- Transcorp Nigeria Plc has announced that it has obtained SEC approval-in-principle to merge Transcorp Ughelli Power Ltd (TUPL) and Ughelli Power Plc
- Trasncorp Ughelli Power Ltd was set up as a Special Purpose Vehicle (SPV) used to acquire 100% equity is Ughelli Power plant which was sold by the Goodluck Jonathan Government in 2013
- According to Transcorp, the idea is to bring the overall “management and operational efficiency of the power business of Transcorp”
- However, analysts believe this move is basically geared towards transferring the debt of the SPV to the Operating Assets which is Ughelli Power Plc. By transferring the debts to the latter, the SPV is free of any loans and as such the power plant will now be fully used as a collateral for the loans.
- This move also creates tax efficiencies for the company as it eliminates cases of excess multiple tax on potential dividends declared by the company to Transcorp Shareholders.
- This is also good news for Transcorp Shareholders who will now directly own Ughelli Power plant rather than through another layer of corporate entity.
- For the Government, the hope now is that the debt been loaded on the books of Ughelli Power Plc will not send it into prolonged losses.
- TUPL announced in 2014 that it had increased generation capacity of Ughelli Power Plant from 342MW at December 2013, to 610MW at the end of 2014 and plans to increase it further to 850MW by the end of 2015.
- Press Release
Why Transcorp is Merging TUP with Ughelli Power Plant Plc
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