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Riversdale chairman to quit, Rio gets 3 directors on board

Riversdale chairman to quit, Rio gets 3 directors on board
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First Published: Thu, Apr 07 2011. 02 35 PM IST
Updated: Thu, Apr 07 2011. 02 35 PM IST
Melbourne/New Delhi: Australian mining firm Riversdale on Thursday said three nominees of global mining giant Rio Tinto have joined its board as directors, while the company chairman and one director plan to resign.
Since December, the Australian firm has been a takeover target for Rio Tinto, which has acquired 49.53% participating interest in the company so far, a Rio filing to the Australian Stock Exchange said.
Tata Steel and Brazilian steel maker Companhia Siderurgica Nacional (CSN) are the other largest shareholders in Riversdale, with stakes of 27.14% and 19.9%, respectively.
According to a Riversdale statement, its executive chairman, Michael O’Keeffe, and non-executive director Andrew Love will resign as soon as Rio acquires more than a 50% stake in company or its offer period for the bid closes on 20 April.
The statement added that three senior executives of Rio Tinto -- Douglas Ritchie, David Peever and Matthew Coulter -- have joined the Riversdale Board, taking the total number of board members to nine.
However, the Rio nominees will not take part in any decisions of Riversdale that relate to the global mining giant’s takeover bid until after the end of the offer period (20 April), it stated.
On Wednesday, Rio Tinto had said that it had secured a 49.49% stake in Riversdale and had extended the offer till 20 April to secure an over 50% stake in the target firm.
The global mining giant had also agreed to pay AUD 16.50 a share to Riversdale shareholders, as it had exceeded its target of acquiring a 47% stake in the company. The initial bid of Rio, submitted in last December, was AUD 16 a share.
At AUD 16.50 per share, Riversdale’s valuation will rise to AUD 4.03 billion.
The Riversdale statement also said “its board unanimously recommends that its shareholders accept Rio’s offer in the absence of a superior proposal.”
On 29 March, Rio had dropped its minimum acceptance condition of acquiring more than a 50% stake in the Australian mining firm and had said that its new target is to acquire an over 47% stake in Riversdale.
Tata Steel and CSN had so far frustrated the takeover move of Rio Tinto by increasing their stake in Riversdale in the last few months and together hold over a 47% stake in the company.
Tata Steel and CSN have maintained in past that they were more interested in getting coal than making a quick gain and would stay invested in Riversdale, which has about 13 billion tonnes of rich coking and thermal coal reserves in Mozambique.
In addition to its stake in Riversdale, Tata Steel also has an agreement for 40% of the coal produced from the company’s Benga mine in Mozambique, which is scheduled to begin production this year.
However, comments from both companies could not be obtained on the latest developments.
In January, Rio Tinto had said it would evaluate the performance and prospects of Riversdale’s operations and projects and wanted to sell the company’s Zululand colliery in South Africa if the takeover is successful.
According to the earlier estimates of Riversdale, about $400 million will be required to develop the Benga project, while the cost of the Zambeze project in Mozambique was estimated at $2.9 billion.
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First Published: Thu, Apr 07 2011. 02 35 PM IST