2.13 Material contracts

DLC agreements

On 29 June 2001, BHP Billiton Limited (then known as BHP Limited) and BHP Billiton Plc (then known as Billiton Plc) merged by way of a DLC structure. To effect the DLC, BHP Limited and Billiton Plc (as they were then known) entered into the following agreements designed to place the shareholders of both companies in a position where they effectively have an interest in a single group that combines the assets, and is subject to all the liabilities, of both companies:

  • BHP Billiton Sharing Agreement
  • BHP Billiton Special Voting Shares Deed
  • BHP Billiton Limited Deed Poll Guarantee
  • BHP Billiton Plc Deed Poll Guarantee.

The effect of each of these agreements and the manner in which they operate are described in section 2.12 of this Report. It is expected that these agreements will remain in effect until such time as a change in control of the BHP Billiton Group may occur.

Credit facility

On 5 February 2008, we entered into a multicurrency term and revolving facility and subscription agreement with Barclays Capital, BNP Paribas, Citibank Global Markets Limited, Goldman Sachs, HSBC Bank plc, Banco Santander, S.A., London Branch and UBS Limited to, among other things, meet potential funding requirements in relation to our offer to acquire Rio Tinto. The facility agreement provides for four debt facilities in an aggregate amount of US$55 billion as follows:

  • a US$20 billion term loan facility with a term of 364 days, which may be extended (at our election) for a further 12 months and thereafter up to US$10 billion may be extended for a further six months (at our election) subject to payment of an extension fee;
  • a US$15 billion term loan facility with a term of three years;
  • a US$12.5 billion term loan facility with a term of five years; and
  • a US$7.5 billion revolving facility with a term of five years incorporating Euro and US dollar swingline facilities.

The proceeds of loans drawn under the facilities may be used for the following purposes:

  • refinancing Rio Tinto’s existing US$40 billion facility or any refinancing of such facility;
  • financing any return of cash to our shareholders by way of a share buyback or otherwise;
  • financing any cash consideration that may be offered to Rio Tinto shareholders pursuant to the acquisition;
  • the payment of costs in connection with the acquisition; and
  • in the case of the revolving facility, for the general corporate purposes of the BHP Billiton Group.

Loans drawn under the facilities bear interest at a margin over LIBOR.

The facility agreement contains customary representations and warranties, affirmative and negative covenants (including, among others, compliance with a leverage ratio, negative pledge and certain restrictions on disposals and subsidiary indebtedness), indemnities and events of default, each with appropriate carve-outs and materiality thresholds.

The facility agreement contains a requirement to prepay the US$20 billion term loan facility from proceeds of certain disposals and borrowings, subject to certain exceptions and thresholds.