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Umeme stock falls after interim dividend cutoff
Umeme is seeking to compel the Uganda government to pay it an additional $292 million (Sh38 billion). The company indicated that the government was ready to pay additional, unspecified amounts after making the $118 million payment.
Former Ugandan power distributor Umeme’s stock shed 23.5 percent on Tuesday at the Nairobi bourse after the company closed its books on a Sh8 (Ush222) per share interim dividend.
The day’s loss is the latest in a series of volatile movements on the stock at the Nairobi Securities Exchange (NSE) — where it is cross-listed— in recent weeks on account of corporate announcements surrounding the end of the company’s 20-year power distribution concession with the Uganda government.
The stock had rallied to touch a record high of Sh24.75 per share on June 24 after the surprise dividend announcement.
The dividend, which will be distributed to eligible shareholders on July 31, helped reverse a steep price erosion that had ensued after the company announced uncertainty over the amount it would receive from the Uganda government at the end of concession.
Following the end of the concession and the disclosure of the payout dispute, Umeme’s stock was suspended from trading for about six weeks, at a price of Sh16, before resuming trading on June 13 after the company resolved to escalate the matter to arbitration in London.
The return to the market saw its share price fall to a range of Sh11.90 and Sh12.45, before the dividend announcement on June 23 caused a rally to the high of Sh24.75 per share.
End of concession
The Uganda government had earlier paid Umeme $118 million (Sh15.3 billion) at the end of the concession although the company did not indicate whether this amount was linked to the interim dividend that totals Sh13 billion.
Umeme is seeking to compel the Uganda government to pay it an additional $292 million (Sh38 billion). The company indicated that the government was ready to pay additional, unspecified amounts after making the $118 million payment.
Receipt of additional cash from the government would have a substantial impact on Umeme’s financial position and ability to make further distributions to shareholders.
