KenGen sets rights issue offer price at Sh6.55, seeks to raise Sh28b

KenGen sets rights issue offer price at Sh6.55, seeks to raise Sh28b

After a two-year delay, power producer KenGen is all set to raise Sh28 billion from shareholders through a rights issue.

KenGen will issue 4.39 million new shares, which shareholders will buy at a discounted price of Sh6.55. Shareholders who take up their rights in the offer will be entitled to two new shares for every share held.

The offer price is a discount on the power producer’s share price that closed Monday’s trade at Sh7.45.

“The shareholders of KenGen will have the right to subscribe for two new ordinary shares for every one ordinary share held on the register closure date 3.00 pm on Monday 16th May 2016,” KenGen’s Company Secretary Rebecca Miano said in a statement to shareholders.

The rights issue will open on the 23rd of May with the new shares to be listed on the 16th of July.

The government, through the National Treasury is the majority shareholder in KenGen with a 70 percent stake and has committed to take up its rights in full.  The government plans to convert part of the loans lent to the state owned corporation into a stake in the firm.

KenGen owes the government an estimated Sh41 billion, with the power producer in the past saying Sh20 billion of the proceeds of the cash call will be used to retire the debt.

This will leave KenGen with an estimated Sh8.7 billion shillings to use to finance power projects.

KenGen has an installed capacity of 1,611 MW, which it plans to increase to 2,122 MW by 2018 at a cost of $1.75 billion.

Projects lined up by the power producer include three new 350 MW Olkaria geothermal projects, a 400 MW wind farm in Meru as well as rehabilitation of its Olkaria 1 plant.

KenGen has increasingly been turning to international financiers to fund power projects. The firm has recently signed deals with the Japanese International Cooperation Agency (JICA), the European Investment Bank and most recently signed a deal with US President Barack Obama’s Power Africa initiative to fund energy projects.

KenGen has appointed Standard Investment Bank and Renaissance Capital as the lead transaction advisors.

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