ICVL board meet on Jan 27 to decide on Riversdale bid

The board of International Coal Ventures Ltd, a company floated by public sector companies—SAIL, NTPC, RINL, NMDC and Coal India—will meet on January 27, to decide on a bid for Australia’s Riversdale Mining.

The bid will have to be higher than the $3.9 billion proposed by the world’s second largest miner, Rio Tinto.

Some of the ICVL board members met today in Kolkata, where Citigroup, the merchant banker, made a presentation. “Citigroup made a presentation, but we will meet on January 27 to take a final call,” Coal India chairman, Partha Bhattacharyya, said.

He, however, declined to comment whether the valuation that Citigroup had arrived at was higher than $3.9 billion offered by Rio. ICVL had earlier said that the consortium would go ahead only if the valuation was higher.

“We have to discuss the assumptions behind the valuations arrived at by Citigroup. We will meet in Delhi next,” Bhattacharyya said.

Meanwhile the Australian Treasurer has approved Rio’s bid. The miner, however, will need support from 50 per cent of Riversdale shareholders for its bid.

Therefore, support of major shareholders—Tata Steel and CSN—will hold key to the proposal. Tata Steel is the largest shareholder in Riversdale with a 24 per cent stake while CSN has more than 16 per cent.

Passport Capital too has a major chunk of shares.

Riversdale is being pursued by steel majors as it has 13 billion tonnes of coking and non-coking coal resources. With the volatility in raw material prices, captive sources have become key to insulate from margin pressure.

In early December, Riversdale admitted that the company had been approached by Rio for a $3.5 billion takeover. The final offer, however, was made at $3.9 billion.