Nigeria’s Power Generating Company, Geregu Power Plant, has successfully raised N40 billion in unsecured corporate bonds at an interest rate of 14.5%.
The bond issue is part of the company’s N100 billion multi-instrument issuance programme meant to finance capital expansion and working capital requirements.
The bond opened on July 1 2022 and closed on the 14th of July and was reportedly oversubscribed. This is also the largest corporate bond raised by a Power Company in Nigeria.
Proceed of the bond is to be utilized to augment funding for the planned acquisition of the 434MW Geregu Power Plant as well as to support its working capital requirements.
Details of the bond
The Bond is the first installment of the N100 billion multi-instrument issuance programme which the company launched.
- The N40 billion bond issued is for a fixed term of 7 years and at an issue price of N1000 per unit.
- The minimum uptake was N10 million and then multiples of N1 million subsequently.
- The bond closed at an interest rate of 14.5% and has a principal moratorium of 2 years. This means the principal will be paid after two years.
- The bond will be serviced semi-annually.
- Utilization of the bond is the partial financing of the acquisition of the Geregu II Power Plant.
- The bond will be repaid from the cash flow of the company.
- Lead Issuing houses for the bond include United Capital, Cordos Capital, Coronation Bank, Commercial Partners, FBN Quest, Kairos, and Lighthouse.
What they are saying
The Chief Executive Officer of Geregu Plc, Mr. Akin Akinfemiwa revealed that the success of the bond confirms the confidence the debt market has in Nigeria’s power sector.
- “The resounding success of our debut bond offer demonstrates implicit confidence in our business by the investment community in our quest to increase capacity and contribute our own quota to the Nigerian Electricity Supply Industry (NESI). It would help us in the attainment of our long-term corporate goals; market leadership, innovation, and commitment to the highest standards of environmental, social, and corporate governance.” – Mr. Akin Akinfemiwa
- Rating Agency, GCR Ratings assigned an A rating meaning the bond is Stable. Augusto on the other hand assigned a Bbb+ rating to the bond also Stable.
About Geregu
Geregu Power PLC was incorporated in November 2006 as one of the unbundled companies from the now-defunct Power Holding Company of Nigeria (PHCN).
- The Company began operations in February 2007, to generate electric power supply to the National Grid managed by the Transmission Company of Nigeria (TCN).
- Currently, Geregu Power has authorised and issued share capital of ₦1,245,000,000 comprising of 2,490,000,000 ordinary shares of ₦0.50k each, which has been fully paid up.
- Amperion Power owns 99.9% of the company.
- Mr. Femi Otedola is the Chairman of Geregu Power Plant while Mr. Akin Akinfemiwa is the Chief Executive Officer.
It’s ok