Power generator KenGen approves rights issue

The board of Kenya’s biggest power generator, KenGen, has approved a rights issue plan and will seek shareholder approval on December 16th, the firm said in a statement Wednesday.

The plan, which also needs regulatory approvals, would involve issuing up to 7.802 billion shares at a price to be set.

Kenya Electricity Generating Co, which is 70 percent state-owned, previously said it wanted to raise 30 billion shillings (USD294 million) to help restructure its balance sheet and to finance expansion.

The announcement comes barely a month after its shares jumped up and announced plans to raise 28 billion shillings (USD272 million) in a rights offer early next year.

The stock gained as much as 33 percent and traded 16 percent higher at 9.60 shillings, heading for its biggest gain in more than nine years.

KenGen reported profit of 11.5 billion shillings in the year through June from 2.83 billion shillings a year earlier, citing a tax credit and growth in its geothermal-power capacity. Revenue climbed 45 percent to 26.2 billion shillings.

KenGen picked Standard Investment Bank and Renaissance Capital as advisers for the planned cash call, which is set to take place in the first quarter of 2016, Finance Director John Mudany said in an interview.

Kenya’s government, which holds 70 percent of the company, is expected to take up its rights, said Mudany.

The proceeds will fund a reorganization of KenGen’s balance sheet, while the company also plans to raise USD1.7 billion in long-term debt.

According to Chief Executive Office Albert Mugo, the company currently has 1,611 MegaWatts of installed capacity and plans to increase that to 2,122 megawatts.