With talk of an All-Indian bid coming, the board of Riversdale Mining yesterday supported the $3.9 billion offer from Rio Tinto.
And that vote included a representative of top shareholder Tata Steel, which is said to be the focus for the bid by a group of Indian companies, which is reported to have postponed a decision on a bid until January 27 (this Thursday).
Riversdale is wanted for its coking coal projects in Mozambique and yesterday said it was unaware of any other takeover offers in the works.
"As of today, no superior proposal has been received by Riversdale and the company is not aware of any party having an intention to make such a proposal," Riversdale said in a statement after releasing its official response to Rio’s bid.
While Tata Steel’s representative on Riversdale’s board backed Rio Tinto’s offer, Riversdale said the vote was not an indication of Tata Steel’s intention with its Riversdale stake.
When the deal was first announced in December, Tata’s board representative N.K. Misra abstained from voting on the offer and Riversdale said the new vote was made in the capacity as a Riversdale board member.
The company said Tata Steel had reserved its rights as to possible future action.
Riversdale’s shares closed at $16.50 yesterday, up 19c on the day and above Rio’s offer of $16 a share, indicating investors now expect a higher offer to emerge.
Riversdale’s two biggest shareholders are Tata Steel which owns 24.2%, while Brazil’s CSN owns 16.3%.
Riversdale’s third-largest shareholder hedge fund and investor, Passport Capital has been selling down its stake from 15.7% over the past few weeks, indicating it is prepared to sell into an offer.
Rio’s is due to end on February 18.
Rio Tinto has secured call options over an aggregate of 14.96% of the issued capital of Riversdale.
Riversdale said in the Target Statement yesterday that it is on track to start production at its Benga coal joint venture in Mozambique in 2011, with works at the coal handling and preparation plant on schedule for completion in September.
"The latest updated project schedule depicts that the first coal will be available for export at the port of Beira before the end of 2011," the company said.
Benga is thought to have a resource of four billion tonnes of coking coal, a key reason Rio is interested in buying the company.
Riversdale owns 65% of Benga in collaboration with Tata Steel, owning the other 35%.
Riversdale said talks with its Chinese shareholder Wuhan Iron & Steel Corp over acquiring a stake in its other major asset, the Zambeze coal project in Mozambique, have been suspended while Rio’s offer is current.
