KenGen puts off Sh15bn cash call, blames delay in getting approval
From left: KenGen chairman Joshua Choge, managing director Albert Mugo and regulatory affairs boss Simon Ngure during an investor briefing on March 6,2015. PHOTO | DIANA NGILA | NATION MEDIA GROUP
What you need to know:
- The Treasury owns 70 per cent of KenGen and the negotiations centre around a deal to convert government debt of about Sh20 billion at the power generator into equity.
- KenGen’s share price at the Nairobi Securities Exchange yesterday closed at Sh11.80 apiece, 10.27 per cent below its 52-week high of Sh13.15, set in October, last year. The dip was blamed on the delay in the rights issue.
- National Bank of Kenya is currently awaiting government’s approval to launch a rights issue while Uchumi Supermarket had to wait for two years to get the greenlight.
Kenya Electricity Generating Company has once again postponed its Sh15 billion rights issue for later this year.
The change follows delays in getting a commitment on uptake from the government, its majority shareholder.
The cash call had been slated for the first quarter of this year but KenGen said it is yet to get an approval.
“We may not make it this financial year, it may spill over to the first quarter of next financial year (2015-2016),” Chief Executive Officer Albert Mugo said at an investor briefing yesterday.
TOP GEAR
He however noted that talks are in top gear and an approval from government could be given by the end of this month.
“We advertised for a transaction adviser to determine the modalities but it is a long process before we roll it out,” added Mr Mugo.
The Treasury owns 70 per cent of KenGen and the negotiations centre around a deal to convert government debt of about Sh20 billion at the power generator into equity.
The cash call was approved by shareholders in December 2013 and was set to be launched by June last year.
The plan is to float 2.2 billion new shares to existing shareholders in the ratio of a share for every one held to help it double its generation capacity in the next five years.
KenGen’s share price at the Nairobi Securities Exchange yesterday closed at Sh11.80 apiece, 10.27 per cent below its 52-week high of Sh13.15, set in October, last year. The dip was blamed on the delay in the rights issue.
Analyst hold that the 2.2 billion shares could further dilute the share price by half as the offer targets a ratio of one for every one held.
BUREAUCRATIC CHALLENGES
The fundraising headwinds is the latest show of bureaucratic challenges faced by publicly traded firms.
National Bank of Kenya is currently awaiting government’s approval to launch a rights issue while Uchumi Supermarket had to wait for two years to get the greenlight.
Mr Mugo said KenGen needs proceeds of the rights issue to grow its installed capacity to 3,000 megawatts by 2018 from the current 1,575 megawatts and shift Kenya’s energy to clean and cheaper sources such as geothermal and wind.
