Kenya Power to issue Sh25.8 billion corporate bond
What you need to know:
Kenya’s power distributor has said that it will issue a corporate bond to fund the upgrade and expansion of its electricity distribution network.
The company needs Ksh156 billion ($1.83 billion) to improve reliability of power supply, reduce system losses and create capacity for new power connections over the next five years.
The Nairobi Securities Exchange (NSE) listed firm will raise about a fifth of the funds or Sh25.8 billion ($300 million) through the issuance of a corporate bond.
Kenya’s power distributor has said that it will issue a corporate bond to fund the upgrade and expansion of its electricity distribution network.
The company, on Friday said that it needs Ksh156 billion ($1.83 billion) to improve reliability of power supply, reduce system losses and create capacity for new power connections over the next five years.
Kenya Power’s acting chief executive Ben Chumo said that the Nairobi Securities Exchange (NSE) listed firm will raise about a fifth of the funds or Sh25.8 billion ($300 million) through the issuance of a corporate bond.
The balance will be provided by multilateral agencies such as World Bank, African Development Bank (AfDB) and Agence Francaise de Developpement (AfD) who are its traditional financiers.
“We will source for long-term funding options like concessional loans and corporate bonds,” said Mr Chumo.
The company posted a 5.74 per cent drop in profit after tax to Ksh4.35 billion for the twelve month period ended June 2013 from Ksh4.61 billion posted over a similar period ended June 2012, blamed on increased interest costs on new debt taken to finance network expansion.
Finance costs rose by Ksh1.27 billion to Ksh2.49 billion for the period ended June 2013 compared to Ksh1.21 billion incurred over a similar period the previous year after the company incurred additional debt.
The electricity distributor has opened talks with the World Bank on how to arrange for the bond offering in the international markets.
"We have presented our investment plan to the World Bank. We’re still in the early stages,” said Lawrence Yego, Kenya Power's chief finance manager.
The electricity retailer’s capital expenditure in the year to June almost doubled to Sh40.4 billion compared to Sh26.6 billion a year earlier, mostly in putting up new substations, power lines and system automation.
Kenya Power shares which have shed 17.54 per cent since the beginning of this year closed at Ksh14.10 as at the close of Friday’s trading.
The power distributor, which paid a Ksh0.50 dividend per share for the full year ended June 2012 said that it will not pay a dividend for the full year ended June 2013.
“We shall intensify programs to expand the network, reinforcement and upgrading projects aimed at improving the quality and reliability of power,” said Kenya Power acting chief executive Ben Chumo.
