Kenya Electricity Generating Company (KenGen) rights issue offer opened on a high note yesterday after the Government took up its full entitlement of the rights.
The principal shareholder, the Government, which currently owns 70 per cent of the firm, has agreed to participate in the issue by converting Sh20.2 billion debt into shares.
The decision means the remaining shareholders will have up to June 10, 2016 to exercise their right of two new ordinary shares for every one ordinary share held in the company’s register as at May 16.
KenGen is offering a total of 4,396,722,912 new ordinary shares at a discounted price of Sh6.55 per share to raise Sh29 billion for business expansion.
The rights issue closes on Friday June 10, 2016.
Already, the Government will be taking up 70 per cent of the transaction, through the conversion of some of the loans on-lent to KenGen into equity.
Treasury Cabinet Secretary Henry Rotich, who signed the provisional allotment letter, said the Government had agreed to participate in the rights issue in order to support KenGen’s energy generation growth agenda.
“This will not only relieve the company of its debt repayment obligation but also give it additional headroom for debt as and when it is required,” said Rotich.
The company plans to commission an additional installed capacity of about 720MW mainly from green sources with its CEO Albert Mugo saying the new investment calls for enormous funding.
“With the country’s power demand expected to cross the 4,000MW mark by 2020, success in the future is dependent on early planning and that is why we are asking shareholders to take up their rights,” said Mugo.
Rotich commended KenGen’s decision for seeking market solution for its funding needs saying that it will help the company in delivering enough power for the country.
This was reiterated by Energy and Petroleum CS Charles Keter, who reckoned that firms need to be innovative in financing so as to reduce reliance on exchequer. Keter added that energy requirements in the country call for harnessing more power from renewable sources such as geothermal, wind and solar energy.
“Kenya Power will have to sign long-term power purchase agreements with investors to promote the development of renewable energy,” he said.
Speaking during the official launch, KenGen Chairman Joshua Choge said this could be the last time the company is calling for a rights issue since it expects to start generating money from ongoing projects.
“We hope this money will be able to spur our growth and improve the position of our balance sheet. We believe we should be able to finance future projects from our own internally generated funds,” said Choge.
The energy producer is offering a total of 4.4 billion ordinary shares at Sh6.55 per share to raise Sh28.8 billion in new capital.
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