Demerger of BHP Steel

BHP Billiton Limited
13 May 2002



     BHP Billiton Limited is issuing this announcement to fulfil disclosure
  obligations arising from its secondary listing on the London Stock Exchange.

    The text of this release is identical to that issued by BHP Billiton Plc
                                    earlier.



13 May 2002
Number: 29/02

                  BHP BILLITON LAUNCHES DEMERGER OF BHP STEEL

BHP Billiton today announced that it has lodged documents relating to the
demerger of BHP Steel Limited (BHP Steel) from BHP Billiton Limited and the
related bonus issue of shares to BHP Billiton Plc shareholders with the
Australian Securities and Investment Commission (ASIC) and other regulators.
Copies of these documents will be available on the Group's Internet site at
www.bhpbilliton.com

BHP Billiton Chairman Don Argus said: 'Today is a very significant step towards
the planned public listing of BHP Steel in July this year. Since we announced
our intention to separate and publicly list our steel flat and coated products
business more than 12 months ago, there has been solid support for the listing
from all of BHP Steel's stakeholders.

'There is recognition that the listing of BHP Steel will maximise the future
prospects of that business by creating a stand-alone company focused on
maintaining and enhancing its strong market reputation. Significantly, BHP Steel
will be master of its own destiny in terms of capital management and that will
prove a tremendous positive for the business going forward.'

Mr Argus said: 'BHP Steel will be able to pursue and capture market
opportunities and ensure its long-term competitiveness in a way that would not
have been possible if it had remained part of BHP Billiton. That has proven true
of our former long steel products business, now OneSteel, which shortly after
being spun-out from BHP went on to participate in a major industry consolidation
transaction.'

Eligible BHP Billiton Limited shareholders will receive one BHP Steel share for
every five BHP Billiton Limited shares held. BHP Billiton Plc shareholders will
not receive BHP Steel shares. Instead, to ensure equality in the economic
treatment of BHP Billiton Plc shareholders, such shareholders will receive a
bonus issue of BHP Billiton Plc shares to reflect the market value of the BHP
Steel shares being distributed to BHP Billiton Limited shareholders.

The demerger aims to maximise the combined value of BHP Steel and the BHP
Billiton Group. Importantly, the process provides eligible BHP Billiton Limited
shareholders with the opportunity to retain their BHP Steel shares, to acquire
additional shares prior to the public listing of BHP Steel or to sell part or
all of their entitlement into a dedicated Sale Facility.

Mr Argus said: 'Upon listing, BHP Steel will be a well-capitalised, independent
company and will hold an important place within the Australian investment
market. It will have an experienced and energetic Board and management team
dedicated to maximising value for shareholders, many of whom will also continue
to be BHP Billiton Limited shareholders.'

Details of the demerger transaction mechanics are attached in the following
appendices.

This announcement does not contain or constitute an offer or invitation to
purchase or subscribe for any securities of BHP Billiton Limited, BHP Billiton
Plc or BHP Steel in any jurisdiction, including the United States and should not
be relied on in connection with any decision to purchase or subscribe for any
such securities.

BHP Steel shares have not been and will not be registered under the US
Securities Act of 1933, and may not be offered or sold in the United States
absent registration or an applicable exemption from the registration
requirements of the US Securities Act.

Offers of shares in BHP Steel Limited are to be accompanied by a copy of the
Retail Prospectus, the Shareholder Prospectus or the Institutional Offer
Memorandum. Anybody wishing to acquire shares in BHP Steel will need to complete
an application form or buy form (in the case of BHP Billiton Limited
Shareholders) that will be in or will accompany the Retail Prospectus or the
Shareholder Prospectus.

This announcement has been issued by BHP Billiton and the contents have been
approved solely for the purposes of section 21 of the Financial Services and
Markets Act 2000 by ABN AMRO Corporate Finance Limited and Credit Suisse First
Boston (Europe) Limited, which are regulated in the United Kingdom by the
Financial Services Authority. ABN AMRO Corporate Finance Limited and Credit
Suisse First Boston (Europe) Limited are acting exclusively for BHP Billiton and
for no one else in connection with the demerger of BHP Steel and will not be
responsible to anyone other than BHP Billiton for providing the protections
afforded to clients of ABN AMRO Corporate Finance Limited and Credit Suisse
First Boston (Europe) Limited, or for providing advice in relation to the
demerger of BHP Steel.

For further information, please contact:
Australia                                                     United Kingdom/South Africa
Dr. Robert Porter, Investor and Media Relations               Mark Lidiard, Investor & Media Relations
Tel: + 61 3 9609 3540 Mobile: [phone]                 Tel: [phone]
email: [e-mail]                          email: [e-mail]
United States                                                 Ariane Gentil, Manager Communications
Francis McAllister, Investor Relations                        Tel: [phone] Mobile: + 44 7881 518 715
Tel: [phone] Mobile: [phone]                  email: [e-mail]
email: [e-mail]





Appendix A

Capital Reduction, Scheme of Arrangement and Bonus Issue of BHP Billiton Plc
Shares

As announced on 24 April 2002, the demerger will be implemented by way of a
capital reduction and distribution of 94% of BHP Steel shares. Under the capital
reduction and scheme of arrangement (the 'Scheme'):

      • the share capital of BHP Billiton Limited will be reduced by $0.69 for
        each BHP Billiton Limited share on issue at the record date, expected to
        be Friday, 5 July 2002; and
      • eligible BHP Billiton Limited shareholders will be entitled to receive
        one BHP Steel share for every five BHP Billiton Limited shares held.

The return of capital by BHP Billiton Limited from its share capital account to
BHP Billiton Limited shareholders will not be treated (in whole or part) as a
dividend for Australian taxation purposes. In this regard, BHP Billiton Limited
has sought and obtained a class ruling from the Australian Taxation Office.

BHP Billiton will offer for sale the remaining 6% of BHP Steel shares on issue
under a sale facility (see below).

BHP Billiton Plc Shareholders will not receive BHP Steel shares. Instead, to
ensure equality in the economic treatment of BHP Billiton Plc shareholders, such
shareholders will receive a bonus issue of BHP Billiton Plc Shares to reflect
the market value of the BHP Steel shares being distributed to BHP Billiton
Limited Shareholders. The total number of shares to be issued under the bonus
issue will be determined using the formula contained in Appendix B. The bonus
issue is expected to be made on Monday, 22 July 2002 to holders of BHP Billiton
Plc shares on the register as at Friday, 19 July 2002 (except for shareholders
registered in the South African section of the register where the bonus shares
are expected to be issued on 29 July 2002 to holders on the register as at 26
July 2002).

Further details relating to the capital reduction, Scheme and bonus issue of BHP
Billiton Plc shares are contained in the Scheme Booklet that is being sent to
BHP Billiton Limited shareholders and the BHP Billiton Plc Circular that is
being sent to BHP Billiton Plc shareholders along with a copy of the Scheme
Booklet.

Approval Process and Timetable

On Friday, 10 May 2002 the Federal Court of Australia ordered the convening of
shareholder meetings of BHP Billiton Limited to approve the Scheme of
Arrangement.

The Scheme and the bonus issue of BHP Billiton Plc shares to BHP Billiton Plc
shareholders are subject to the approval of both sets of BHP Billiton
shareholders. An Extraordinary General Meeting of BHP Billiton Plc shareholders
will take place at 9.30 a.m. (London time) and a General Meeting of BHP Billiton
Limited shareholders will take place at 6.30 p.m. (Melbourne time), both on
Wednesday, 26 June 2002. Further details are contained in the Notices of Meeting
included within the BHP Billiton Plc Circular and BHP Billiton Limited Scheme
Booklet respectively. Documents will be despatched to shareholders on or before
24 May 2002.

The Scheme is also subject to the approval of the Federal Court of Australia at
a court hearing due to be held on Monday, 1 July 2002. The demerger is dependent
on all of the above approvals being obtained.

BHP Billiton Limited will trade ex the entitlement to BHP Steel shares on 2 July
2002. On this date, the value of each BHP Billiton Limited share would be
expected to fall, reflecting the separate value of BHP Steel shares.

Sale Facility and Offer of BHP Steel shares

Sale Facility

The Sale Facility is being offered to eligible BHP Billiton Limited shareholders
who wish to offer to sell, prior to the listing of BHP Steel on ASX, some or all
of the BHP Steel shares to which they are entitled under the Scheme. The BHP
Steel shares attributable to Ineligible Overseas Shareholders will also be
offered for sale under the Sale Facility and the proceeds of sale will be
remitted to such Ineligible Overseas Shareholders. BHP Billiton will also offer
to sell under the Sale Facility its 6% holding of BHP Steel shares to ensure a
minimum supply of BHP Steel shares under the Offer.

BHP Steel shares will be sold under the Sale Facility at the final price
determined following the close of the institutional bookbuild process (see
below) (the 'Final Price'). An indicative price range of $2.60 to $3.30 per BHP
Steel share has been determined by BHP Billiton after consultation with the
Joint Global Coordinators, and is based partly on preliminary indications from
potential investors. The Final Price will be determined by BHP Billiton after
consultation with the Joint Global Coordinators and may be set above, within or
below the Indicative Price Range. The Final Price is expected to be announced on
Monday, 15 July 2002.

BHP Billiton retains the right not to proceed with the Sale Facility, or to
proceed with the Sale Facility but not sell all of the BHP Steel shares
available for sale. If the Sale Facility does proceed, BHP Billiton will first
sell under the Sale Facility all of the 6% of BHP Steel shares held by it on its
own behalf.

Details of the Sale Facility are contained in the Scheme Booklet, the
Shareholder Prospectus (for Australian and New Zealand BHP Billiton Limited
shareholders) and the Sale Facility Circular (for other BHP Billiton Limited
shareholders).

Offer

It is intended that the Offer will consist of a minimum of 54 million BHP Steel
shares, being the BHP Steel shares to be offered for sale by BHP Billiton and
the estimated number of BHP Steel shares to be offered for sale on behalf of
Ineligible Overseas Shareholders. The BHP Steel shares which eligible BHP
Billiton Limited shareholders offer to sell under the Sale Facility will also
form part of the pool of BHP Steel shares for sale under the Offer. Accordingly,
the actual number of BHP Steel shares being offered for sale under the Offer is
expected to exceed 54 million BHP Steel shares.

The Offer will be structured in two parts:

  • the Retail Offer - to retail investors in Australia and New Zealand,
    including BHP Billiton Limited shareholders in Australia and New Zealand;
    and
  • the Institutional Offer - to Australian institutional investors and
    participating member organisations of ASX and, to the extent permitted by
    applicable law, international institutional investors.

The price ultimately paid by successful applicants under the Retail Offer and
the Institutional Offer will be the Final Price (described above).

Details of the Offer are contained in the Shareholder Prospectus being sent to
BHP Billiton Limited shareholders in Australia and New Zealand with the Scheme
Booklet, and in the Retail Prospectus available to other prospective BHP Steel
investors in Australia and New Zealand. The prospectuses are available on our
website to BHP Billiton Limited shareholders and other potential retail and
institutional investors, except to persons in the United States.

BHP Steel is expected to commence trading on ASX (on a conditional and deferred
settlement basis) on Monday, 15 July 2002.

Copies of the Scheme Booklet and other information relating to the demerger of
BHP Steel will be available on our Internet site: http://www.bhpbilliton.com.

BHP Billiton Shareholder enquiries can be directed to the BHP Billiton Share
Department on 1300 655 140 (within Australia only) or (61 3) 9609 3333
(International) weekdays between 9.00a.m. and 5.00p.m. (Australian Eastern
Standard Time). Alternatively, please send an email to
[e-mail].


Advisers

ABN AMRO Corporate Finance Australia Limited and Credit Suisse First Boston
Australia Limited are acting as financial advisers to BHP Billiton on the
demerger of BHP Steel.

Appendix B

Bonus Issue Formula

The total number of bonus BHP Billiton Plc shares to be issued will be
determined by the following formula:

A =      (B x C) x (D / E)          Where:        A =       number of bonus BHP Billiton Plc shares to be issued
                                                  B =       VWAP of BHP Steel shares sold under the Sale Facility and
         F - (B x C / E)                                    BHP Steel shares traded on ASX during the first five trading
                                                            days
                                                  C =       number of BHP Steel shares to which BHP Billiton Limited
                                                            shareholders are entitled under the Scheme (including any
                                                            BHP Steel shares sold on behalf of Ineligible Overseas
                                                            Shareholders*)
                                                  D =       number of BHP Billiton Plc shares on issue as at the BHP
                                                            Billiton Plc record date (expected to be 19 July 2002)
                                                  E =       number of Fully Paid BHP Billiton Limited shares in issue as
                                                            at the BHP Billiton Limited record date (expected to be 5
                                                            July 2002)
                                                  F =       VWAP of BHP Billiton Plc shares traded on the LSE over the
                                                            same five day trading period used to calculate the VWAP of
                                                            BHP Steel Shares

Note: VWAP = Volume Weighted Average Price


* This number does not include the BHP Steel shares to be sold by BHP Billiton
Limited as they are not being distributed to BHP Billiton Limited shareholders.
The proceeds from the sale of these BHP Steel shares will benefit BHP Billiton
and, as a consequence, all BHP Billiton shareholders

The VWAP of BHP Billiton Plc shares (F) is reduced by the value distributed per
BHP Billiton Limited share (B x C / E) to calculate a theoretical ex bonus price
for BHP Billiton Plc.

For illustrative purposes, based on the mid-point of the Indicative Price Range
and using a BHP Billiton Plc share price of £3.66 (being the closing price of
£3.88 on 8 May 2002, adjusted to give a theoretical ex bonus price), and the
Australian dollar/British pound exchange rate of 2.6940 as at 9 May 2002,
approximately 139 million new BHP Billiton Plc shares would be issued. This
equates to 2.3% of the aggregate number of ordinary shares on issue by BHP
Billiton, or approximately a one for 16.72 issue of BHP Billiton Plc shares. The
actual number of BHP Billiton plc shares to be issued will depend on the actual
value of BHP Steel and BHP Billiton as set out above and may be higher or lower
than this indicative figure.


BHP Billiton Limited ABN 49 004 028 077                     BHP Billiton Plc Registration number 3196209
Registered in Australia                                     Registered in England and Wales
Registered Office: 600 Bourke Street Melbourne Victoria     Registered Office: 1-3 Strand London WC2N 5HA United Kingdom
3000                                                        Telephone [phone] Facsimile [phone]
Telephone [phone] Facsimile [phone]

              The BHP Billiton Group is headquartered in Australia



                      This information is provided by RNS
            The company news service from the London Stock Exchange