PERTH (miningweekly.com) – Diversified miner Rio Tinto has suffered a set-back in its bid to acquire the remaining interest in Turquoise Hill Resources, with the miner forced to abandon its sideline agreement with securityholders Pentwater Capital Management and SailingStone Capital Partners.

Under the agreement with the securityholders, which was signed in early November, the securityholders agreed to withhold their votes at Turquoise Hill’s special meeting and exercise their dissent rights in respect of Rio’s proposed C$43-a-share acquisition of the remaining 49% interest in Turquoise Hill.

Canadian regulators took issue with the transaction, and compelled Turquoise Hill to postpone the shareholder vote on the $3.3-billion takeover offer indefinitely.

Rio this week said that after careful consideration of the concerns raised by minority shareholders in Turquoise Hill, the company had agreed to terminate the agreement with the securityholders.

The company said that while its proposed C$43-a-share offer for Turquoise Hill would proceed, there was no assurance that any of the securityholders would continue to withhold their vote or whether any of them would vote for or against the transaction.

“We have acknowledged feedback received from minority shareholders and returned to the proposal originally unanimously recommended by the Turquoise Hill Special Committee. We will work with the Turquoise Hill Special Committee to secure a new shareholder meeting date so that the proposed transaction can be voted on by minority shareholders as soon as practicable,” Rio Tinto copper CEO Bold Baatar said.

“We continue to believe that a premium of 67% for their shares and removal of financial uncertainty is an attractive proposition for minority shareholders.”

To further support the proposed transaction, Rio will waive the 12.5% dissent condition in respect of the arrangement, provided that Turquoise Hill shares for which dissent is validly exercised do not exceed 17.5% of Turquoise Hill shares outstanding, will make an upfront payment of C$34.40 a share to any Turquoise Hill shareholder who validly dissents and elects to receive such amount, and will pay to an electing shareholder interest at the Canada 1 Year Treasury Bill Yield on any balance of “fair value” that becomes payable under the dissent process over and above the upfront payment up to C$43 a share calculated from the effective date to the date of payment, provided that no other interest shall be payable to an Electing Shareholder in respect of any fair value payment.

Rio will also allow any oppression claims by any Turquoise Hill minority shareholders, including electing shareholders, against Turquoise Hill, Rio Tinto or their respective affiliates, to survive the arrangement and be pursued following the effective date, where such claims are served on or provided to Turquoise Hill and Rio Tinto no later than seven days following the effective date.

Rio has reiterated that the C$43-a-share cash offer was the company’s best and final all-cash offer, with the bid representing a premium of 67% to Turquoise Hill’s closing price of C$25.68 a share on March 11, the day prior to Rio’s initial public proposal to acquire Turquoise Hill.