CEC | Further Cautionary Statement
Shareholders are referred to the first Cautionary Announcement, dated 9th June 2020 and the subsequent Cautionary Announcements dated 25th January 2021 and 19th May 2021, issued by the Board of Directors of Copperbelt Energy Corporation PLC (“CEC” or “the Company”), wherein shareholders were advised regarding the accumulated debt by Konkola Copper Mines (“KCM”) in unpaid power charges. An arbitration action was commenced by CEC against KCM on 18th November 2021, under the UNCITRAL Rules 1976, to recover the debt, pursuant to the arbitration provision contained in the Power Supply Agreement (the “PSA”), for an outstanding principal sum at the material time of US$ 139,798,529, plus contractual interest for power supplied until the expiry of the PSA (the ‘Arbitration’).
The parties consented to settle the dispute under Arbitration on agreed commercial terms, and consequently, CEC and KCM have entered into a Settlement Agreement in which the parties have agreed to settle and resolve completely and finally the present dispute.
The implication of the Settlement Agreement on the Company will be an immediate reversal in part of the previously impaired KCM receivable of US$171 million. Additionally, an amount of US$107 million will be applied to reduce the ZESCO payable, which currently forms part of the current liabilities in CEC’s books of accounts. Furthermore, an amount of US$64 million will be applied to Zambia Revenue Authority to settle the corporation tax arising from the writeback of the KCM receivable. Finally, the residue KCM debt of US$20 million will be paid by KCM by way of an agreed number of instalments.
The Board of Directors informs shareholders of the Company and the market that the arbitral proceedings have not been finalised. However, in view of the settlement, the parties intend to conclude the action by a consent award to be endorsed by the sole arbitrator. Therefore, as events unfold, the shareholders and the market will be kept informed on this matter accordingly.
Shareholders are, therefore, advised to continue exercising caution when dealing in the Company’s securities.
By Order of the Board
Julia C Z Chaila
Company Secretary
Issued in Lusaka, Zambia on Friday, 14 July 2023
First Issued on 9th June 2020
