CIC Energy Corp has disclosed that its buyout by Indian power utility, JSW Energy Ltd, might be terminated or delayed if it fails to get a “comfort letter” from the Botswana government for its power project.
CIC Energy is the company behind the Mmamabula Energy Project (MEP), a 1200 megawatt (net) capacity power station and integrated coal mine project in Botswana that is planned to provide power mainly to South Africa. The MEP is the most advanced independent power producer (IPP) project that can meet the urgent demand for new base load capacity in South Africa in the near term. It has been billed as the largest single private sector investment ever to take place in Botswana.
Last November, CIC had agreed to a C$422 million, or C$7.42 a share, buyout offer from JSW Energy, subject to CIC having obtained such a comfort letter from the Government of Botswana.
CIC said it has begun talks with JSW and the government of Botswana. The discussions are expected to conclude by May 31.
CIC, which continues to receive offers from other companies, said the deal may also be delayed by several weeks, pending talks and fulfillment of several conditions. It had expected to close the deal by end of May.
If the proposed acquisition of CIC is not completed by May 31, either CIC Energy or JSW will be entitled to terminate the supplementary agreement, CIC said in a statement.
Last month, the Botswana government had declined to renew one of CIC’s two mining licenses. [ID:nL3E7EV2ZA]
“Should the supplementary agreement be terminated, CIC Energy will review its strategic plans, including exploring alternative corporate transactions,” CIC added.