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Hedge fund wants to unify BHP, split off U.S. oil

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Staff Writer | April 10, 2017
BHP Billiton
Proposal   Elliott Advisors sent a letter to BHP

Hedge fund manager Elliott Advisors said it had sent a letter to BHP Billiton directors outlining a plan to unlock value by scrapping the mining giant's dual- corporate structure, demerging its oil business and rejigging its capital return policy.

"The goal is to provide details of the BHP shareholder value unlock plan to all of BHP's shareholders so that BHP can engage openly with all parties on the plan," Elliott said in a statement.

BHP did not immediately provide comment on the matter when contacted by Reuters.

Elliott said it holds a "long economic interest" of about 4.1 percent of the issued shares in London-listed BHP Billiton PLC.

That stake is worth $3.81 billion, Reuters calculations showed based on Friday's closing price.

Elliott also said it holds rights with its affiliates to acquire up to 0.4 percent of the issued shares in Sydney-listed BHP Billiton Ltd, worth about $372 million.

"After reviewing the elements of Elliott’s proposal, we have concluded that the costs and associated risks of Elliott’s proposal would significantly outweigh any potential benefits," the company said.

"Since the formation of the DLC in 2001, we have returned to shareholders approximately $23 billion in buybacks of BHP Billiton Limited and BHP Billiton Plc shares, and approximately $56 billion in cash dividends.

"Since 2013, BHP Billiton has reduced the number of assets in the portfolio by more than one third, through the demerger of South32 and the sale of over $7 billion of assets. We have reduced unit costs by more than 40 per cent.

"Under BHP Billiton’s updated dividend policy, shareholders now receive a minimum 50 per cent of underlying earnings as a dividend each period.

"We have introduced a rigorous capital allocation framework, which balances value creation, cash returns to shareholders and through the cycle balance sheet strength in a transparent and consistent manner."


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