Virgin Island-headquartered coal mining company CIC Energy Corporation has agreed to enter into negotiations with an Indian multi-billion dollar conglomerate for acquiring at least 51 per cent, and up to 100 per cent in the Toronto Stock Exchange-listed company. The bidder has been granted exclusivity for the completion of due diligence and the negotiation of a definitive binding acquisition agreement.
Incidentally, the company had earlier received a takeover offer from another Indian group. CIC described the suitor “as a multi-billion dollar Indian conglomerate with interests, which include coal mining and power generation” in an earlier stock exchange announcement. The offer, at an indicative price of $8.50 a share, valued CIC Energy at close to $480 million — almost triple its market value.
“A transaction at this non-binding price would represent an approximate 170 per cent premium to CIC Energy’s unaffected closing price of CDN$2.87 on September 14, 2010 (being the trading day preceding the date of announcement of the first acquisition proposal),” said the company in a stock exchange announcement on Friday.
The shares of CIC Energy gained more than six per cent on October 8 and were trading at CDN$6.53 at the time of going to press. CIC Energy is currently developing the Mmamabula Energy Complex – a mining, power and potential coal-to-hydrocarbons facility – in the landlocked southern African country of Botswana.
The Mmamabula field is estimated to contain 2.6 billion tonnes of high-thermal coal, with calorific value largely above 6,000 kcal per kg. In the next three to four years, it is expected that around 24 million tonnes of coal can be extracted every year. Along with the mines is a proposed 1,200 Mw coal-fired power plant.
The promoters of CIC Energy, led by its chairman and CEO, serial entrepreneur Warren Newfield, hold close to 20 per cent in the company. Along with institutions, they hold close to 85 per cent, with the remaining 15 per cent with public shareholders.
