Mining Weekly

PERTH (miningweekly.com) – Australian Treasurer Scott Morrison has warned that activist US fund manager Elliott International’s plan to shift mining major BHP Billiton’s primary stock market listing offshore would be a criminal offence and that directors could be held liable.

Morrison on Thursday described the proposed plan, which involves restructuring BHP Billiton and scrapping the dual listed structure in favour of a primary listing in London, as “unthinkable” and stressed that it would not comply with conditions set for the miner to operate in Australia.

Despite BHP dismissing the Elliott proposal, with a warning that it will destroy at least $1.3-billion in company value, the fund manager is reportedly meeting with the company’s other shareholders to push for the strategic change.

Morrison said on Thursday that in 2001, when the Australian Treasury agreed to the merger between BHP Limited and Billiton, the transaction was subject to a number of conditions, including that the merged entity remained listed on the ASX, and remained the ultimate holding company for the businesses it owned prior to the merger, as long as they remained part of the BHP group.

“These conditions apply indefinitely unless revoked or varied by me. It is clear that the proposals under discussion would not be consistent with these conditions,” Morrison said.

The Treasurer pointed out that BHP’s Australian shares are held by hundreds of thousands of Australians directly, and by millions more through superannuation funds and other investments, adding that the company played an important role in the Australian economy.

“The conditions set down by then Treasurer are in Australia’s national interest and remain necessary and appropriate. There is nothing in what I have seen of the proposals to suggest otherwise.

“It is unthinkable that any Australian government could allow this original ‘Big Australian’ to head offshore.

“Should BHP Billiton implement Elliott’s proposal contrary to the conditions imposed in 2001, it may commit a criminal offence and could be subject to civil penalties under the Foreign Acquisitions and Takeovers Act (FATA). If the company is convicted of an offence, the directors could be held personally liable,” Morrison said.

Furthermore, the Treasurer noted that a proposal by an LSE listed company to acquire the BHP assets would also be significant under the FATA, with Morrison being able to order that such an acquisition not proceed if it was contrary to national interest.

“If an acquisition proceeds without my consent, I would be able to order a divestment of the assets acquired and take court action to enforce this order. The proponents of the acquisition may also be liable to civil and criminal penalties.”