KenGen scouts for transaction adviser to steer Sh30bn offer

An aerial view of the 140MW Olkaria IV geothermal power plant in Naivasha sub-county. KenGen is scouting for a transaction adviser to steer its planned rights issue. PHOTO | SULEIMAN MBATIAH |   NATION MEDIA GROUP

In Summary

• KenGen’s managing director Albert Mugo told Nation by phone that the company was in consultation with the Treasury and the ministry of Energy regarding the government’s participation in the offer.
• It is understood that the discussion between KenGen and the government has explored the options of converting KenGen’s debt to the government into equity or the latter’s fresh capital injection into the company.
• Failure by KenGen and the government to agree on whether the latter would participate in the offer has delayed the cash call longer than anticipated.

By IMMACULATE KARAMBU
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The Kenya Electricity Generating Company is scouting for a transaction adviser to steer its planned rights issue.

The company is targeting to raise Sh30 billion through a cash call to finance investments in new power generation plants and expansion of existing ones.

“This expression of interest is being sent for the purpose of providing information to interested and qualified bidders to enable them to submit proposals for providing KenGen with transaction advisory services in relation to the rights issue,” reads a notice published on Friday.

The transaction adviser will value the company to determine the indicative share price and structuring of the cash call. The adviser will also prepare KenGen’s marketing and communication strategy.

Failure by KenGen and the government to agree on whether the latter would participate in the offer has delayed the cash call longer than anticipated.

At the moment, the government has 70 per cent stake in KenGen and its decision on whether to participate in the cash call or not is critical to the company’s planning.

Through the rights issue, KenGen is targeting to raise at least Sh15 billion from its largest investor, while the balance would come from minority shareholders.

The rights issue was scheduled to take place last June.

KenGen’s managing director Albert Mugo told Nation by phone that the company was in consultation with the Treasury and the ministry of Energy regarding the government’s participation in the offer.

GOOD PROGRESS

“We are making good progress in our discussions with the government and we hope to reach a conclusion soon,” said Mr Mugo.

It is understood that the discussion between KenGen and the government has explored the options of converting KenGen’s debt to the government into equity or the latter’s fresh capital injection into the company.

At an investor briefing held recently, KenGen said it owed the government Sh22 billion.

The cash from the rights issue is hoped to restructure KenGen’s balance sheet to maintain a favourable debt versus equity position.

Together with an anticipated Sh70 billion debt from external lenders, the electricity generator hopes to raise Sh100 billion to finance the projects it has lined up for completion by 2018.

KenGen is tasked with generating 844 megawatts of electricity as part of the government’s plan to add 5,000 megawatts of power to the national grid by the end of next year.

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