Hancock Prospecting’s takeover bid for Riversdale Resources has hit a hurdle after two prominent shareholders rejected the offer.
Resource Capital Fund VI (RCF VI), a private equity company that owns 48 per cent of Riversdale, and Regal Funds Management, which owns 1 per cent, have both delivered statements reprinted by Riversdale on the ASX explaining their reasons for rejecting the offer.
RCF VI stated it would not accept Hancock’s offer at either $2.20 or $2.50 a share, but reserved the right to accept the offer should Hancock receive over 50 per cent of Riversdale on an undiluted basis or increase the offer price above $2.50.
RCF VI’s rejection effectively means that Hancock will have a hard time achieving over 50 per cent of Riversdale’s shares under the current offer.
The response from Regal Funds Management was simpler, stating that Hancock’s offer “vastly undervalues Riversdale.”
“In the absence of a material change in circumstances, Regal does not intend to sell into the takeover offer,” the company reported.
Hancock, which already owns just under 20 per cent of Riversdale’s shares, announced its bid for Canadian company Riversdale at the end of February, making a base offer of $2.20 a share for the remainder of the company. Hancock stated that it would increase this to $2.50 a share once it achieved a holding above 50 per cent.
Riversdale’s primary project is the Grassy Mountain coking coal project in Alberta. The company initially responded to Hancock’s offer by advising shareholders to take no action until a recommendation had been received from the board.
Hancock’s offer at the higher $2.50 price represents a 43 per cent premium on Riversdale’s peak price of $1.75 a share achieved in the last 12 months.