NAIROBI, Kenya, Nov 20- Major restructuring is expected at the Kenya Power and Lighting Company (KPLC) after the firm announced its intentions to float a rights issue where the government will cede some of its shareholding.
The company also said on Friday that it plans to carry out a share split to make its shares affordable to majority of investors. The share price as at November 19th was Sh140.
“As part of measures to strengthen its balance sheet and enhance the affordability of its shares in the market, and after consultations and approval by the government, KPLC intends to restructure its capital base,” said the Managing Director Eng Joseph Njoroge in a paid up announcement in the local dailies.
The authorised share capital of KPLC is Sh18 billion out of which Sh15.9 billion (90.72 percent) comprises redeemable non-cumulative preference shares, with a par value of Sh20 and an interest coupon of 7.85 percent owned by the government.
The restructuring exercise will see about 87 percent of the preference shares owned by the government converted into ordinary shares which will also be traded at the Nairobi Stock Exchange.
The government owns 40.4 percent absolute shares in the power company and another 7.89 percent through National Social Security Fund with the remainder held by private investors.
This has at times being a disadvantage as it has meant that the government cannot inject capital from public funds into the company.
There is speculation that the exercise will increase the government’s absolute shareholding to well above the 51 percent threshold required to give it major control.
Mr Njoroge said the measures are expected to be implemented during the first half of 2010.
“Further details of the above exercise are being finalised and will be communicated to the public in due course,” he added.
Approvals from the shareholders and the requisite regulators such as the Capital Markets Authority will be sought before these measures are executed, he added.
Shareholders and members of the public have been advised to be cautious when dealing in KPLC shares.
This announcement comes barely a month after the company registered an 83 percent increase in after tax profits to Sh3.2 billion for the year ended June 30 2009.