Tender Discount or as a Final Price Tender) if they wish to participate in the Buy-Back. Shareholders who hold more than 70 Shares may tender any number of Shares they hold (at one or more Tender Discounts or as a Final Price Tender), subject to a minimum of 70 Shares (in aggregate) and a maximum of the number of Shares shown on their Tender Form.

In addition, those who tender all of their Shares as a Final Price Tender and/or at a Tender Discount greater than or equal to the Buy-Back Discount and who would otherwise be left with a Small Holding (being a holding of fewer than or equal to 30 Shares) as a result of a scale back, will not have their Tender scaled back and their Tender will be accepted in full. 

What do I need to do by when?

Bid Details:

Offer Terms:

CHESS will process acceptance messages received no later than 7.00pm (Melbourne time) on Friday, 09 November 2018. An eligible RIO shareholder may only tender the number of Shares they hold as at the Buy-Back Record Date (Thursday 26 September 2018) that confer an entitlement to participate in the Buy-Back.

Participants should be aware that RIO shareholders are able to submit Tenders via an online facility offered by RIO.  Tenders submitted via the online facility for a CHESS holding will be actioned by the Registry via Registry Initiated Takeover Request transactions in accordance with CHESS 6.1, and such messages require the participant’s response to either accept or reject the message. 

RIO strongly recommends that shareholders with CHESS Holdings who lodge online Tenders do so by no later than 5.00pm (Melbourne time) on the Closing Date.  Participants should also be aware that they may be required to action messages received via this channel up to 7.00pm (Melbourne time) on the Closing Date, in order for the Tenders to be validly submitted.  It is expected that this Tender mechanism may result in larger volumes of registry initiated messages than for paper-based submission only, and participants are requested to monitor the requests for response throughout the Buy-Back period, but especially in the last week of the Tender Period.

Any Buy-Back Tender CHESS messages initiated by the Registry which have not been acknowledged by a shareholder’s controlling participant by 7.00pm on the Closing Date will be rejected, and those Tenders will not be included in the Buy-Back.  Neither RIO nor the Registry will be responsible should the controlling participant not acknowledge and confirm a Tender in sufficient time.

Withdrawal Process

A participant may withdraw a Tender by transmission of an EIS type ‘085’ message (Takeover Acceptance Removal Request Message) such that it is received no later than 7.00pm (Melbourne time) on Friday, 09 November 2018. (Please refer to Buy-Back booklet for further information.)

Amendment of Tenders

Each parcel of Shares tendered at one of the Tender Discounts or as a Final Price Tender, including a Tender made conditional on a Minimum Price, is a separate Tender.

A participant who receives instructions from a Sponsored Holder (i.e. CHESS Holder) to amend the Tender Discount and/or Minimum Price for a specific Tender must process the amendment by withdrawing the relevant Tender entirely and replacing it with a new Tender. A participant may withdraw a Tender by transmission of an EIS type ‘085’ message (Takeover Acceptance Removal Request Message) and replace it by transmission of an EIS type ‘031’ message (Takeover Acceptance Message).

Both messages must be received no later than 7.00pm (Melbourne time) on Friday, 09 November 2018 in order for the previous Tender to be replaced with the new Tender. If a Sponsored Holder wishes to reduce or increase the number of Shares tendered at a particular Tender Discount, the Sponsored Holder should complete the details of all their Tenders that they wish to submit on the Withdrawal/Amendment Form, but the participant will not need to transmit a full withdrawal of the relevant Tender, but only those Tenders at the particular Tender Discounts that are being amended.

Please refer to General Information for further details concerning the processing of Takeover Acceptance Removal Request Messages. 

Small Holdings / Excluded Tenders

An Excluded Tender is a Tender submitted by an eligible RIO shareholder who has tendered all of their Shares at one of the Tender Discounts greater than or equal to the Buy-Back Discount and/or as a Final Price Tender, and who would otherwise be left with a Small Holding (i.e. 30 Shares or less) as a result of a scale back. No scale back will apply to Excluded Tenders. 

Shares held by trustees and nominees

Trustees and Nominees must aggregate all Tenders received from beneficial owners who are not Ineligible Foreign Shareholders. Any scale back that applies to Shares Tendered, and the application of the rules in relation to Priority Allocations and Excluded Tenders, will be performed on a registered holder basis. 

Payment of proceeds

All proceeds due under the Buy-Back will be paid in Australian dollars.

If you have a direct credit authority to an Australian bank account recorded on the Share Register at 7.00pm (Melbourne time) on the Closing Date for the payment of dividends on your Shares, all proceeds due to you under the Buy-Back will be credited to your nominated Australian bank account. Shareholders and Participants should ensure this account held by the Registry is correct.  By submitting a Tender, RIO is authorised to pay any Buy-Back proceeds electronically into the nominated bank account held by the Registry.

Bank accounts can be updated online at www.computershare.com.au/easyupdate/rio or through CHESS before the Closing Date. Any updates to bank account details will be taken to be the nominated bank account details for future RIO dividend payments. 

If you do not have a direct credit authority to an Australian bank account recorded on the Share Register as at 7.00pm (Melbourne time) on the Closing Date, proceeds due to you under the Buy-Back will be sent to you by cheque in Australian dollars.

Payments to bank accounts and dispatch of cheques are expected to occur by Monday, 19 November 2018. Payment to nominated bank accounts will satisfy RIO’s obligation to pay for any Shares bought back. Cheques and direct credit advices will be mailed to your address as shown on the Share Register at 7.00pm (Melbourne time) on the Closing Date.

For further information regarding the offer please contact the Buy-Back Information Line on 1800 813 292 (within Australia) or +61 3 9415 4030 from outside Australia (Monday to Friday between 8.30am to 5.30pm Melbourne time).

Need more information?

Issued by

Chris Mitchell, Post Trade Operations

Contact information

Chris Mitchell
1800 623 571
cad@asx.com.au

General Information

Participants should refer to Section 13 of the CHESS Procedure Guidelines for Participants and Section 14 of the ASX Settlement Operating Rules for further information concerning the processing of Takeover Acceptance Messages for a CHESS Holding of securities. Some of these issues are summarised below. 

• A Participant must initiate acceptance of an offer by transmission of an EIS type ‘031’ message (Takeover Acceptance) where the securities in question are held in a CHESS Holding. The Participant will receive a ‘032’ message (Effected Takeover Acceptance) from CHESS in response. 
• In addition to the electronic notification to the Participant, paper notification will be sent directly to the Holder as securities are reserved in an offer-accepted subposition. Any change to the balance of securities in subposition will generate further electronic advice to the Participant and paper advice to the Holder.
• Where a Participant receives instructions from a Sponsored Holder, the Participant is required under the ASX Settlement Operating Rules to initiate acceptance of an offer:
• if the Holder specifies the time when or by which the offer must be accepted, in accordance with those instructions; otherwise 
• by End of Day on the date of receipt of instructions from the Holder. Where the offer closes on the date of receipt of instructions then prior to the close of the offer. 

Participants should therefore retain, as a minimum, a record of the date on which instructions to accept an offer are received from a Sponsored Holder.

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