Citi adviser to ICVL on counterbid for Riversdale Mining Saurabh...

Citi adviser to ICVL on counterbid for Riversdale Mining Saurabh Chaturvedi From: Dow Jones Newswires December 24, 2010 6:16AM
INTERNATIONAL Coal Ventures Ltd has hired Citibank to advise on a counterbid to Rio Tinto’s $3.9 billion offer for Riversdale Mining.
"We have appointed Citibank. The merchant bank will submit its report in the next two weeks, based on which we will take a call on counter-bidding for Riversdale," chairman C.S. Verma told reporters.

ICVL is a joint venture between five state-run Indian companies -- Steel Authority of India, NTPC, NMDC, Rashtriya Ispat Nigam and Coal India.

If the Indian consortium decides to go ahead, it will have to up Rio Tinto's offer price of $16 per share for the Mozambique-focussed Riversdale.

PricewaterhouseCoopers mining analyst Pukhraj Sethiya said: "India's state-run companies don't have monetary constraints but need to formulate an effective acquisition strategy."

Acquiring the Perth-based Riversdale, which has 13 billion tonnes in coking and thermal coal reserves in its Benga and Zambeze projects in the southern African country of Mozambique, will help the Indian companies secure coal supplies as local production falls much short of demand.

India's expanding economy has led to a surge in construction activity and ramp up in power generation capacity, boosting demand for coal. Indian state-run and private companies are scouting for assets in Africa, Indonesia, Australia to secure fuel supplies.

The country's coal demand is expected to rise to 713.24 million tonnes next financial year beginning April 1, when supply will likely be 629.91 million tonnes.

Yesterday, Rio Tinto won the endorsement of Riversdale's board for an improved cash offer of $16 a share, compared with an original indicative offer of $15 announced on December 6.

Rio Tinto said that it has already attracted pre-bid acceptances from 14.9 per cent of Riversdale's shareholders for an offer that has a 50 per cent minimum acceptance condition.

But analysts said that the diversified mining giant may have to again sweeten its offer to woo a Riversdale shareholder register that includes India's Tata Steel and Brazil's Cia Siderurgica Nacional.

Two major shareholders told Dow Jones Newswires on December 6 that they would be unlikely to sell out for less than $20.