- Turquoise Hill Resources’ (TSX:TRQ) largest minority shareholder has engaged in a war or words with the company’s board
- Pentwater Capital Management claims Turquoise Hill’s financial figures, released in May, were inadequate and misleading
- The dispute centres around the announcement of a C$4 billion funding shortfall for the Oyu Tolgoi underground mine in Mongolia
- Pentwater claims this calculation is false and hopes to place a minority shareholder representative onto Turquoise Hill’s board
- Turquoise Hill Resources (TRQ) is up 5.7 per cent and is trading at $1.11 per share
Turquoise Hill Resources (TSX:TRQ) has been embroiled in an ongoing dispute with its largest minority shareholder, Pentwater Capital Management.
Pentwater Capital is an Illinois-based private capital management company, with discoed holdings sitting at a value of over approximately C$8.2 billion.
The majority shareholder of Pentwater is Rio Tinto, one of the world’s largest mining companies.
Pentwater has penned some explosive claims, specifically relating to disputes over the disclosure of financial information on the Oyu Tolgoi underground mine.
The Oyu Tolgoi mine is a Mongolian gold project, which is currently 66 per cent owned by Turquoise Hill and 34 per cent owned by the Mongolian Government.
Pentwater believes the board and management at Turquoise Hill misled investors when it reported a funding shortfall of $4 billion on May 13.
Since that May release, Pentwater has penned two letters calling on the company to clarify that announcement. Pentwater claims that this funding shortfall is false, as it includes a funding commitment to construct a power plant, which the Mongolian Government has since committed to constructing.
The private capital management firm also claims that, within that $4 billion figure is a $2 billion debt amortization figure, which could be easily extended for a small fee. Pentwater claims the real funding deficit is $1.2 billion, and that Turquoise is able to raise up to $1.6 billion through existing financing arrangements.
Due to these perceived circumstances, Pentwater believes minority shareholder representative should be voted onto the Turquoise Hill board.
In the latest letter to the market, Pentwater has come out swinging with very strong language including calling Turquoise Hill’s board and management team deaf, corrupt, and mindless.
Turquoise Hill Resources (TRQ) is up 5.7 per cent and is trading at $1.11 per share at 12:00 pm EDT.