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Alba Iulia
Sunday, November 29, 2020

CDC bid to buy CEC flops

Economy CDC bid to buy CEC flops

UK state-owned development finance institution, the Commonwealth Development Corporation (CDC) Group’s plans to acquire the Copperbelt Energy Corporation (CEC) for K3.709 billion has flopped.

This follows the failure by CDC to meet conditions to the Offer in full as at 17:00 Hours CAT on 17th July 2018, being the final Closing Date of the Offer.

According to a notice issued by the Lusaka Stock Exchange, CDC which made the offer under a new company called Zambian Transmission has formally advised the CEC Board of Directors that the conditions to the Offer had not been met in full.

CDC has advised that as the conditions to the Offer were not satisfied in full or the Offer declared unconditional as at 5:00p.m. CAT on 17th July 2018 the Offer has accordingly lapsed with immediate effect.

“Consequently, as the Offer has lapsed, it is no longer capable of further acceptance and any accepting CEC Shareholders cease to be bound by their acceptances,” it said.
On 30th January 2018, CDC and A P Moller Capital announced that they had made a bid to acquire CEC.

CEC is majority owned by Zambian Energy Corporation (“Ireland”) Limited (“ZECI”) which holds 52% shareholding whilst the balance of 48% is held by various institutional and retail investors.

Details of the circular to shareholders indicated that condition precedents needed to be meet for the deal to go through.

A condition precedent (CP) is an event or state of affairs that is required before something else will occur and in the CDC and CEC deal, several CPs were listed, according to cecinvestor.com.

1. the Minister of Finance of Zambia as holder of the Golden Share in CEC has consented to the change of control of CEC resulting from the Offer in accordance with the constitutional documents of CEC, on terms and in a form satisfactory to the Offeror;
2. the Energy Regulation Board of Zambia, in relation to CEC’s transmission license, electricity supply license and electricity generation license, has been notified of the Offer;

3. the COMESA Competition Commission has granted its approval of the Offer;

4. the Lenders (as described in the Circular) to CEC have consented to the acquisition of a controlling interest in CEC pursuant to clause 7.2 of the Common Terms Agreement between CEC and the Lenders; and

5. the Zambia Information and Communication Technology Authority (ZICTA) has consented to the change of control as required under CEC’s network license conditions and the Information and Communication Technologies Act No. 15 of 2009.

However, only 5 out of the 7 CPs have been agreed thus far. The following two conditions precedent to the Offer have not yet been fulfilled:

1. the consent of ZESCO Limited (“ZESCO”) pursuant to Clause 28(b)(ii)(c) of the Bulk Supply Agreement (the “BSA”) to any change of control (as defined in the BSA) of CEC resulting from the Offer and the waiver by ZESCO of its right to terminate the BSA as a result of such change of control, on terms and in a form satisfactory to the Offeror; and
2. the execution by CEC and ZESCO of an unconditional and irrevocable amendment to the BSA which provides for the extension of the term of the BSA for an additional period of 20 years on commercial terms which are no less advantageous to CEC than the existing terms of the BSA in a form and on terms satisfactory to the Offeror.

The last CP demanded that there be a renewal of the Bulk Supply Agreement (BSA) for an additional period of 20 years.

This was indicative of a desire to make the investment for the long term.

17 COMMENTS

  1. You want to sell everything, what is wrong with Zambians? Are we saying that we have failed to literally run anything on our own volition? Why do we have so many people with PHDs, masters, degrees, etc and yet we can not be in control of our own destiny. It actually says a lot about these qualifications, either we are only schooled and not educated or most of them are fake. People are only interested is getting cuts from these deals and run, instead of putting the nation ahead, cry my beloved country.

    • CEC is not owned by Zambians. 52% of CEC is by an Irish Company operating in Zambia as Zambia Energy Corporation. Why do people always like blaming others without facts.

    • This is GREAT news

      British companies, will bring a lot and treat the workers iin a fair way the Chinese.

      Thanks

      BB2014,2016

    • I’m impressed with chileshe kapwepwe,I hope as Zambian we shall support her to do the best,we have people withPhDs and degrees we can’t even manage to run something which is in our country we just steal from our own kofer,Zambian lets develop our country no one will do it for us.

  2. @kci what about the other 48% is owned by who? Read the story again before you make comments. Who does not know that CEC was pioneered by Zambians who used to work for ZCCM? We need to maintain our presence in these companies less we cry like babies of mistreatment after we have sold everything like we deed in the mines.

  3. #1.1 kci, Zambia Energy Corporation is a majority Zambian owned company, never mind registered in Ireland.

  4. first what cec does zesco can do thats why late president mwanawasa ensured that zesco gets the contract to supply power to some new mines with first quantum. zesco should go all the way and supply to the mines no middle men all profits for zambia.

  5. people dont understand ,its the Zambian shareholders who wanted to sell. if a company is making money and some one comes with money to buy then why stop them. CEC has for a long time provided power to the mines as a separate company even before independence. its only KK who nationalized it and made it into ZCCM as Power division,but later it was taken back to private hands

  6. HH really ba Sharon ? If indeed HH sold it and still has money 20++ years later (even after having been in bankrupting Zambian opposition politics for 10+ years) He is a very clever investor. Zambia needs him.I wish I knew him.

  7. The issue is the BSA(Bulk Supply Agreement) which CDC wants extended to another 20 years after the 20 years CEC signed with MMD expires. This BSA implies that mines continue paying for electricity at the same old cheap rate they agreed with MMD. Upto now government have failed to effect the new electricity tarrifs on the mines because of the BSA with CEC, whilst citizens are charged new rates. Its strange that a Company run by Commonwealth would advocate for the continuing of raking money from a country struggling to pay loans. These are issues opposition parties should stand with the people of Zambia on. Is the silence on the part of the opposition on this matter genuine or its a trap to see what step government takes and use it for campaigns?

Comments are closed.

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