Riversdale Isn't Aware of Rival Bid to Rio as India Mulls Bid

Bloomberg Jan 24--Riversdale Mining Ltd., subject of a A$3.9 billion （$3.86 billion） takeover bid from Rio Tinto Group, said it’s not aware of any other offers, after an Indian group repeated that it may consider a rival proposal.

“Rio Tinto’s offer crystallizes value now by way of an all-cash offer price,” Sydney-based Riversdale said today in a regulatory filing. The coal company that is developing projects in Mozambique has recommended Rio Tinto’s A$16 a share offer, which is priced at 2.9 percent less than the A$16.46 it traded at in Sydney at 10:09 a.m.

International Coal Ventures Ltd., which groups Indian government-run metal and energy companies, may consider a bid at a board meeting in New Delhi on Jan. 27, Chairman C.S. Verma said yesterday in an interview. The group in December hired Citigroup Inc. to advise on a possible deal.

Indian companies are seeking coal mines overseas to secure raw material supplies for making steel and generating power as demand and prices climb. London-based Rio Tinto last week received Australian regulatory approval to buy the company.

“Our bid price for Riversdale will be higher than Rio Tinto’s if it is to be a viable bid,” Verma said in an interview in Kolkata on Jan. 22, declining to elaborate. Rio Tinto spokesman Bruce Tobin declined to comment when contacted today.

Rio’s offer needs support from 50.1 percent of Riversdale’s shareholders. Tata Steel Ltd., the biggest holder with 24.2 percent according to data compiled by Bloomberg, said this month it had no “discomfort” with Rio’s offer. Tata also owns 35 percent of Riversdale’s Benga project.

Director Recommendation

Tata’s director on Riverdale’s board, N.K. Misra said in today’s statement that he recommended the Rio offer in his capacity as a Riversdale director not as a representative of Tata. Misra had earlier abstained from voting on Rio’s bid.

Riversdale today said in the statement it would need an additional A$400 million to fund its share of the development cost for the Benga project’s stages 2 and 3 and “not less” than $2.9 billion for the Zambeze project.

Construction for the first stage of the Benga project is targeted for completion during the second half of this year, for production capacity of 5.3 million metric tons of coal that may rise to 20 million tons.

The Zambeze project is set to complete a pre-feasibility study in the same timeframe, and production won’t start before 2014, Riversdale said.

Coal India Ltd. holds about 28 percent of ICVL. Steel Authority of India, the nation’s second-biggest producer of the metal, also has 28 percent, while NTPC Ltd., its largest power generator, NMDC Ltd., its top iron-ore producer, and steelmaker Rashtriya Ispat Nigam Ltd. own about 14 percent each.

Rio is advised by Macquarie Group Ltd. and Riversdale by UBS AG.