CIC shareholders accept P855m takeover bid

Brian Benza
Staff Writer | Thursday August 30, 2012 00:00

 

At a special shareholders meeting held in Mauritius on Monday, 97 percent of votes cast were in favour of the proposed acquisition.

 'As per the terms of the merger agreement with Jindal and its wholly-owned subsidiary, Jindal (BVI) Ltd., CIC Energy will merge with Jindal BVI, with Jindal BVI being the surviving entity.

'Following the completion of the merger, the holders of the outstanding shares of CIC Energy will receive C$2.00 per share. This price represents a premium of 65 percent to the volume-weighted average trading price for CIC Energy's shares on the TSX for the 30-trading day period ending on July 17, 2012, the last trading day prior to the announcement of the indicative price,' said CIC in a statement.

The C$2(P15) offer is however significantly lower than the P55 per share offered by another Indian firm, JSW Energy, in a bid that collapsed last May.  The counter closed yesterday's trading on the Botswana Stock Exchange (BSE) at P14.81.

This now paves way for the Indian giant to take over the Mmamabula energy coalfields to meet the company's high appetite for fuel to power its steel plants in the world's second most populous country. While Jindal will export most of the coal to India, the company says it also has plans to build two 300MW power stations in Botswana through its subsidiary, Jindal Power Limited (JPL).

In July this year, JPL invited expression of interest from qualified companies for the design of two 300MW - 350MW in Botswana and Mozambique,  Under CIC, the MEP was focused on building a 1200MW power plant with the South Africa's Eskom expected to be the primary power off-taker. The approval by CIC shareholders is a boost for the Mmamabula Energy project, which has suffered a string of setbacks since 2006. Last week, the Competition Authority green-lighted the merger while government recently renewed CIC's retention licence for an area holding approximately 361 million tonnes of coal at Mmamabula.

In the statement, CIC says the merger is now expected to close within the next two weeks and, in any event, no later than October 9, 2012, subject to the satisfaction of certain conditions, including approval by the Minister of Minerals, Energy and Water Resources.

With an annual turnover of over US$3.5 billion, JSPL operates the largest coal-based sponge iron plant in the world and has an installed capacity of three million tonnes per annum of steel. The deal is also expected to spur government into fast tracking the development of a new railroad to enable coal to reach ports in Mozambique enroute to India.

Botswana can export as much as 1.7 million tonnes per annum to international markets using the existing railways through Mozambique. With the huge coal appetite of mainly booming economies such as China and India, Botswana plans to fully exploit its 212 billion tonnes of resources to become a top coal exporter in the next six years with the construction of a new railway line and a new port in either Namibia or Mozambique.

Through Mozambique, Botswana is 6 000 km away from India while coal powerhouse, Indonesia is 5 000 km away.  On the other hand, another top coal producer, Australia is 10 000 km away from India but only 7 000 km away from China.