NAPLES, Fla., Jan. 18, 2022 /PRNewswire/ -- On January 13, 2022, Pentwater Capital Management LP
("Pentwater"), the largest minority shareholder of Turquoise
Hill Resources Ltd. ("Turquoise Hill") (TSX:TRQ) (NYSE:TRQ),
sent the following letter to the members of the Board of Directors
of Turquoise Hill. As with every other letter we have sent for the
past year, there was no response. Pentwater urges all Turquoise
Hill shareholders to make their voices heard by reaching out
directly to the members of the TRQ Board. A copy of the letter is
as follows:
Dear Board of Directors of Turquoise Hill Resources:
As you know, we at Pentwater Capital Management have been your
largest minority shareholders for many years.
I write to you because weeks have passed since a resolution was
voted on in the Mongolian Parliament that could have materially
detrimental effects on TRQ, and yet we have not heard any comment
from TRQ's Board or management. As a result, we are gravely
concerned that you and your cohorts at Rio Tinto may be on the
verge of committing some or all of the following flagrant
derelictions of fiduciary duty:
(1) TRQ would agree to
forgive $2.3bn in debt that the
Government of Mongolia owes TRQ,
half of which the minority shareholders will have to absorb even
though the only basis to forgive any debt is the malfeasance and
misconduct committed by the operator of the mine, Rio Tinto;
(2) You have not
secured for TRQ minority shareholders any compensation from Rio
Tinto in return for the costs and damages they suffered at the
hands of Rio Tinto despite the fact that TRQ owns twice as much of
the mine as the Mongolian government and the Mongolian government
is receiving a package worth well in excess of $2.5 billion;
(3) You are going to
allow Rio to settle on terms that will restrict you from raising
debt at the OT level and require you to fund the whole underfunding
needed to complete the project, further harming the TRQ minority
investors.
If this does, in fact, turn out to be the outcome, you should
steadfastly refuse to sign such a deal, and should resign if need
be. Over the years, numerous Mongolian government officials –
including two Prime Ministers – have been held in jail related to
their actions regarding OT; Rio Tinto personnel have had to leave
Rio under a cloud of scandal, while the recent independent
consultant's report is damning regarding Rio Tinto's
actions. Nevertheless, TRQ board members have acted like
puppets of Rio Tinto. There is so much blame to go around. Signing
off on any of the scenarios listed above would constitute your
admission of liability for such a blatant disregard for your
fiduciary duties to your shareholders.
As a significant investor in Turquoise Hill equity, Pentwater
does not prefer to see the underground cease operations. But
it is preferable to have a pause in operations than to have you
practically give away the mine. Agreeing to the proposal that seems
to be on the table would simply be an audacious and astonishing
disregard for duty, and the blame would rest at your feet. Rio is
desperate to sweep their malfeasance under the rug and will
eventually agree to appropriate economic compensation even if it is
necessary to pause construction. This mine will eventually
operate and will be a windfall to the people of Mongolia and TRQ's investors. The
minority shareholders have borne the burden of financing the
construction and have had to live with consequences of Rio's
misconduct and should be reasonably compensated for such. The
minority shareholders continue to carefully watch your actions. You
will surely be held to account for breaches of your fiduciary
duties.
We have seen enough from your past actions to not have much hope
of our pleas leading to any result. With that said, it is never too
late to begin doing the right thing. Please publicly reply to this
letter and release this letter along with your response.
Kindest Regards,
Matthew Halbower
Chief Executive Officer
Pentwater Capital Management
Cc: Members of the Board of Directors of Turquoise Hill
Resources
peter.gillin@turquoisehill.com;
Maryse.Saint-Laurent@turquoisehill.com;
george.burns@eldoradogold.com; Stephen.Jones@turquoisehill.com and
Steve.Thibeault@turquoisehill.com
Contact:
David Zirin- Chief Operating
Officer
Pentwater Capital Management
312-589-6401
