BHP To Increase Its Interest In SolGold

BHP Billiton Limited (ASX:BHP) is involved in the operations of discovering, acquiring and developing markets natural resources worldwide. On 16 October 2018, BHP Billiton Limited made an announcement regarding entering into a share subscription agreement with SolGold Plc. Under the share subscription agreement, SolGold will issue 100 million shares to BHP. Following this news, the share price of the company increased by 1.71 percent as on 16 October 2018.

The private placement by SolGold is expected to occur on 19 October 2018, and after this completion, the BHP’s interest in SolGold will rise from 6.01 percent to 11.2 percent. BHP Billiton Limited will be required to pay 45 pence per SolGold share, representing a 32 percent premium to the 20-day volume-weighted average London Stock Exchange price of 34 pence per share as determined on October 15, 2018.

Under the share subscription agreement, BHP is having a right to nominate one director to the SolGold board.  The company also has anti-dilution rights for a two-year period to allow it to preserve its shareholding at 10 percent. 

BHP has agreed that it will not acquire more shares in SolGold for a period of 2 years without SolGold’s consent, subject to certain exceptions. The company has also agreed to support the proposed change of control transactions relating to, and capital raising up to a limit by SolGold for a period of two years, provided these actions have the support of 60 percent of SolGold’s shareholders. During this period, BHP will also support proposals by the SolGold board to appoint or remove a director.

Recently, the company disclosed about the completion of the sale of its Fayetteville Onshore US gas assets. The assets were sold to a wholly owned subsidiary of Merit Energy Company. Merit acquired 100% of the issued share capital of BHP Billiton Petroleum Inc. and 100% of the membership interests in BHP Billiton Petroleum LLC, which hold the Fayetteville assets, for a total price of US$0.3 billion.

In FY 2018, the total revenue of the company increased from US$36,135 million in FY 2017 to US$43,638 million. The profit from operations of the company increased from US$12,554 million in FY 2017 to US$15,996 million in FY 2018. The loss after tax from discontinued operations increased from US$472 million in FY 2017 to US$2,921 million in FY 2018. The net cashflow from operating activities increased from US$16.804 million in FY 2017 to US$18,461 million in FY 2018, which reflects higher commodity prices and a strong operating performance during the year. In FY 2018, the company announced the highest ever final dividend of 63 cents per share and returned US$6.3 billion to its shareholders in the form of dividends. The company also announced the sale of our Onshore US assets for US$10.8 billion.

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In the past six months, the share price of the company increased by 11.21 percent as on 15 October 2018. BHP’s shares traded at $33.910 with a market capitalization of $107.08 billion as on 16 October 2018 (AEST 1:11 PM).

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