NAIROBI, Kenya, Nov 11 – Kenya Power and Lighting Company shareholders have approved the power distributor’s plans to restructure its capital base.
This marks the first phase in KPLC’s plans to shore up capital for use in sustaining the company’s profitability.
The restructuring by the power distributor will involve the conversion of preference shares into ordinary stock, a share split and a Rights Issue that the shareholders unanimously agreed to.
Speaking during the firms Annual General Meeting KPLC Managing Director Eng Joseph Njoroge said all three steps are expected to run concurrently.
KPLC’s authorised share capital is fixed at Sh18 billion out of which Sh15.9 billion (90.72 percent) comprises redeemable non-cumulative preference shares with an interest coupon of 7.85 percent owned by the Government.
Eng Njoroge said the share split, where shareholders will receive eight new shares for each share held, is geared towards making the KPLC share more attractive.
“This is a response to shareholder requests because they say the share is too big and difficult to trade. We believe this share split will create interest in the share and enhance more investment in the company,” Eng Njoroge told shareholders.
The share split will then be followed by a Rights Issue where KPLC will be seeking to raise between Sh7 billion and Sh10 billion. KPLC will float 488,630,245 new ordinary shares through the Issue at the rate of 20 new shares for every 51 shares held.
Eng Njoroge did not however disclose the price at which the share will be sold saying: “The price will be determined by November 23 after the board of directors as well as our consultants have met.”
The offer is to begin on November 25 running through to December 15. KPLC is however awaiting regulatory approval.
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 generated will be invested in the refurbishment and development of the country’s power distribution network.
“We have a number of projects lined up such as power stations to put up as well as enhancing our pre-payment system,” he said.