Google Website Translator Gadget

Friday, June 3, 2011

CIC Energy terminates proposed acquisition by JSW Energy


Friday, 03 Jun 2011

TSX listed CIC Energy has terminated the proposed acquisition of the company by Indian group JSW Energy, citing failure to complete the deal by the deadline of May 31st 2011.

CIC now intends getting into negotiations with other potential buyers which had expressed interest.

Mr Warren Newfield CEO of CIC said that "We look forward to beginning discussions with other major corporations that have expressed interest in CIC Energy in recent months, as well as other parties. We believe this is the best course of action for shareholders. We are prepared to continue the process with JSW, but only on a non-exclusive basis."

CIC controls the Mmamabula Energy Complex in eastern Botswana, where it is looking at various power projects as well as an export coal project.

The CIC share price traded as high as CAD 17.50 in 2007-08, when the company was planning to build a 1,300 MW power station and associated coal mine at a cost of USD 3 billion to supply electricity to Eskom. That project has been repeatedly delayed by ongoing uncertainty in South Africa over the role of independent power producers in the country's power supply strategy. The decision by the South African government last year to go for a major nuclear build program and limit the involvement of coal fired IPPs was viewed as being extremely negative for CIC and other Botswana based coal companies. The CIC share price collapsed to CAD 1.21 before JSW made its offer in November to acquire the company through a CAD 7.42 per share cash offer.

CIC shares soared back to CAD 7.25 by January, from where they have drifted back to current levels of around CAD 3.16. A key condition precedent to the JSW takeover was the requirement that JSW obtain a letter of comfort from the Botswana government concerning the key commercial terms for the proposed 300 MW Mookane domestic power project. That was not obtained by the May 31st 2011 deadline, triggering CIC's decision to end the exclusive agreement with JSW.

Mr Greg Kinross president of CIC said that "It is disappointing that after almost eight months the transaction with JSW has not been completed, despite several extensions to the original deadline." (sourced from Miningmx)

No comments: