CIC extends deadline to close JSW deal

Monday, Feb28, 2011
By: Liezel Hill

TORONTO (mining weekly.com) - Toronto- and Botswana Stock Exchange-listed CIC Energy has extended the deadline on its agreement to be acquired by India's JSW Energy until March 15, the firm said on Monday.

CIC Energy owns the Mmamabula coal project in Botswana, and has a stake in the planned Moopane power project at the site, after concluding a shareholders agreement last year with Chinese-backed Golden Concord Group Limited (GCL).

A CIC spokesperson declined further comment until the JSW deal is completed.

The transaction was previously to have closed by February 28, but the company said last week that GCL had filed a notice of arbitration with the Hong Kong International Arbitration Center.

GCL claimed that CIC's local subsidiary had a contractual obligation to agree on the terms of a power-purchase agreement and a coal-supply agreement with GCL, and demanded written confirmation that it would do so.

CIC said at the time that the claims were without merit, but noted that the takeover agreement with JSW required CIC to show there were no outstanding liabilities or obligations surrounding the shareholders agreement with GCL.

JSW agreed in November last year to buy CIC Energy for C$7,75 a share, or about C$422-million.

CIC Energy shares had fallen as low as C$4,77 apiece on Monday afternoon, suggesting investors were not betting on the acquisition succeeding.

The Moopane power station would be Botswana's first private, base-load independent power producer and could begin production by the middle of 2013, the partners said last year.

Under the shareholder agreement GCL owns 70% of GCL-CIC Mookane Power Holdings, which in turn holds the equity in the two Botswana project companies that will build and operate the Mookane project. CIC Energy affiliates own the 30% balance.

Edited by: Liezel Hill

Mergers & Acquisitions: CIC Energy agrees to offer from India’s JSW Energy

India’s JSW Energy has agreed to buy developer CIC Energy for C$7,42 a share in cash, in a transaction that has the support of the Toronto- and Botswana-listed company’s board.
CIC Energy owns the Mmamabula coal and power station project, in Botswana. Shares in the company jumped 33% last week after a trading halt was lifted, to C$6,91.
The announcement is the second investment by JSW in Southern African coal this year, after buying a stake in JSE-listed coal junior South African Coal Mining Holdings.
The offer, which values CIC at about C$422-million, represents a 203% premium to the volume-weighted average trading price for the company’s shares on the TSX for the 30-trading-day period ended September 14, the day before CIC announced it had received the takeover proposal.
However, the price is below the non- binding C$7,75 a share that CIC had previously indicated it could receive after entering exclusive negotiations last month.
“We believe that the terms of this offer provide fair value for CIC Energy shareholders in the current environment,” CIC chairperson and CEO Warren Newfield said in a statement.
“With South Africa’s increasingly apparent shift in energy policy, the outlook for coal-based power producers looking to supply South Africa has weakened.”
CIC has been waiting for an agreement to supply about 75% of the electricity from the Mmamabula project to South African utility Eskom.
But South Africa published a draft second Integrated Resource Plan in early October, outlining the country’s energy plans from 2013 onwards, which appeared to exclude plans to source coal-fired energy from projects in the rest of sub-Saharan Africa until after 2020.
CIC announced on October 8 that it had entered into exclusive negotiations on a take- over by an unnamed “multibillion-dollar conglomerate” which could buy between 51% and 100% of the company, at a nonbinding price of C$7,75 a share.
The October exclusivity agreement followed the announcement about a month earlier that the company had received an indicative proposal “from a multibillion- dollar Indian conglomerate with interests which include coal mining and power generation”.
CIC said last week that it had received a positive fairness opinion on the JSW offer from financial adviser Deutsche Bank Securities, and that the company’s directors and officers of CIC Energy had agreed to enter into lock-up agreements with JSW to tender their shares into the offer.
Under the agreement between the two companies, JSW must launch its offer by December 20, subject to due diligence, no material adverse change and shareholders representing at least 20% of CIC’s outstanding shares, including the officers and directors, having entered into lock-up agreements.
The offer will require government and regulatory approvals and approval by shareholders representing at least two-thirds of CIC Energy shares on a partially diluted basis.
CIC has agreed not to solicit other transactions, and JSW will have the right to match any superior offer. CIC will, under certain circumstances, also pay a break fee of about C$10,5-million if the acquisition is not completed.

News via miningweekly.com by Liezel Hill, 3rd December 2010
Edited by: Martin Zhuwakinyu