down in london by 0.25%, page-8

re: buyback announced Sydney - Tuesday - October 5: (RWE Australian Business News) -
BHP Billiton today announced details of the first phase of its capital
management program.
The company first announced its intention to return up to $US2
billion of capital to shareholders, in addition to its "ongoing
progressive dividend policy", on August 18.
The program will commence with an invitation to eligible
shareholders in BHP Billiton Ltd to participate in an off-market buyback
of between $A1 and $A1.5 billion.
Following completion of the off-market buyback, BHP Billiton
will consider alternatives for returning the balance of the $US2 billion
to shareholders within the next 12 months through further share buybacks
in BHP Billiton plc or BHP Billiton Ltd and/or enhanced dividends.
The form that the balance of the return of capital will take
will depend on an assessment of market conditions at the time.
BHP Billiton has committed to proceed with the off-market
buyback only at a price which represents at least a 5 per cent discount
to the volume weighted average price of BHP Billiton Ltd shares over the
five trading days up to and including the closing date of the buyback.
Eligible shareholders may choose to participate in the
off-market buy-back for various reasons and in so doing may take account
of the tax credits that only arise under the Australian taxation regime.

*****

Directors believe this is an efficient way of returning capital
because the purchase of shares at a discount to the market price allows
the company to buy back a greater number of shares than would be
possible in an on-market buyback for the same total cost.
The value of the remaining shares will therefore be enhanced
through the increased earnings, cash flow and return on equity
attributable to each share.
The capital management program will be funded from existing
resources.
Given the strength of BHP Billiton's financial position, it will
remain strongly capitalised after completion of the program, and the
capital return will not compromise the company's "A" credit rating or
ability to fund its strong pipeline of organic growth projects.
The board has concluded that the proposed off-market buyback can
be completed without negatively affecting the ability of BHP Billiton
Ltd to pay fully franked dividends for the foreseeable future.

*****

Under the off-market buyback process, all eligible shareholders
will be able to tender any number of their BHP Billiton Ltd shares at
discounts of between 5 per cent and 14 per cent to the market price, or
as a final price tender.
The final buyback price will be determined according to the
tenders lodged by eligible shareholders and the market price.
For Australian tax purposes, the buyback price received by
participating shareholders will comprise the following:
a) a capital component of $2.10 a share (as agreed with the
Australian Taxation Office; and
b) a fully franked dividend equal to the buyback price less
$2.10. For the purpose of Capital Gains Tax calculations, the capital
proceeds will be the $2.10 capital component plus an amount equal to the
excess of the tax value over the buyback price.
Under the off-market process, BHP Billiton will buy all shares
tendered by eligible shareholders who elect to receive the final buyback
price or who tender their shares at a discount greater than or equal to
the final discount determined under the tender process, subject to any
required scale-back.