Introduction
Rio Tinto announced the successful completion of its off-market share buy-back up to approximately $560 million of capital to shareholders, or 11,566,308 RIO shares representing 2.65% of the issue shares of Rio Tinto (CR 2015/27).
The ex-entitlement date was on 18 February 2015 and buy-back completion date was on 7 April 2015. The buy-back proceeds consist of two components, franked dividend component plus a capital component.
The $39.00 dividend component will be treated as a fully franked dividend and the deemed capital proceeds will be $16.78, being the $9.44 capital component plus $7.34, which is the amount by which the CGT value exceeds the buy-back price.
- The share buy-back corporate action is only optional, i.e. shareholders must choose to participate in the buy-back and the amount subject to the buy-back varies from fund to fund.
- This type of Corporate Action will need to be processed at fund level.
Buy-Back Details
The key results of the Rio buy-back are as follows:
|
Buy-Back Description |
Per Share |
100 Shares |
|
Size |
A$560,271,960 |
|
|
CGT Date |
15 April 2015 |
|
|
Market price |
A$56.3169 |
|
|
Buy-back discount |
14.0% |
|
|
Buy-back price |
A$48.44 |
|
|
Scale back |
91.02% |
|
|
Number of RIO shares bought back |
11,566,308 |
|
|
% of RIO issued capital |
2.65% |
|
|
Capital component |
A$9.44 |
$944 |
|
Additional capital component |
A$7.34 |
$734 |
|
Fully Franked dividend component |
A$39.00 |
$3,900 |
|
Tax value |
A$55.78 |
$5,578 |
Worked Example
The following is an illustrated buy-back example using 100 units of RIO shares processed through the corporate action console:
