CDC of­fer for ma­jor­ity stake in CEC PLC lapses.

Zambian Business Times - - FRONT PAGE -

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 (for all out­stand­ing or­di­nary shares). 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:

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 (for all out­stand­ing or­di­nary shares). 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.

Zam­bian Trans­mis­sion LLP has for­mally ad­vised the Board of Di­rec­tors of CEC PLC that the con­di­tions to the of­fer had not been met in full as at 5:00p.m. CAT on 17th July 2018, be­ing the fi­nal clos­ing date of the of­fer and that of­fer has ac­cord­ingly lapsed with im­me­di­ate ef­fect.

CEC PLC is in dis­cus­sions for the dis­posal of its tele­coms as­sets that will see the power dis­trib­u­tor sell off its 50% stake in CEC Liq­uid to Liq­uid Tele­coms for a cash con­sid­er­a­tion. CEC Liq­uid Tele­com Zam­bia is a joint ven­ture be­tween Liq­uid Tele­com Group and Cop­per­belt En­ergy Cor­po­ra­tion PLC (CEC). Liq­uid Tele­com is the lead­ing in­de­pen­dent data, voice and IP provider in East­ern, Cen­tral and South­ern Africa’s sup­ply­ing fi­bre op­tic, satel­lite and in­ter­na­tional car­rier ser­vices to Africa’s largest mobile net­work op­er­a­tors, ISPs and busi­ness of all sizes.

In a se­cu­ri­ties ex­change news note for May 23, 2018, CEC com­pany Sec­re­tary Ju­lia Chaila stated that CEC is the le­gal and ben­e­fi­cial owner of 50% of the al­lot­ted and is­sued share cap­i­tal of CEC Liq­uid Tele­com. She fur­ther stated that the com­ple­tion of the trans­ac­tion would be con­di­tional on reg­u­la­tory ap­provals and any other third – party con­sents re­quired. A.P. MC is an al­ter­na­tive in­vest­ment fund domi­ciled in Den­mark with the pur­pose of cre­at­ing and en­abling op­por­tu­ni­ties through in­vest­ments in African in­fras­truc­ture. A.P. MC was launched in Au­gust 2017 backed by a selec­tion of blue-chip Danish in­sti­tu­tional in­vestors and has a to­tal fund com­mit­ment to date of US$650mil­lion. With mar­kets pric­ing in news of a CDC takeover (ear­lier in the year) CEC shares had ral­lied 44% to ZMW2.15 a share from lev­els of ZMW1.42. How­ever, as the trans­ac­tion pos­si­bil­ity seemed bleak, the stock started to sell - off that saw re­ver­sal of some gains to cur­rent lev­els. As at 5pm on 21 July, CEC PLC shares were trad­ing for ZMW2.01 per share on the LuSE.

• Zam­bian Trans­mis­sion LLP has for­mally ad­vised the Board of Di­rec­tors of CEC PLC that the con­di­tions to the of­fer had not been met in full. • The clos­ing date was ex­tended twice on 20th April and 21st May this year, as ap­proved by the SEC

Cop­per­belt En­ergy Cor­po­ra­tion – CEC PLC stock price tra­jec­tory ex­tracted from Bloomberg.

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