Cash offer for majority shareholding of Zambian energy company lapses

The conditions for approval by the SEC for the cash offer for majority stake in CEC have not been fully satisfied therefore the company is looking for other alternatives for funding.

An offer by Commonwealth Development Corporation – CDC and A.P. Moller for majority stake in Lusaka Securities Exchange – LuSE listed Copperbelt Energy Corporation – CEC officially lapsed at 5pm on 17 July 2018. This was confirmed in a stock exchange news (SENS) update on the Zambian bourse the LuSE. This followed a firm intention by Zambian Transmission LLP, a wholly owned subsidiary of CDC Group PLC to make a binding offer to purchase all the ordinary shares in the share capital of the energy distributor for a cash offer price of US$0.2338 per share translating to USD380million. The closing date was extended twice on 20th April and 21st May this year, as approved by the Securities and Exchange Commission following failure to satisfy one of the five conditions to the agreement. According to the offer document sighted by ZBT, the five conditions of the offer that needed to be either satisfied or waived include:

1. Receipt of the merger control clearance from the Competition and Consumer Protection Commission-CCPC;
2. Consent of the holder of the golden share (i.e. the Zambian government through the Minister of Finance) to the transaction as required by the articles of association of the energy transmitter;
3. Consent of ZESCO to the transaction as required pursuant to the Bulk Supply Agreement – BSA and execution by CEC PLC and ZESCO of an amendment to the BSA which provides for an extension of the term of the agreement for an additional period of 20 years. (This was the condition that stalled completion of the transaction)
4. Lenders to CEC PLC unconditionally consenting to the transaction and agreeing not to demand repayment of any debts owed by the energy distributor as a result of the transaction;
5. Valid acceptances being received in respect of shares which, together with any CEC stock acquired by the offeror and persons acting in concert with it (whether pursuant to the offer or otherwise), will result in the offeror and persons acting in concert with it holding a majority of the voting rights attaching to the CEC Shares.

All but the third were met and as such the transaction had to be extended twice to allow for negotiations relating to the bulk supply agreement…

View the CEC Website

Read complete article: Zambia Business Times