* Elliott Advisors urges end to dual-corporate structure
* Wants to list U.S. oil arm on NYSE, revise capital return
* Elliott's previous targets include Samsung Electronics
(Adds details of Elliott's plan, investor comments, context)
By James Regan Jamie Freed
SYDNEY, April 10 BHP Billiton
came under fresh pressure to restructure on Monday as activist
hedge fund Elliott Advisors urged the miner to scrap its
dual-corporate system, split off its U.S. oil arm and revise its
capital return policy.
Elliott outlined the proposal in a letter to directors at
BHP, adding the miner to a string of firms it has sought to
shake up including Samsung Electronics Co Ltd, Dutch
paints and chemicals group Akzo Nobel NV and brewer
SABMiller Holdings Inc.
The letter comes at a time when miners enjoy an unexpected
rise in prices for many commodities. But in late February after
unveiling a nearly eight-fold rise in half-year profit, BHP
Chief Executive Andrew Mackenzie said price corrections loomed,
notably for coal and iron ore.
"The goal (of the letter) is to provide details of the BHP
shareholder value unlock plan to all of BHP's shareholders so
that BHP can engage openly with all parties on the plan,"
Elliott said in a statement, disclosing an economic interest of
about 4.1 percent of London-listed BHP Billiton PLC.
That stake was worth $3.81 billion based on Friday's closing
share price, Reuters calculations showed. Elliott said it also
held rights with affiliates to buy up to 0.4 percent of
Sydney-listed BHP Billiton Ltd, worth about $372 million.
BHP did not immediately provide comment on the matter when
contacted by Reuters, but CEO Mackenzie has previously rejected
the idea of spinning off oil assets and Chairman Jac Nasser has
said overhauling the dual-corporate structure could be too
Elliott, which manages over $32.7 billion in global assets,
in its letter advised BHP to bring its British entity under the
control of its Australian arm.
That would create a single Australian-headquartered firm
that would retain BHP's current stock market listings and keep
them in Sydney's and London's benchmark share price indices,
according to Elliott.
The result would place holders of BHP's London and Sydney
shares on the same footing, eliminating a trading value
mismatch, it said.
Elliott also proposed spinning off BHP's U.S. oil and
petroleum arm - which it said was worth around $22 billion - and
listing it on the New York Stock Exchange.
The fund also advised BHP to avoid making badly timed
acquisitions and use cash flow instead to return more to
shareholders. At present, BHP has a minimum underlying
attributable profit payout ratio of 50 percent.
Elliott said its BHP plan could increase value by up to 48.6
percent for holders of BHP's Sydney-listed shares and 51 percent
for holders of its London-listed shares.
The Sydney shares closed 4.6 percent higher at A$25.73 on
Monday, while the London shares were up over 5 percent in early
Eliminating the British arm to release tax benefits relevant
to holders of the Sydney stock was not a new idea, said an
Australian fund manager with shares in BHP, who had not closely
reviewed Elliott's proposal and so declined to be identified.
"I think BHP has probably been asked 10 times in the last 15
or 17 years to unwind the (dual-corporate structure)," the fund
manager said. "These guys (Elliott) are talking their own book
in a way. If they are a shareholder and can agitate and get the
share price up that is a win."
BHP Billiton was created in 2001 through the merger of the
Australian Broken Hill Proprietary Co and the Anglo–Dutch
(Reporting by James Regan and Jamie Freed; Editing by Stephen
Coates and Christopher Cushing)