CIC Energy, the company developing the ambitious Mmamabula Energy Complex in Botswana, said it is failing to obtain an offer regarding the sale of the company and has now shifted attention to attract a strategic partner.
In an update, the BSE quoted outfit revealed it has begun discussions with investors for the acquisition of minority position in the company rather than an outright sale.
“CIC Energy Corp has been in discussions with interested parties regarding the acquisition of 100 percent the company for several months, however, it has so far been unable to obtain an offer that would be supported by the board and its advisors,” the company said in a statement on its website.
“The company attributes this to a number of factors, including the current challenging business climate and market conditions. CIC Energy will remain open to receiving offers from potential acquirers for the acquisition of the company,” it added.
One major deal that looked likely to happen was the CIC Energy proposed merger with JSW Energy, the Indian energy giant that wanted to use the company’s Mmamabula to access coal resource to feed India’s huge appetite for coal.
However, JSW Energy later cancelled the deal saying the conditions laid down were not met to acquire 100 percent shareholding in CIC Energy.
Last week, the British Virgin Islands based outfit told shareholders that it has also begun discussions with potential strategic investors with a view to the acquisition of a minority position in the company.
“The company expects the sale of a minority position in CIC Energy would bring on board a development partner and bolster the company’s treasury,” it said.
The company added such a strategic partner, as well as the additional funds the company would receive in connection with such a sale, would allow it to advance further its project development activities, which it believes are developing positive momentum.
“CIC Energy believes that these potential developments could positively impact the value of the company.”
CIC Energy President Greg Kinross said he believes the latest move is a good decision.
“Our management team and the board of directors believe this initiative to bring on a strategic partner, and at the same time raise additional capital, best serves shareholder interests during the current challenging business and market conditions, as it strengthens our ability to continue to advance our projects, as well as negotiate with potential acquirers of the company.”
However, the company said no assurances can be given that it will enter into or conclude negotiations with any strategic partner or potential acquirer.
CIC Energy is developing the Mmamabula Energy Complex with most of the power destined for the South African market. However, it has received a blow as Eskom has not made an offtake agreement until after 2015, which has cast doubts on the project.
The original plan was to sell 75 percent of power to Eskom and remainder to Botswana Power Corporation (BPC). Although, appetite for electricity is still high, South Africa prefers its own Independent Power Producers (IPPs) which is forcing CIC Energy to build a Mookane Domestic Power station although it comes at a time when BPC is on the verge of completing the P11 billion Morupule B.