KenGen shareholders approve $350 million capital raising plans
OLK02 wellhead plant of GEG at Olkaria in Kenya (source: Green Energy Group)
Alexander Richter
1 Jan 2014
Kenya Electricity Generating Company (KenGen) receives shareholder approval for capital raising of up to $350 million for Olkaria IV, Olkaria I and geothermal wellhead units, as well as wind projects for 2014.
Last week, the shareholders of Kenya Electricity Generating Company (KenGen) “approved plans by the electricity utility to raise new capital to finance power projects in 2014.
The firm’s acting CEO Simon Ngure told shareholders at the company’s annual general meeting (AGM) in Nairobi that the company requires cash quickly to fund its ambitious capacity expansion program.
“We are growing our business very quickly and therefore need more money. KenGen will grow to three times its size over the next three years. It is a necessity that if you take debt, then you must ensure you have adequate equity,” said Ngure.
The funds will see KenGen issue 2.2 billion shares in the market most likely through a rights issue in the first half of 2014.
At the current price of 0.17 dollars, this would be expected to raise 349 million dollars. The company has a total of 2.2 billion shares listed at the Nairobi Securities Exchange meaning that the Rights Issue would be in the ratio of 1:1.
Ngure said KenGen plans to raise its share capital from 64 million dollars to 290 million dollars through creation of 7.7 billion new shares.
The 2.2 billion new shares approved is the first tranche in the capital raising project by Kenya’s largest electricity producer seeking to raise 4 billion dollars for new projects over the next four years through a mix of debt and equity.
The new projects comprising mainly a mix of geothermal and wind energy, are expected to boost KenGen’s power generation capacity by 400 megawatts by 2014.
They include Olkaria IV, Ngong Wind, Geothermal mobile wellhead and a 70 megawatt additional plant at Olkaria I.
The firm is targeting to increase its power output to 3,000 megawatts by 2018 from the current 1,239 megawatts. He added that the projects will be financed through a 70:30 debt-to-equity ratio.
In 2008, KenGen launched a major capacity expansion program stretching over three horizons to 2018. In the last five years, the firm has commissioned 325 megawatts and a further 214 megawatts will be commissioned by June 2014.
KenGen outgoing Chairman Titus Mbathi said the company was on course to realizing its target of increasing capacity in line with rising demand as the country implements the Vision 2030 plan to create an industrial economy.”
Source: Coastweek
