Rio Tinto - unveils details of new share buy-back programme

[idpickering]

Rio Tinto today unveils the details of how it intends to return approximately $3.2 billion of post-tax coal disposal proceeds to its shareholders.

The proceeds will be returned through a $3.2 billion share buy-back programme (the "Programme"), combining an off-market buy-back tender targeting up to 41.2 million Rio Tinto Limited shares (approximately A$2.7 billion[1] ($1.9 billion[2])) and further on-market purchases of Rio Tinto plc shares. The Programme is subject to market conditions and compliance with all applicable laws and regulations.

Rio Tinto chief executive J-S Jacques said "Returning $3.2 billion of coal disposal proceeds demonstrates our commitment to capital discipline and providing sector leading shareholder returns. We continue to focus our portfolio on those assets which provide the highest returns and growth, which will ensure that we continue to deliver superior value to our shareholders in the short, medium and long term".

Rio Tinto Limited will target the completion of the off-market purchase of up to 41.2 million of its shares in 2018, being the maximum number of shares that may be repurchased by Rio Tinto Limited under the Buy-Back in accordance with the terms of the shareholder approval granted at Rio Tinto Limited's 2018 annual general meeting. The aggregate maximum consideration and timing of the new on-market purchases by Rio Tinto plc under the Programme will be announced following the completion of the off-market buy-back tender for Rio Tinto Limited shares, which is expected to be on 12 November 2018. This is in addition to the existing Rio Tinto plc buy-back programmes, of which $1.7 billion[3] in shares remain to be purchased and which will be completed no later than 27 February 2019[4].

All shares purchased will be cancelled.

https://www.investegate.co.uk/rio-tinto ... 00163696B/

[88V8]

I'd much rather they just give us a special dividend.
OK, it's taxable which an increase in the SP isn't at least not unless one sells and then only maybe.

But hang on! It improves the EPS. The CEO's bonus targets no doubt include EPS.
So that's OK then.

V8

[scrumpyjack]

The advantage of the buyback arrangement is that they can get the benefit of Australian dividend tax franking and effectively buy back shares at significantly less than the market price (because the sellers get a tax credit)

It makes a lot of sense and I would much rather they did that than pay me a large dividend on which I would have to pay tax.

[monabri]

Perhaps with the new dividend policy it is the right thing to do -see this previous post ( by 'onthemove'), especially the last para.

viewtopic.php?f=15&t=13190&p=159867&hilit=Rio+dividend+policy#p159864


Less shares =less $ to be paid out in dividends ...or, alternatively, they might maintain a divi to shareholders with the funds available and/or improve dividend cover.

[Steveam]

V8: I’ve not checked the bonus arrangements but I’m aware (previously involved) of three schemes which ALL took into account changes in the capital structure. Dilution, consolidation and buybacks were all taken into account.

Best wishes,

Steve

[Gengulphus]

I'd much rather they just give us a special dividend.
OK, it's taxable which an increase in the SP isn't at least not unless one sells and then only maybe.

But hang on! It improves the EPS. The CEO's bonus targets no doubt include EPS.
So that's OK then.

And improving the EPS by buying back shares also improves the fraction of the company's earnings I 'own' as a result of my unchanged shareholding. So I care far more about whether that 'ownership' is real (i.e. whether it's reflected in free cash flow and whether that free cash flow is actually used for shareholders' benefit) and whether the increased EPS's beneficial effects for directors and shareholders are in reasonable proportion to each other than about whether there are such beneficial effects for directors.

Gengulphus