CEC | Proposed demerger of CEC Africa from the CEC Group
INTRODUCTION
In compliance with the Listings Requirements of the Lusaka Securities Exchange (“LuSE”), shareholders are advised that on 28 October 2016, the Board of Directors of Copperbelt Energy Corporation Plc (“CEC Plc” or the “CEC Group”) has proposed, subject to shareholder approval and lender consent the restructuring of the CEC Group by means of a distribution, via a dividend in specie, of ordinary shares in CEC Africa Investments Limited (“CEC Africa”) to shareholders of CEC Plc in the ratio of one (1) ordinary share in CEC Africa for every CEC Plc share held on the “Proposed Demerger”), being the record date of the Proposed Demerger (“Proposed Demerger Record Date”).
BACKGROUND AND RATIONALE FOR THE PROPOSED DEMERGER
In 2013, CEC Plc established CEC Africa as an investment platform through which it could channel its investments in the power sector across Sub-Saharan Africa. CEC Africa was capitalized with USD100 million, being seed capital for its operations, and received a further injection of circa USD50 million through shareholder loans. The original strategy for CEC Africa was for it to be an investment platform through which investors could access power infrastructure assets that were well diversified by region and technology.
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.
These and other general matters have significantly impacted the fair value of CEC Plc’s investment in CEC Africa…
Download the full announcement below.
