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Kenya Electricity Generating Company Ltd (KEGN), fondly known as KenGen, is issuing equity to raise additional capital to fund growth, portfolio diversification and other capital projects.
But KenGen’s rights issue isn’t getting everyone excited. Shares of Kenya’s leading electricity producer fell 1.55% to close at Sh6.35 on Monday (May-23, 2016). During the Monday session, the shares rose to a high of Sh6.50 and dipped to a low of Sh6.20. Stock has traded in the range of Sh5.40 and Sh11.00 in the last 52-weeks. About 6.43 million shares of KenGen changed hands on Monday.
What about the rights issue?
In pursuit of additional capital for expansion and diversification, KenGen (KEGN) is offering 4.4 billion new shares to existing shareholders. The company is hoping to raise Sh28.8 billion through the rights issue offering. KenGen’s right issue will close on June 10 and the newly-issued shares will begin trading on the Nairobi Securities Exchange market on July 6.
What’s the rights issue price?
Kenya Electricity Generating Company Ltd (KEGN) has priced its newly-minted shares at Sh6.55. The recent pullback in the stock has effectively erased the discount of the rights issue as shares are currently trading below the issue price. KenGen (KEGN) shares moved south about 11% when the regulator issued final approval for the company to carry on with the rights issue.
Debt-to-equity
The government of Kenya, which is the majority investors in KenGen, has taken advantage of the rights issue to convert about Sh20.1 billion of its loan to the company to equity.
KenGen said that shareholders who exercise their rights fully will have the opportunity to purchase additional rights from shareholders who didn’t exercise their rights fully.
KenGen's financials
KenGen (KEGN) generated revenue of Sh18.2 billion in the first half of its FY2016. The revenue figure improved from a little over Sh12 billion in the corresponding period in FY2015. The company posted EPS of Sh2.58 for the latest first half, compared with Sh2.24 in the like period a year earlier.
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