Power generator KenGen is set for a major re-organisation of its balance sheet that could see the Treasury write off billions of shillings in debt in exchange for the company’s shares. Treasury secretary Henry Rotich says the government plans to write off some of the loans it has advanced to the power generator in exchange for company stock, effectively avoiding dilution of its stake in KenGen’s upcoming Sh15 billion rights issue. KenGen has announced plans to issue 2.21 billion new shares to existing owners in the ratio of one new share for every one held to finance upcoming projects that are expected to double its electricity generation capacity in the next five years. “We’re discussing our participation in the rights issue…. we will convert some debt into equity to take up our rights,” said Mr Rotich in an interview with the Business Daily. READ: KenGen delays Sh15bn rights issue to July The Treasury, which owns 70 per cent of the Nairobi Securities Exchange-listed KenGen, has loaned it a total of Sh19.4 billion. Going by the power generator’s current market price of nearly Sh10 per share, the government’s debt is enough to cover its portion of the cash call and possibly acquire an additional stake, as the Treasury requires just about Sh15.3 billion to take up its entire rights. KenGen aims to raise $5 billion (Sh430 billion) through the rights issue, corporate bonds and concessional loans to fund its expansion plans. It says its needs funds to grow its installed capacity to 3,000 megawatts by 2018 from the current 1,252 megawatts and tilt Kenya’s energy basket in favour of clean and cheaper sources such as geothermal and wind. “We want to increase equity so we can take up more debt,” said Albert Mugo, managing director of KenGen. “We are waiting for government to make a decision. We can’t finalise the information memorandum or seek regulatory approvals without the major shareholder’s undertaking,” he added. Transaction advisers for the KenGen cash call include Barclays, Dyer & Blair, KPMG and law firm Hamilton Harrison & Mathews. Some of the power projects that KenGen has lined up include the development of 560 megawatt steam energy from its Olkaria field and a 100 megawatt wind farm in Meru.
Posted on: Fri, 13 Jun 2014 06:55:58 +0000
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