BHP urged to rethink on petroleum

ACTIVIST hedge fund Elliott Advisors has called on BHP Billiton to conduct an independent review of its petroleum business, saying it has found support from other shareholders for unlocking its value.

Elliott, which claims a 4.1 per cent stake in BHP’s UKlisted unit, says it prefers a full or partial demerger of the unit, but recognises there are other possible solutions to unlock the latent value of the petroleum business.

“Our shareholder conversations have revealed extremely broad and deep-rooted support for proactive steps to be taken by management to achieve an optimal value outcome,” it said in a letter to BHP’s board.

The logical next step would be an in-depth and open independent strategic review of the business, Elliott said.

The statement is part of a public campaign launched by Elliott last month, urging the miner to spin off its US petroleum business for listing in New York and to return more cash to shareholders through buybacks.

Elliott also said it had seen a significant groundswell of dissatisfaction among shareholders because of chronic underperformance, and accused its board of not being open to suggestions and misleading in its response to the original proposals.

“We reject both claims,” BHP said in a statement.

The miner said chief executive Andrew Mackenzie would update shareholders on its plans to significantly grow long-term shareholder value.

BHP had dismissed Elliott’s previous proposal, saying the plan had major flaws and would not be beneficial to shareholders.