Mandatory offer for CEC Africa shares made by BP Investments
Copperbelt Energy Corporation Plc, Energy

Quoted company on the Lusaka Securities and Exchange, CEC Africa, has announced that a mandatory offer has been made by BP Investments Limited for purchase minority shareholders stake in the company that has operations in Nigeria.

Shareholders of CEC Africa Investments Limited will be aware that on 17 June 2020, BP Investments Limited purchased shares in CECA which resulted in its shareholding exceeded the 35% threshold”, read a statement issued by Clara Mvula, Head of Corporate Affairs at CEC Africa on Tuesday 25th August 2020 in Lusaka Zambia.

According to rules stipulated by the Securities and Exchange Commission of Zambia, when the 35% mark is breached by an investor, a Mandatory Offer has to be made. “As a result, BP Investments was required to proceed with a Mandatory Offer to all the other shareholders in CECA in accordance with Rule 56 of the Third Schedule of the Securities (Takeovers and Mergers) Rules, Statutory Instrument No 170 of 1993, (the “Takeovers Rules”), issued pursuant to the Securities Act No 41 of 2016 (the “Securities Act”)”.

The announcement of the mandatory offer comes on the back of the resolution of the withdrawal of the Letter of Demand that was issued by Zambia Energy Corporation in early August 2020. “Shareholders of the Company are referred to the Cautionary Announcement first issued on 17 July 2020 in which Shareholders and the market were advised that the Company received a letter of demand from Zambian Energy Corporation (Ireland) Limited (“ZECI”) on 3 July 2020 for repayment of a loan of principal and interest amounting to USD 15,427,263=00 entered into by the Company on 20 November 2014”, read a statement issued by Clara Mvula, Head, Corporate Services on Thursday, 13th August 2020. “On 10 July 2020, the Company was served with court process documents indicating that ZECI would seek to recover the debt through the courts in Mauritius”.

The offer itself comes with no premium for minority shareholders. On 25th August 2020, the quoted price for CEC Africa was K0.13 which is the same price of the Mandatory Offer. This is despite the price peeking to K0.19 in the last 12 months.

Possible Rationale of an exit for investors

In recent months, it is clear that the Board of CEC Africa has had a relook at the fortunes of the market that they desired to be in. When the Company was served with court process documents indicating that ZECI would seek to recover the debt through the courts in Mauritius, this was a culmination of a plethora of issues that their Nigerian adventure had faced. The company’s investments have not gone according to plan. In 2016, various factors have adversely affected the value of CEC Africa, including but not limited to:

  • Low power generation in Nigeria compared to Multi-Year Tariff Order forecast;
  • Liquidity challenges facing the Nigerian energy sector;
  • The effect of the depreciation of the Naira on CEC Africa’s USD debt obligations; and
  • Limited enforcement of the Nigerian power sector regulatory regime due to various factors.

So much for a destination that offered so much hope.

Terms of the Offer

According to the SENS announcement, the details of the offer are as follows:

  1. BP Investments has informed the Board of CECA of its intention to undertake the Offer, being a cash offer, to all minority shareholders of CECA, representing a 7.62% shareholding in the Company, at a price per share of ZMW0.13 (the “Offer Price”) to be settled at the close of the Offer period.
  2. Accordingly, as stated in Section 3 below, BPIL and CECA will send to each shareholder of the Company an Offer Document and a Circular respectively, setting out details of the Offer, actions to be taken by those minority shareholders of CECA who may wish to participate in the Offer.
  3. At their sole discretion, shareholders of CECA registered as members of the Company as at the Record Date of the Offer may choose to sell to BPIL, some, all or none of the shares they own in CECA.

The Deal Team

According to documents sent to shareholders of CEC Africa seen by the Founder of Financial Insight Zambia, corporate information indicates that BP Investment Limited has their registered office in Nigeria. Pangaea Securities Limited are the designated transaction advisors. B&M Legal Practitioners are the legal advisors and Olusuyi Agboola & Co Chartered Accountants are the auditors

About the BP Investments

BP Investments is a private company registered on 14 June 1999 for the purpose of engaging in commodity trade; making investments of any kind; provision of management, business and advisory services for the purposes of safeguarding and enhancing the investment of the company, among others. BPIL has successfully made several investments in various companies and has major shareholdings in many companies. BPIL is also established to carry out businesses in any part of the world, in areas such as – Shipping, energy and any other business, which in the opinion of BPIL Directors is beneficial to the objectives of the Offeror.

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