NAIROBI, Kenya Nov 19 – The Kenya Power and Lighting Company (KPLC) has set the price for the 488.6 million new ordinary shares on offer in its rights issue at Sh19.50.
The rights issue, which will now open on December 1st through to the 23rd, seeks to raise Sh9.1 billion.
KPLC had earlier announced that it was targeting between Sh7b to Sh10b.
The offer price marks a 30 percent discount over a six-month period of the shares trading levels.
Making the announcement, KPLC Managing Director Joseph Njoroge exuded confidence that the offer would be received well in the market.
“The offer is not limited to the current shareholders. The government rights will be available to the public who wish to gain ownership of the company,” Eng Njoroge said.
Shareholders will be entitled to purchase 20 new shares for every 51 shares held.
The government has renounced all its rights and will sell them to interested buyers through the Nairobi Stock Exchange.
By renouncing its rights, the government’s shareholding in the company will stand at 50.1 percent.
The government renounced its rights in an effort to mitigate any short-term dilutive impact on the preferential non- cumulative shares on the holders of ordinary shares in KPLC.
Given the timing of the rights issue, KPLC has entered into an underwriting agreement with Equity Bank and Centum Investment Company for 50 percent of the rights to ensure a successful issue.
“Demand for cash in the market is high at the moment hence the prudent approach being taken to safeguard the issue,” Dyer and Blair Chairman Jimnah Mbaru explained.
The rights issue is part of KPLC’s restructuring of its capital base.
The first step entails the issuance of an additional 76,622,891 ordinary shares of a par value of Sh20 each following the redemption by the government of its redeemable non-cumulative preference shares in the company.
KPLC’s authorised share capital is fixed at Sh18 billion out of which Sh15.9 billion (90.72 per cent) comprises redeemable non-cumulative preference shares with an interest coupon of 7.85 percent owned by the government.
Eng Njoroge said this had put pressure on the company to raise capital as investors looked at the shares as debt to the firm.
KPLC will also be carrying out a share split such that one ordinary share of Sh20 each will be split into eight ordinary shares of Sh2.50.
The split is expected to occur on November 19 at the close of business at the NSE.
The split 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 reporters.