NAIROBI, Kenya Oct 28 – The Kenya Power and Lighting Company expects to raise between Sh7 billion and Sh10 billion in its proposed capital restructuring.
The restructuring by the power distributor will involve the conversion of preference shares into ordinary stock, a share split and a rights issue that are expected to run concurrently.
KPLC Managing Director Eng Joseph Njoroge says the company is seeking to strengthen its balance sheet and make its shares affordable at the Nairobi Stock Exchange.
"Besides giving shareholders the opportunity to increase their shareholding, we anticipate to raise up to Sh10 billion from the exercise. A more precise figure will be announced once the price of the shares is determined after the necessary approvals go through," Eng Njoroge said.
KPLC\’s authorised share capital is fixed at Sh18 billion out of which Sh15.9 billion comprises redeemable non-cumulative preference shares with an interest coupon of 7.85 percent owned by the Government.
The conversion of 794, 962, 491 million government preference shares into 76, 622, 891 million ordinary shares, will push the governments shareholding in the company to 69.7 percent.
That is however set to reduce to just 50.1 percent after the rights issue as the government will not take up its share of the rights issue.
According to Eng Njoroge the rights issue offer is to begin on November 25 running through to December 15. KPLC is however awaiting regulatory and shareholder approval before setting a price for the offer.
Dyer and Blair Investment Bank has been appointed as the lead transact advisor for the restructuring process.
The Sh17.1 billion preference shares came about in 2003 after the government took over a Sh15.9 billion debt KPLC owed to KenGen and converted it into equity in the form of preference shares.
KPLC will float 488,630,245 new ordinary shares through the rights issue.
Eng Njoroge said through the share split, each ordinary share of Sh20 would be split into eight ordinary shares of Sh2.50 each.
Through the restructuring KPLC will make savings from the more than Sh1.2 billion annual payments to the Treasury, leaving it with cash to overhaul its ageing infrastructure and boost dividend payout to other shareholders.
Funds raised from the rights issue will be invested in the refurbishment and further development of the power delivery system in the endeavor to meet demands of an expanding economy.
Targeted projects will help KPLC reduces losses in the system as well as enhance quality and reliability of power supply to its customers across the country.