KenGen gets nod for Sh28.8b rights issue

The Kenya Electricity Generating Company (KenGen) has received regulatory approval for its Sh28.8 billion rights issue.

The energy producer says it’s offering a total of 4.4 billion ordinary shares at Sh6.55 per share to raise Sh28.8 billion in new capital. The rights issue will open on May 23, 2016, and close on June 10, 2016 following approval by the Capital Markets Authority (CMA) and Nairobi Securities Exchange (NSE).

“We are pleased to advise the shareholders of KenGen that CMA and NSE have approved the proposed renounceable rights issue to the existing shareholders,” said KenGen in an advert that appeared in the dailies yesterday.

The issue will see shareholders given the entitlement of two new ordinary shares for every one ordinary share held in the company’s register as at May 16.

Compared to the volume weighted average price of KenGen’s share at NSE for the past 30 trading days to May 4, the offer price is discounted by 18.33 per cent. As at yesterday, KenGen’s share price at the bourse was Sh7.20.

Private transfer

“The Authority is satisfied that the disclosures therein comply with the requirements of Regulation 11 of the Capital Markets (Securities)(Public Offers, Listing and Disclosures) (Regulations) 2002, and contain the information that will enable investors to make an informed decision on the rights issue”, CMA noted in its statement. A minimum of 65 per cent of the rights issue is required to be accepted to be declared successful.

Shareholders who wish to sell their rights to other investors in what is called renunciation of rights by private transfer, will have up to May 27 to do so. The last date of trading in nil paid rights at the bourse will be June 3 before the closure of rights issue on June 10.

Standard Investment Bank and Renaissance Capital have been picked as lead transaction advisors while Dyer & Blair Investment Bank and Faida Investment Bank will be the lead sponsoring stockbrokers. Image Registrars will be the receiving agent and data processors, while Co-operative Bank of Kenya will be the receiving Bank for the rights issue.

KenGen is expected to make a public announcement of the results of the issue on the first day of July before the listing and commencement of trading of the new shares on NSE on July 6.

The board has disclosed that the Government, which currently owns 70 per cent of the firm, will be taking up their full entitlement in the rights issue offer. In so doing, the Government will convert part of the Sh20 billion debt into shares.

KenGen has been working on several projects as it moves to grow its power-generation muscle, mainly from renewable geothermal sources. Out of the additional 766 megawatts (MW) that the firm targets by 2020, its Chairman Joshua Choge said 676MW of this will come from geothermal sources.

Other plants that require financing include Olkaria 1 Unit 6, which will generate 70MW, and the ongoing upgrade of Olkaria 1 to 50.7MW by 2017.