. Passport Capital commits its final Riversdale stake to Rio Tinto offer PASSPORT Capital has put its remaining 5 per cent stake in Mozambique-focused coking coal developer Riversdale Mining into an institutional acceptance facility set up as part of Rio Tinto’s $US4 billion bid for the company, according to a person familiar with the situation. Passport put its stake into the facility at $16.50 a share, the raised bid price announced by Rio last week after an initial $16 a share offer attracted lackluster support from shareholders, the source said today.
Passport, a San Francisco-based investment fund which was the second-largest shareholder in the miner at the start of Rio's bid for the company on December 24, was an early supporter of the offer and made over half of its 16 per cent holding into a pre-bid acceptance facility. A further 3 per cent was sold on the open market to Rio Tinto, the person said.
The three-month battle for control of Riversdale has illustrated the uneasy relationship between steelmakers and major miners at a time when prices of iron ore and coking coal -- the key raw materials in steel production -- are booming, swelling miners' profits but squeezing the margins of steel mills.
The company's two largest investors -- Indian and Brazilian steelmakers Tata Steel and Cia. Siderurgica Nacional -- hold a combined 47 per cent of voting rights, giving them an effective lock over any takeover offer. The companies haven't indicated how they intend to dispose of their holdings.
However, fears the bid would fail appear to have ebbed since Rio sweetened its offer last Thursday, with Riversdale shares rising more than 3 per cent to $15.61 last from $15.13 at last Wednesday's close, on the eve of the improved offer. The stock is still trading a discount to Rio's $16.50 offer, however.
Rio said yesterday its offer was now backed by shareholders accounting for 26.13 per cent of Riversdale's voting rights, compared to 19.14 per cent at its last notice on March 4. Of that total, 8.37 per cent is in the institutional acceptance facility.
Institutional acceptance facilities allow shareholders to in effect put their holdings in escrow, conditional upon a takeover bid meeting all its conditions. They are used in Australia to encourage investors to signal their acceptance of a takeover offer without risking losing their stake in the event the bid fails.
The takeover is due to close on April 1, although the $16.50 offer only lasts until March 23.
RIV Price at posting:
$15.80 Sentiment: Buy Disclosure: Held
