Riversdale owners dig in

IF GINA Rinehart wants to realise her Canadian coal ambitions she faces a fight, with the largest shareholder in Riversdale Resources indicating it will not accept Hancock Prospecting’s cash offer.
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The battle for control of Canadian coal resources is heating up.

Haydn Black


Resource Capital Fund which owns 47.98% of Riversdale, and Regal Funds Management that owns 1.08%, say their stakes are not for sale, and the decision means Hancock is unlikely to get its position above the 50% level required that would see it increase its offer from $2.20 to $2.50 per share.
The board is making no recommendation at this stage, saying that several shareholders are interested in buying additional shares and strategic parties have "signed confidentiality agreements and commenced due diligence on Riversdale" - moves that could lead to a bidding war, with neighbouring Atrum Coal likely to be caught in the splashback.
Grant Thornton has been hired to provide an independent expert's report on Riversdale and assess the Hancock bid, which is due to close on April 14. 
The offer has no minimum acceptance or due diligence conditions.
RCF has reserved the right to change its mind if Hancock climbs above the 50% threshold, but Phil King's Regal Funds has argued the bid "vastly undervalues Riversdale" and will not sell without a material change in circumstances.
Regal recently increased its stake in Atrum to 10% by pumping in $10 million of a $20 million capital raising.
The $591 million takeover offer for Riversdale is aimed at giving Rinehart control of the Grassy Mountain coal project in Alberta, and comes just six months after Hancock paid $1.70 for a 19.8% stake in capital raisings.
Riversdale chairman Gary Lawler said there was a lot of interest in Grassy Mountain, and he hoped a higher offer may emerge.
Riversdale founders Michael O'Keefe, Steve Malyon and Anthony Martin have previously agreed to accept the Hancock offer for the 16.5% they hold.
Grassy Mountain has a measured and indicated resource estimate of 195 million tonnes while Atrum's Elan coking coal project has a 298Mt resource estimate, but is less advanced.
Riversdale is targeting first production in 2021.
Atrum shares were below 10c earlier in the year, and last traded at 20.5c, valuing the junior at $74 million.
It argues its project is being valued at just 12c/t compared to an attributable enterprise value of around $2/t for Riversdale.