Activist investor demands review of Rio Tinto's structure
Palliser Capital called for an independent review of Rio Tinto's structure on Thursday, the latest salvo in the activist investor's campaign to end the miner's dual-listed status.
In a letter sent to the miner's board, Palliser and a number of other shareholders demanded a resolution be included in the next annual general meeting that, if passed, would see Rio commit to an "independent, comprehensive and transparent review" of its structure.
Rio Tinto is currently dual-listed, with its primary listing in London and a secondary one in Australia. The UK hedge fund wants it to unify into a single Australian-domiciled holding, with its primary listing in Sydney and secondary listings in London and New York.
Palliser, which believes the current dual-listed company (DLC) structure is both outdated and value destructive, met with Rio on 4 December to press for change
However, Palliser said Rio's management was "adamant" there was no value in unification "despite us demonstrating the overwhelming empirical evidence in favour".
Rio also claimed most shareholders were happy with the current structure, which Palliser disputed.
In the letter, Palliser said it had not decided to requisition the resolution "lightly or without a great deal of deliberation".
"We took this step because we believe that the market is long overdue the review we are requesting.
"The resolution we have co-filled provides an opportunity for shareholders of Rio Tinto to be head. It enables management to genuinely test whether shareholder support for unification is impossible, as they have asserted."
It concluded: "It is simply unsustainable for the board of the second-largest mining company in the world to keep working around the value-destructive constraints of its archaic structure while its DLC-free peers optimise value through their unrestricted access to the full suite of capital allocation."
Palliser, which holds a stake worth around $250m in Rio, first called on the miner to quit London in May.
Rio Tinto has yet to comment on Thursday's letter.
Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.