India's Jindal Steel to buy Canadian coal company CIC
(Reuters) - Canadian coal mine developer CIC Energy Corp ELC.TO has agreed to be sold to India-based Jindal Steel & Power Ltd (JNSP.NS: Quote) for C$116 million ($114 million) in cash, more than a year after ending an agreement with JSW Energy Ltd (JSWE.NS: Quote).
Indian power company JSW in November 2010 offered to buy CIC for C$422 million, but the deal was terminated about eight months later, forcing CIC to look for other buyers.
JSW is headed by Sajjan Jindal, the brother of Jindal Steel chairman Naveen Jindal.
CIC, which has lost a third of its value in the last 12 months, said on Tuesday Jindal Steel has made an offer of C$2.00 per share. The offer is at a premium of 27 percent over the stock's Monday closing price of C$1.57 on the Toronto Stock Exchange.
"In the current challenging economic and capital markets environment, we believe that this offer provides fair value for CIC Energy shareholders," CIC Chief Executive Warren Newfield said.
CIC's Mmamabula coal field in Botswana has an estimated mineral resource of about 2.4 billion metric tonnes (2.64 billion tons), giving Jindal Steel much-needed fuel to power its plants in India.
Chairman Naveen Jindal told Reuters in June that Jindal Steel was looking at coal and iron ore projects in South America, Africa and Australia as part of its aim to increase its self sufficiency in steel raw materials.
CIC, which is being advised by Deutsche Bank Securities Inc, said the companies have set a termination fee of about C$3.5 million if the deal is not closed under certain circumstances.
Jindal Steel's shares closed flat at 414.75 rupees on the National Stock Exchange on Tuesday.
(Reporting by Krishna N. Das and Sakthi Prasad in Bangalore; Editing by Paul Tait and Sreejiraj Eluvangal)
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