Pentwater Calls For Turquoise Hill to Be Transparent About The Magnitude of the Potential Funding Shortfall For Construction ...
Last Wednesday, Pentwater Capital Management LP
"), the largest minority shareholder of
Turquoise Hill Resources Ltd. ("Turquoise Hill
") (TSX:TRQ) (NYSE:TRQ), wrote to
Turquoise Hill highlighting the Company’s inadequate and misleading
disclosure of important financial information. Specifically,
Pentwater explained how the Company’s disclosure of a $4 billion
capital shortfall was misleading because it failed to explain that
over $900 million of the shortfall was for the construction of a
power plant that the government of Mongolia publicly indicated it
intended to build, and over $1.9 billion of the shortfall was for
debt amortization payments that typically can be extended for the
payment of a small fee.
Yesterday, Rio Tinto confirmed that the Company
will no longer need to fund the construction of the power plant as
the Government of Mongolia will now “fund and construct a State
Owned Power Plant at Tavan Tolgoi.” Today, Pentwater
responds: Now that the Company’s 51% owner Rio Tinto has
confirmed that Turquoise Hill will not need to finance the
construction of the power plant, Turquoise Hill must come clean and
provide at least the bare minimum of financial disclosure to its
minority shareholders who own 49% of its stock. Tell us the
- Isn’t it true that without needing to finance the construction
of a power plant, the capital funding shortfall is less than $3.1
- Isn’t it true that more than $1.9 billion of the $3.1 billion
is debt amortization payments?
- Isn’t it true that if the debt amortization payments are
contractually extended, the capital funding shortfall is less than
- Isn’t it true that the existing project financing arrangements
provide the Company the ability “to raise additional supplemental
debt of up to $1.6 billion at the same attractive terms,” as its
- Isn’t it true that if the Company raises the supplemental
financing and extends the amortization payments, then there is NO
capital funding shortfall?
Turquoise Hill’s disclosures are inadequate and
misleading. Shareholders have a right to know these answers.
However, the Board and management seem to not want to be honest and
transparent with their minority shareholders. Instead, the Board
and management prefer to act only in the interest of Rio Tinto,
which has chosen every single Board member and every single
This is why it is so important that shareholders vote for the
election of a minority shareholder representative to the Board and
why shareholders support Pentwater’s proposal to amend the bylaws
to allow minority shareholders to have full time representatives on
the Company’s Board.
We Need Your Support
We are seeking your support at the Company's
upcoming annual and special meeting of shareholders to be held on
July 24, 2020 to restore accountability at Turquoise Hill and give
minority shareholders back their voice.
We encourage our fellow shareholders to consider
the facts and take action against the current culture of
entrenchment, value destruction and misconduct at Turquoise Hill.
The interests of the Company's minority shareholders have been
disregarded for far too long. Your vote is critical to initiate
much-needed change, to restore accountability and to safeguard
minority shareholder interests in Turquoise Hill.
Shareholders are urged to vote only the GOLD
- FOR the election of Matthew Halbower to the board of directors
of the Company;
- WITHHOLD in respect of the election of all of the management
nominees to the board of directors of the Company; and
- FOR the adoption of the shareholder proposal submitted by
Pentwater to amend the Company's articles to provide minority
shareholders of the Company with the exclusive right to nominate
and elect three of seven directors to the Board.
Shareholders are urged to read the full text of
Pentwater's proxy circular and related press releases, which have
been filed and made available under Turquoise Hill's issuer profile
For further information contact:
MacKenzie Partners, Inc. Daniel Burch – 1-212-929-5748 Jeanne
Carr – 1-917-648-4478Email: SaveTRQ@mackenziepartners.com