Rio Tinto has announced it will carry out an off-market $500 million share buyback.
The move is part of the miner’s wider strategy to carry regain control of around US$2 billion worth of its shares on the market, with an on-market buyback of US$1.6 billion outlined for later in the year.
The buyback is believed to be part of a five year strategy to increase Rio Tinto's underlying share dividends by around ten per cent.
Speaking on the buyback, Rio Tinto chairman Jan du Plessis explained “as with most buybacks of this type, for Australian tax purposes, the buyback price will comprise a capital component and a deemed dividend component”.
“The ATO has indicated that shareholders whose shares are bought back by the company under the buyback will receive a cash capital component of $9.44 per share with the balance of the buyback price deemed to be a fully franked dividend for Australian tax purposes,” du Plessis said.