Canada's CIC Energy seeks bids after JSW deal lapses
CIC Energy Corp said it was open to acquisition offers after its USD 422 million deal with Indian power company JSW Energy Ltd collapsed as the Canadian coal miner continued to face problems on its mining license in Botswana.
June 01, 2011 / 10:47 IST
CIC Energy Corp said it was open to acquisition offers after its USD 422 million deal with Indian power company JSW Energy Ltd collapsed as the Canadian coal miner continued to face problems on its mining license in Botswana.
CIC will now engage in talks with other potential buyers who had expressed interests to strike a deal, the Canadian company said in a statement.The company said it would send a notice of termination to JSW Energy on June 1, but added that it was still open to further talks with JSW on a non-exclusive basis.JSW Energy had agreed to pay C$7.42 a share in its November deal, which would have allowed the Indian utility to pocket the development-stage Mmamabula coalfields and a power plant in southeastern Botswana.However, since the offer, various issues surfaced, forcing both parties to extend the deadline several times. CIC stock has almost halved in value during the period.The future of the deal first came under doubt in February when CIC's partner in the power project filed an arbitration notice and in March, the Botswana government refused to renew CIC's license for the Mmamabula South mine. CIC itself had warned last month that the deal might fall through if it failed to get a comfort letter from the Botswana government with respect to the power project or if JSW Energy did not close the deal by May 31.Talks between the Botswana government, JSW Energy and CIC over key commercial terms around the power project were also scheduled to be completed by the end of May.CIC did not give any update on the talks with the Botswana government, nor did it name the companies who had expressed an interest.Both companies could not be immediately reached for further comments._PAGEBREAK_AFRICAN WOESCIC said that while the dispute with its partner, GCL Botswana, remained unresolved, it was open to further talks and that it was considering all options to resolve the matter.CIC and GCL, an indirect unit of Hong Kong based-Golden Concord Holding Group Ltd, had agreed to build a power station and develop a feeder mine at Mmamabula, but later fell out over the terms of the power purchase and coal supply agreement.CIC said its advisers, Deutsche Bank Securities Inc and Motilal Oswal Investment Advisors Pvt Ltd, would begin talks with prospective buyers after terminating the JSW deal.Indian coal, steel and power companies have been scouting for coal assets overseas to feed power plants at home. The energy-hungry nation aims to halve a near-14 percent peak-hour power deficit within two years. CIC had received a C$8.72 per share proposal from an unnamed Indian conglomerate in mid-September, before settling for JSW Energy's offer. JSW's final offer of C$7.42 per share was also lower than its initial proposal in early October.M&A activity among coal miners are also rising as they move to cash in on the rising demand for thermal coal used to fire power plants and for metallurgical coal used in the manufacture of steel.CIC shares were trading up 1.3% at C$3.04 in afternoon trade on the Toronto Stock Exchange. Trade in the stock was initially halted and it tumbled 13% to C$2.60 when trade resumed before staging a turnaround. The shares touched a high of $3.46 in intraday trading.JSW Energy's shares closed at Rs 70.05 Tuesday on the National Stock Exchange. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
