CIC Energy, the Botswana and Toronto-listed company, came under overwhelming pressure of a possible “lucrative take-over”, staged by an undisclosed multi-billion dollar Indian conglomerate focused on coal mining and power generation.
The Indian investors indicated that they are desirous about acquiring all listed and unlisted shares of the company in a bid to have full control of Mmamabula project.
The move by the Indian conglomerate was this week described as “serious” by a leading expert on Botswana resource sector based in London ,while in Gaborone, the general mood was that India might be looking for reliable sources of energy to power its developments.
Although CIC Energy was tight lipped on the name of the suitor, Rupert McCammon told The Sunday Standard from London that the situation “is really serious”.
In Gaborone, a source said India is very hungry for coal to fire up its development and the conglomerate might be looking at Botswana coal as another source.
Botswana has unmined coal resources of around 2 billion metric tons which if mined at the current rate, should have a life-span of 15,000 years.
The developments saw the share price of CIC Energy soaring by over 80 percent on Thursday after the news of a take-over bid.
The bid – “an indicative price of US$8.50 per share” – would value the company at almost US$450 million – some 2.7 times CIC’s market value at the close Wednesday after the stock shot up more than 13 percent to C$3.25 per share.
On Thursday, CIC stock soared $2.65, or 81.5 per cent, to C$5.90 on volume of almost 3.9 million shares.
The company has 52.6 million common shares outstanding and 70 million common share fully diluted ÔÇô including vesting of options and warrants.
CIC said Wednesday it has formed a three men committee of independent directors to evaluate the bid.
“The Special Committee will review the merits of the proposal and, if warranted, respond to it and will consider available alternatives to maximize shareholder value and will make recommendations to the board of directors and, if appropriate, to shareholders,” CIC Energy said.
“The proposal provides for an indicative price of US$8.50 per share, of which up to US$3.50 will be payable upon fulfillment of certain project milestones,” the company said in a news release.
“Along with the other terms and conditions of the proposal, the price will be subject to negotiation and may change,” it added.
Based in the British Virgin Islands, CIC is involved in developing the Mmamabula coal field in Botswana and has interests in power generation. Further, the developments include export coal project and a potential for coal-to- hydrocarbons project.
The company has been struggling to raise cash for its flagship project at Mmamabula that was geared to power the southern African regionÔÇöespecially South Africa.