JSW Energy To Acquire CIC Energy Corp For $414 Mn
JSW Energy Ltd is set to acquire CIC Energy Corp, a company incorporated in the British Virgin Islands and listed on the Toronto and Botswana stock exchanges for Canadian $422 Mn (Rs.1,886 Cr / $414 Mn).
JSW will buy all shares of CIC at Canadian $7.42 per share, which is at a premium of 42.7% on CIC’s Monday closing on the Toronto Stock Exchange.
This acquisition will enable JSW to secure long-term coal requirements for its existing projects.
CIC Energy owns and develops coal mines in Botswana in Africa with reserves of about 2.6 billion tonnes of thermal coal, used primarily by power plants.
The acquisition will be carried out by a subsidiary of JSW Energy and is scheduled to be completed by March 31, 2011.
Amarchand Mangaldas advised JSW Energy with a team led by Senior Partner L. Viswanathan. The international legal counsels for JSW Energy were from the offices of Stikeman Elliott LLP (Canada), Edward Nathan Sonnenbergs (South Africa), Conyers Dill & Pearman (British Virgin Island), Collins Newman & Co (Botswana) and Wragge & Co. LLP (England).
Macleod Dixon LLP (Canada) acted as the legal advisor to CIC Energy.
KPMG acted as the tax and accounting advisor to JSW Energy and Deutsche Bank along with Motilal Oswal acted as the financial advisors to CIC Energy.
Transaction Reference: Press Release
JSW group has been looking for coal assets globally to feed its growing steel and power businesses. In May, the group paid about $250 million to buy coking coal mines (used in steel making) in US.
It also bought a thermal coal mine in South Africa for about $50 million. Thermal coal is used for power generation.
JSW Energy has 1,430MW of power generating capacity and another 2,220MW under construction and plans to build a capacity of 12,050 Mw by 2015.
CIC Energy, which is developing the Mmamabula Energy Complex at its Mmamabula Coal Field in southeastern Botswana, has long been a target for power companies from emerging markets for its reserves. A thermal plant needs 3 tonnes of coal to generate 1 mw of electricity.
Coal is needed to run both steel and power plants and accounts for 40-50% of total costs in these sectors. Since local coal is high in ash content, private power-generating companies depend on imports. Indian companies typically import coal from Indonesia, Australia and South Africa where reserves of the resource are abundant.
Recently, the rush to own mines has prompted companies to look for alternative locations, including the US, Canada and other regions in Africa.
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