Riversdale Mining Co., the subject of a takeover bid from Rio Tinto Group, plans to sell $2 billion of bonds to U.S. investors to fund two coal projects in Africa should shareholder opposition cause the offer to fail.
“We have been looking at the bond market for the past 18 months and there’s strong demand,” Michael O’Keeffe, chairman and chief executive officer of the Sydney-based company, said in an interview. “If Rio falls away, I would suggest we would go straight to the bond market.”
Rio raised its bid yesterday to A$3.9 billion ($3.9 billion) as stock purchases by Riversdale’s two biggest shareholders threaten to scuttle the deal. The Australian company needs the $2 billion to build its Benga and Zambeze projects in Mozambique and may be attracted to sell bonds to finance production at the lowest relative yields for resource companies since 2007.
“Zambeze is the world’s largest single coking coal resource as far as we can see,” Steve Mallyon, Riversdale Managing Director told Rishaad Salamat on Bloomberg TV’s ‘On the Move.’ “Markets are always ready for a world-class project.”
Riversdale rose 3.2 percent to A$15.61 at the 4:10 p.m. close of trading in Sydney yesterday. Rio fell 2.4 percent.
Australian mid-tier mining companies are turning to North American bond markets, where demand is rising for debt linked to surging commodity prices. Riversdale has appointed an adviser to help with a potential bond sale, O’Keeffe said.
The extra yield investors demand to hold the debt of resource companies instead of similar-maturity government bonds dropped 65 basis points, or 0.65 percentage point, since Sept. 1 to 153 basis points, according to Bank of America Merrill Lynch indexes. The spread on Australian corporate debt shrank 55 to 164, while international dollar bonds narrowed 26 to 101. (BlOOMBERG)
豫公网安备41010502003434号