Australia blocks BHP offshore move, warns of criminal charges

BHP said a lower US corporate tax rate would have a positive impact on its American profits in the long-term

A US hedge fund plan for mining giant BHP Billiton to move its primary listing to London was shot down by the Australian government Thursday which warned of criminal charges if it went ahead.

New York-based Elliott Advisors, a significant shareholder in the Anglo-Australian company, is pushing for BHP to restructure the business, arguing it could unlock as much as 50 percent more value in the stock.

It wants to dissolve the company’s costly dual-listed structure, with its assets transferred to a new company to be incorporated and listed in Britain.

BHP bosses last month rejected the proposal but Australian media reports said representatives from Elliott, run by billionaire Paul Singer, were in Sydney and Melbourne this week to keep up the pressure.

Treasurer Scott Morrison said removing BHP from the Australian Stock Exchange was not in the national interest.

Under conditions imposed by then-treasurer Peter Costello in 2001 when BHP merged with the British miner Billiton, its assets must be held by a company listed in Australia.

"BHP Billiton's Australian shares are held by hundreds of thousands of Australians directly, and by millions more through superannuation (pension) funds and other investments," said Morrison in a statement.

"The company plays an important role in the Australian economy.

"The conditions set down by then treasurer Costello 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."

He said that if BHP chose to follow the Elliott proposal it would be contrary to the conditions imposed in 2001 and "it may commit a criminal offence and could be subject to civil penalties under the Foreign Acquisitions and Takeovers Act".

"If the company is convicted of an offence, the directors could be held personally liable."

BHP's Australian roots stretch back to the Broken Hill Proprietary Company which began mining operations in that eponymous Outback town in 1885. It opened its head office in Melbourne the same year.

BHP bosses said in April it was constantly reviewing its dual-listed structure but "the costs and associated risks of Elliott's proposal would significantly outweigh any potential benefits".

BHP slumped to an annual net loss of US$6.39 billion, its worst-ever result, in the 2015-2016 financial year due to sliding oil and iron ore prices. But it bounced back into the black in the last six months of 2016 as commodity prices rebounded.

Its share price opened 0.73 percent lower at Aus$23.04 on the Australian market Thursday.