BHP Billiton reasserts strategy, says Elliott proposals flawed

SYDNEY (Reuters) - Anglo-Australian miner BHP Billiton on Wednesday dismissed a wide-ranging proposal by shareholder Elliott Advisors to overhaul its corporate strategy and sell off oil interests, saying the costs would far outweigh the benefits.

"The elements of the Elliott proposal as described to the board would not be in the long-term interest of shareholders," BHP Chief Executive Officer Andrew Mackenzie said on an analyst call. "I cannot overstate my strong belief that BHP Billiton is on the right track."

The comments came as BHP released a detailed response two days after U.S.-based Elliott made public a letter to its directors urging them to consider spinning off the U.S. oil arm, while returning more cash to investors.

The response offered no counterproposal and instead defended the miner's longstanding strategy.

"We have been in engagement with Elliott for eight months," Mackenzie said. "From our earliest engagements it was clear there were major flaws in Elliott's proposals."

Elliott, which said it holds a "long economic interest" of about 4.1 percent of London-listed BHP Billiton PLC, wants the miner to ditch its dual corporate structure and replace it with a single company domiciled in Britain.

"The (dual-listed structure) is not a restraint to our business," BHP Chief Financial Officer Peter Beaven told analysts. "It provides two important acquisition currencies in addition to cash."

Under the Elliott plan, BHP would have a primary share-market listing in London and a secondary listing in Sydney.

The Australian government on Tuesday said any significant changes to BHP's corporate structure would need to be consistent with a "national interest" test under the law.

Over the last decade, BHP has examined the prospect of changing its corporate structure and spinning off its oil business but has ultimately rejected the ideas.

"A standard petroleum business would lose access to BHP Billiton's balance sheet," Mackenzie said on Wednesday. "Were we to adopt this proposal our global partners would have to work with a Balkanised, broken up BHP Billiton."

Elliott, an activist hedge fund, has also lobbied for change at other firms including Samsung Electronics Co Ltd, Akzo Nobel NV and SABMiller.

(Reporting by James Regan and Jamie Freed; Editing by Christopher Cushing)