• BHP leaves door open to collapsing its dual-listed structure
BHP leaves door open to collapsing its dual-listed structure
13 Mar, 2018, No Comment

Summary: BHP has not slammed the door on collapsing its dual-listed company structure in future but says it's not worthwhile at the moment.....

BHP’s chief financial officer said that ending the arrangement would cost at least $US1 billion while generating “uncertain benefits”.

During a question and answer session with the miner’s retail shareholders, Peter Beaven also said that collapsing the DLC structure was being examined by the company, along with other comments which suggest that the company does not have an immovable, rigid, permanent opposition to such a change.

“That’s something we are definitely looking at, and have looked at it for many years and will continue to look at,” he said.

“At this point in time, probably let it be, but we’ll continue to review it as we go forward,” he said.

The comments indicate that BHP has certainly not slammed the door on a possible unification of the DLC - a structure that sees the miner have a listing on stock exchanges in Australia and the United Kingdom.

The New York-based activist investor Elliott Management has been pushing BHP to unify its dual-listing as part of its lengthy campaign for change at the miner.

Elliott had been pushing BHP to announce an independent review of its DLC before it released its half-year results in February, a move which the miner resisted.

To push its case Elliott also released a report last month it commissioned which estimated that unification would unlock more than $US22 billion in value to BHP shareholders.

“It (the DLC structure) has worked very well up to this point in time, but we do think about whether there are some benefits from collapsing the PLC (the British listing) into Limited (the Australian company), and actually having only one register here,” Mr Beaven said.

The influential executive participated in the Q and A with retail shareholders in a webcast broadcast on Friday. It was the first webcast of its kind the miner had held with Australian retail shareholders to discuss half-year results.

He also updated the company’s army of Australian shareholders about the company’s recently announced dividend reinvestment plan - to be introduced in time for the company’s final dividend payment for fiscal 2018 - the company’s debt position, and whether the miner would benefit from the rise of electric vehicles around the world.

Asked if BHP was “set up” to benefit from the rise of EVs and if it would consider getting into lithium, Mr Beaven said the miner’s massive copper capabilities left it well placed.

“Copper’s really the big one. That’s a very large market and it’s going to get bigger, and we’ve got this great position,” he said.

Mr Beaven said while a commodity used in electric batteries like lithium would have very high growth rates “there is a lot of lithium around in the world”, and it is “still going to be a relatively small market in the future”.

He also said: “The whole battery thing and the way the world is moving, as I say we’re very thoughtful about it, and there’s many ways for us to play in this, and so I think we are reasonably comfortable...there’s a lot of work and thought going into this, but I think we should be good.”

On debt Mr Beaven said he wanted the company’s net debt to be in the range of $US10 billion-$US15 billion in the medium term.

“That will protect us from any downside that we can see, because the world is an uncertain place. And we need a strong balance sheet that will look after us,” he said.

“We think that $US10 billion-$US15 (billion) range is about right. We’re inside the range, we’re at the top end of it, we still probably need to put a little bit more away for a rainy day, it’s just a prudent thing to do, we’re producing a lot of cash, we should just put a bit more of that away,” he said.

In February BHP revealed that its net debt had fallen to $US15.4 billion, when it reported a first-half underlying profit of $US4.05 billion ($5.12 billion). It lifted the interim divided by 38 per cent to US55 cents per share.

watoday.com.au 10/3/2018

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