# BHP Billiton PLC (NYSE: BBL)



## mrPPincer (Nov 21, 2011)

So BHP Billiton is planning a demerger.
The ADR of the British HQed PLC version is BBL.
The company's home page; http://www.bhpbilliton.com/home/investors/demerger/Pages/default.aspx

I failed to notice they were planning the demerger when I added it to my portfolio earlier this year, not that I necessarily have a problem with it, but I think it's creating a little uncertainty with how it will go forward, what are the tax implications going to be for us foreign shareholders, will we become owners of shares in two different ADRs?
If so will the second one still be an ADR of a PLC HQed in the UK?

Right now they are still going through the approval process; from the August 19 news release: 


> BHP Billiton Limited and Plc shareholders would receive an in-specie distribution of shares in the new listed company on a pro-rata basis, as well as retaining their existing shares in the Group.
> In addition, BHP Billiton will seek to steadily increase or at least maintain the dividend per share in US dollar terms at each half yearly payment following the demerger, implying a higher payout ratio.
> 
> It is intended that NewCo would be an Australian incorporated company listed on the Australian Securities Exchange and would have an inward secondary listing on the Johannesburg Stock Exchange. It is also proposed that a sponsored, Level 1 American Depositary Receipt (ADR) program would be established, with those ADRs traded in the United States over-the-counter market.
> ...


Full PDF http://www.bhpbilliton.com/home/inv...CreationofNewGlobalMetalsandMiningCompany.pdf

& more recently, from their site;


> 16 October 2014
> 
> ​BHP Billiton today confirmed that it will pursue a Standard listing on the UK Listing Authority’s Official List and admission to trading on the London Stock Exchange for the new company it plans to create via demerger. This is in addition to the proposed primary listing on the Australian Securities Exchange and secondary inward listing on the Johannesburg Stock Exchange.


http://www.bhpbilliton.com/home/inv...sting-in-London-for-Proposed-New-Company.aspx

So it looks like there will be a UK listing for the new company, but I don't know if that listing will be HQed in the UK, or if it is, whether the UK listing will have US traded ADR counterpart, and if there is, will my BBL ADR have that one spun out into my TFSA, or, if not, could I instead just take a cash settlement instead for that portion, seems somehow too much to ask but I'll wait and see.

Thoughts? Insights anybody?


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## epson600 (Nov 24, 2014)

Here's my interpretation.

BHP Billiton will continue as before, with London, Aussie, and Johannesburg listings as well as BHP and BBL ADRs. The company retain "19 core Iron Ore, Copper, Coal, Petroleum and Potash assets that generated 96 per cent of the Group’s Underlying EBIT in the 2014 financial year" "EBIT margin of 42 per cent"

They will spin off shares in NewCo to BHP Billiton shareholders.

NewCo will have listings in Aussie, Johannesburg and London. They also "proposed that a sponsored, Level 1 American Depositary Receipt (ADR) program would be established, with those ADRs traded in the United States over-the-counter market." "2014 EBITDA margin of 21 per cent, 34 per cent over last decade"


My understanding is that anything that trades OTC (unsponosed and sponsored Level 1 ADRs) are not considered qualified investments for TFSA,RRSP,etc... 

There were a couple of articles about guy with a large TFSA who bought some an OTC stock and claimed that since they were listed on a prescribed exchange (Stuttgart) that it would be ok. The CRA's PR response as vague but didn't scream Yes to me...
http://business.financialpost.com/2...housing-market-for-your-tfsa/?__lsa=da70-c7d5

So unless some different news comes out I'm assuming that anyone holding BHP or BBL in registered accounts will be getting some NewCo shares that they will have to sell to comply with the rules.


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## mrPPincer (Nov 21, 2011)

So, on monday my 66 shares of BBL disbursed 26 shares of OTC South32 Ltd American Depositary Receipts - Sponsored (Australia).
Worth a whopping 200+ US bucks, hardly worth selling, & I'm curious to see where it will go, but I will sell if I have to.

South32 shares do trade on regulated markets (Australia & UK), so maybe the OTC ADRS are ok in reg. accts?
From the FP article above..


> Under CRA rules, over the counter facilities such as NASDAQ OTC bulletin board, and the Canadian OTC automated trading system are not included in the list of designated stock exchanges. However, if shares are cross-listed with an acceptable exchange, they can be held in a TFSA.


So I'm still a little unclear on this, but as long as the OTC ADRs are considered a representative of the original Ausy-listed stock I think I should be ok.

In the FP article the CRA's PR rep did say that there were two Stuttgard markets, an EU regulated segment, and a self-regulated segment.
She said the first would qualify, and the second would not.

She also said CRA doesn't bother to make a determination whether or not a particular security qualifies or not except in the context of an advance income tax ruling (whatever that is) or audit, so for my couple hundred USDs worth I might just leave it be.


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## londoncalling (Sep 17, 2011)

Thought I would give this a bump to see if years later any additional insight can be provided. I need to increase my exposure to commodities to remain diversified. I already own several energy companies, some lumber stocks and potash by way of NTR. I have sold some commodity stocks over the last few years for a small profit and held onto others through the entire cycle. I find BHP to be one of the largest players in the space and diversified across the sector and perhaps a better way to approach this sector. I noticed currently there is a spread between BBL:US and BHP:US. I am confused by companies that complicate ownership structure and for some that would be a reason not to invest. Although it frustrates me to some extent I see it as an opportunity to learn. If price is factored in isolation BBL seems to be the better buy today. But I know there is much more to consider. DTC, Currency, Taxation for example. If I decide to proceed the purchase would be in my RRSP account. Hoping someone more knowledgeable than I could weigh in on the company than I and /or comment on which version is the better choice for tax sheltered.


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