Sunday, November 29, 2020

JSW’s CIC Energy acquisition moves from takeover to merger

CIC Energy Corp, the developer of the ambitious Mmamabula Energy Complex, is to meet its shareholders early next year in a bid to get them to support a proposed merger with its Asian energy suitorÔÇö JSW Energy Limited.

In an update to shareholders following its agreement to an acquisition offer, the Botswana Stock Exchange (BSE) listed coal rich outfit said the take-over could now be a merger after signing a supplementary agreement.

“This completion of the merger remains subject to the satisfaction of the same conditions as specified under the Acquisition Agreement, plus three additional conditions as discussed…that result from the change in the transaction structure to a merger,” the company, headed by Greg Kinross, said.

Under the terms of the supplementary agreement, the legal structure for completing the proposed acquisition has been changed from a take-over bid to a merger.

Upon the completion of the merger, which CIC Energy supports, the shareholders of the outstanding shares of CIC, including any shares issued pursuant to the exercise of outstanding options, will receive CDN$7.42 per share.

“The price to be offered to shareholders has not changed at CDN$7.42 per share,” said Warren Newfield, Chairman and CEO of CIC Energy.

The supplementary agreement has been approved by the board of directors of CIC Energy and the board has determined to recommend that shareholders of CIC Energy vote in favour of the Merger.

“Today’s news is simply a change in the legal structuring of the proposed acquisition of CIC Energy by JSW,” he added.

CIC Energy’s financial advisor, Deutsche Bank Securities Inc. has revised its fairness opinion, which remains unchanged from the initial fairness opinion issued in relation to the Acquisition Agreement.

In Deutsche Bank’s opinion, subject to the assumptions, qualifications and limitations set forth in such opinion, the consideration payable to shareholders of CIC Energy (other than JSW and its affiliates) pursuant to the merger is fair, from a financial point of view, to such shareholders.

The merger is expected to close no later than February 28, 2011 subject to the satisfaction of the same conditions precedent as set out in the Acquisition Agreement.

As part of a move to involve those concerned, CIC Energy will be holding a special meeting of shareholders to consider and approve the merger.

The agreement is also subject to the resolution approving the merger being passed by a majority of the votes cast at the meeting, holders of not more than 5 percent of the issued and outstanding CIC Energy shares having exercised their dissent rights in respect of the merger and the Meeting having been held on or before January 24, 2011.

The meeting is scheduled to take place on January 21, 2011.

JSW Energy last month agreed to buy CIC Energy for C$7,42 a share in cash, in a transaction that has the support of the coal rich Virgin Islands based company.

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 tones which if mined at the current rate should have a life-span of 15,000 years.

The company has 52.6 million common shares outstanding and 70 million common shares fully diluted including vesting of options and warrants.

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Sunday Standard November 29 – 5 December

Digital copy of Sunday Standard issue of November 29 - 5 December, 2020.