UPDATE: Chinese, Indian Interests Eye Friedland's Ivanhoe Stake -Sources
14 January 2010 - 10:58PM
Dow Jones News
Dealmaker Robert Friedland has put his 23% stake in Ivanhoe
Mines Ltd. (IVN) up for sale, drawing expressions of interest "from
Chinese and Indian interests," in what could result in a change of
control of the Vancouver-based mineral development company, people
familiar with the deal said.
Friedland's stake sale is likely to trigger a general offer for
the rest of the company, whose Toronto-listed shares rose almost
400% in the past 12 months.
One of the people said the potential Chinese and Indian bidders
value the company at more than US$5 billion. Based on its Wednesday
close of C$17.64 a share, Ivanhoe has a market capitalization of
C$7.5 billion (US$7.3 billion).
China's sovereign-wealth fund, China Investment Corp., is one of
the Chinese investors that have shown interest, the person
said.
Chinese energy companies that have the backing of state loans
are also strong candidates, he said. CIC declined to comment.
Ivanhoe Mines said last week it had hired financial advisers to
evaluate options to enhance shareholder value, as it faces costs of
more than $2 billion to develop its Oyu Tolgoi copper and gold mine
in Mongolia.
"Friedland is looking to sell his whole stake," the person said.
The person said, however, that Rio Tinto PLC (RTP), which has a
19.7% stake in Ivanhoe, would have the first option to buy Ivanhoe.
Under its existing agreement with Ivanhoe, Rio Tinto has the option
to raise its stake in the company to as much as 46.6%.
Another person familiar with the situation said that Rio Tinto
has the right to match any offer for Ivanhoe, and also has the
first right of refusal on any bid for the firm.
A Rio Tinto spokesman in London declined to comment on
"speculation" related to Ivanhoe.
"Friedland is looking to cash out of some Mongolian positions
both with Ivanhoe and SouthGobi," the second person said.
SouthGobi Energy Resources Ltd. (SGQ.T), which is 79% owned by
Ivanhoe, is currently seeking US$462 million from a Hong Kong
initial public offering, according to term sheet seen by Dow Jones
Newswires. China's CIC and Singapore's Temasek Holdings Pte. Ltd.
have already each pledged to subscribe to US$50 million worth of
shares in the IPO of SouthGobi, the largest coal producer in
Mongolia in terms of export sales. SouthGobi is looking to list in
Hong Kong on Jan. 29.
Friedland is Ivanhoe's largest individual stockholder. He made
his fortune selling his last mining venture, Voisey's Bay, to Inco
Ltd.
In its statement last week, Ivanhoe said it will look at debt
and equity offerings, a credit facility, a sale of subsidiaries,
equity investments, project financing or other corporate
transactions.
Ivanhoe has hired global investment-banking firm Citigroup Inc.
(C) and Hatch Corporate Finance, a London-based mining-industry
adviser, to advise it on its options.
-By Nisha Gopalan, Dow Jones Newswires; 852-2832-2343;
nisha.gopalan@dowjones.com
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