CIC Energy, JSW in talks for extending buyout deadline

JSW Energy might have to give some more time to Toronto Stock Exchange-listed CIC Energy Corp if it wants to acquire the latter clean of all litigations.

British power company CIC Energy Corp on Monday said that it was is discussion with JSW Energy to further extend the deadline beyond March 15 for the proposed acquisition by JSW Group’s power arm.

JSW Energy, too, said it has entered into discussions again for postponing the date of acquisition. “As they have said, it is true that we are in discussions with them and they want to extend the deadline,” said a senior JSW official.

Without divulging details, he said a decision will be taken on whether to extend the deadline or not within two days.

A note issued by CIC Energy Corp said, “The company announces that it is in discussions with JSW Energy to further extend the outside date beyond March 15, 2011, pursuant to the terms of the supplementary agreement for the proposed acquisition of the company by JSW. The outside date is the date by which the transaction is required to be closed.”
A update will be provided by CIC Energy no later than 9:30 am (Toronto time) on March 16, 2011, it said.

The original date for the completion of acquisition was February 28. But owing to an arbitration notice from one of its partner companies in a power project, it had to extend the date by a fortnight.

On November 23, JSW Energy entered into exclusive talks with CIC Energy and gave an all-cash offer to buy 100% of the company at a price of $7.42 (Canadian) per share, a premium of 159% to the day’s trading price.

However, in the supplementary agreement signed between the two, one of the clauses was that JSW Energy wanted the “company clean”, which means devoid of any litigations or arbitrations.

On February 24, GCL Botswana, a subsidiary of Hong Kong-based Chinese company Golden Concord, filed an arbitration notice against CIC Energy where it had alleged CIC International that it had a contractual obligation to agree with GCL Botswana for a power purchase and coal supply agreement.
However, CIC had denied the allegation saying it was “without merit,” and entered into negotiations with the GCL Botswana.

In August 2010, CIC International and GCL Botswana signed an agreement to jointly build a 300 megawatt power plant in Botswana to be called the Mookane Domestic Power Project.
It was decided that a holding company would be formed which would build a power plant where CIC will hold a 30% interest and GCL the rest.