riversdale stand off, page-11

Brazilians edge closer to upsetting Riversdale bid Mathew Murphy
February 11, 2011

RIO TINTO has extended the offer period for its $3.9 billion takeover of Riversdale Mining by two weeks. It made the extension as one of its target's biggest shareholders generated speculation that it might act as a spoiler as it continues to creep up the share register.

The Brazilian steel-maker Companhia Siderurgica Nacional (CSN) has bought another 5.5 million shares to take its holding in Riversdale to 19.9 per cent. That news came a day after it revealed it had spent $76.2 million at an average of $15.96 a share to expand its Riversdale stake.

But those close to the deal suggested CSN was keen to get exposure to coking coal, a key ingredient in steel-making. Riversdale is sitting on a 14 billion tonne coking coal resource in Mozambique.

Advertisement: Story continues below ''Coal is one of the key supply requirements that CSN doesn't have control over,'' the source said. ''They realised as a group that it was one area they needed to secure, and increasing their stake will give them more leverage to negotiating an off-take agreement.

''The only offer that is on the table is the Rio offer. Everyone has formed a view that Rio is better to bring the Benga and Zambeze projects into production and into export markets than Riversdale.''

If CSN was to combine its 19.9 per cent stake with Tata Steel's 24 per cent holding as a blocking stake it would not require much more dissent to sink Rio's aim of achieving the minimum acceptance condition of more than 50 per cent of Riversdale.

Riversdale shareholders have until March 4 to accept the Rio offer. Riversdale shares rose 10 closer to Rio's $16 offer price, ending yesterday's session at $15.95.