Pentwater Issues Letter to Turquoise Hill Calling for Increased Transparency in Financial Disclosures and Urges Shareholders to Vote for Pentwater’s Proposals to Restore Accountability

June 24, 2020 7:30 AM

NAPLES, Fla., June 24, 2020 (GLOBE NEWSWIRE) -- Pentwater Capital Management LP ("Pentwater"), the largest minority shareholder of Turquoise Hill Resources Ltd. ("Turquoise Hill" or the "Company") (TSX: TRQ) (NYSE: TRQ), has written the attached letter to the Board of Directors. The letter outlines yet another example of how the Board has benefited its largest shareholder Rio Tinto by failing to disclose important and necessary financial information to TRQ shareholders. Several examples of the Board’s dereliction of its duty to provide full and adequate disclosure include:

We Need Your Support

We are seeking your support at the Company's upcoming annual and special meeting of shareholders to be held on July 24, 2020 to restore accountability at Turquoise Hill and give minority shareholders back their voice.

We encourage our fellow shareholders to consider the facts and take action against the current culture of entrenchment, value destruction and misconduct at Turquoise Hill. The interests of the Company's minority shareholders have been disregarded for far too long. Your vote is critical to initiate much-needed change, to restore accountability and to safeguard minority shareholder interests in Turquoise Hill.

Shareholders are urged to vote only the GOLD proxy:

Shareholders are urged to read the full text of Pentwater's proxy circular, related press releases and the June 24, 2020 Letter to the Turquoise Hill Board, which have been filed and made available under Turquoise Hill's issuer profile at

For further information contact:

MacKenzie Partners, Inc. Daniel Burch – 1-212-929-5748 Jeanne Carr – 1-917-648-4478Email:

Pentwater Capital Management LP

June 24, 2020

Dear Mr. Quellman and Members of the Board of Directors:

I am writing to you regarding an unacceptable lack of clarity in your financial disclosures. Turquoise Hill’s 2019 fourth quarter financial results, released on March 21, 2020, served as the first public disclosure of TRQ’s alleged $4.5 billion estimate of the incremental funding requirement caused by the delay and capital overrun in the underground development at Oyu Tolgoi, announced more than 8 months earlier on July 15, 2019. How the company reached the $4.5 billion figure was not explained in any of the filings in any clear way. As you know, Pentwater has made numerous attempts at more transparency from the Company on this subject.

On the March 23, 2020 earnings call, one analyst very reasonably asked for the underlying commodity prices that the Company assumed to get to the very specific $4.5 billion figure. You refused to answer the question. Upon being asked whether the figure included the $924 million that the power plant would cost if the Company fully financed and built it, you also did not directly answer the question, but seemed to imply that it was included. This is despite the fact that the government of Mongolia has recently stated its intention to build the power plant by itself, which, if accurate, would mean the Company will not have to finance it. Finally, in response to yet another question, management did directly confirm that the $4.5 billion figure includes $1.9 billion of debt amortization repayments due over the next five years.

Less than two months later, as part of the 2020 first quarter financial results released on May 13th, 2020, the Company lowered its estimate of the incremental funding requirement to $4.0 billion. The Company has since refused to re-affirm the principal repayment figures included in the underfunding gap. The fact that $1.9 billion of the remaining $4.0 billion of underfunding are principal repayments that could easily be negotiated into outer years is a highly material piece of information that any transparent and thoughtful management team would emphasize. Pentwater has asked you on numerous occasions to provide clarity in this disclosure. You have refused.

If the statements you have made on your earnings call and disclosures are accurate, it appears to Pentwater that if debt amortizations payments are extended and the government of Mongolia does in fact construct its own power plant, the amount of incremental financing needed is as follows:

$4,000 (claimed underfunding)
-$1,917 (debt amortization)
-$ 924 (power plant costs)
=$1,159 (actual underfunding)

If accurate, this paints a drastically different picture of the situation than the $4.5 billion figure provided by TRQ in March of 2020 or the $4.0 billion figure provided by TRQ in May. It also is quite relevant since according to a TRQ press release dated March 14, 2019, the existing project financing arrangements provide OT the ability “to raise additional supplemental debt of up to $1.6 billion at the same attractive terms.” It appears to Pentwater that simply moving forward with the supplemental financing and extending amortization payments at the same time would likely fill TRQ’s needed financing.

Unfortunately, you refuse to confirm or deny any of this. Is it Rio’s goal to scare market participants into selling their shares to keep the price of TRQ shares artificially low? Your complete failure to provide adequate disclosure on this matter is yet another example of how TRQ’s board and management team are not independent and are fully beholden to Rio Tinto – a majority shareholder that not only operates the mine but with whom the Company also happens to currently be negotiating various financing options.

TRQ minority shareholders deserve representation on the Board. Without any minority shareholder representation on the Board, there will continue to be lack of transparency and disclosure on TRQ’s part in regard to any incremental funding requirements. And until additional such transparency is provided, Pentwater must prudently assume that the Company might be purposely obfuscating and misleading the public markets on its true underfunding needs to the benefit of its majority shareholder’s position in financing discussions.


Matthew HalbowerChief Executive OfficerPentwater Capital Management

Source: Pentwater Capital Management LP


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