EDL-Gen announces additional share issue

EDL-Gen announces additional share issue

EDL Generation (EDL-Gen) will issue additional shares in a move to mobilise more capital to increase its power generation capacity, according to the BCEL-KT securities company.

The securities firm, which provides underwriting services for EDL-Gen, announced last week that the publicly-listed power company plans to issue an additional 357 million shares to both current shareholders and new investors.

About 217 million shares will be allocated to existing shareholders through a ‘one new share per four already held' allocation at a price of 4,300 kip per share, while the rest will be offered to the general public at a price of 4,800 kip a share.

Officials from BCEL-KT said it was still unclear when EDL-Gen will set a date for the rights and new share offerings, adding that the power company has only announced it will issue additional shares to mobilise funds to invest in power plants.

They also said the issuing of additional EDL-Gen shares would not change the shareholding structure of the company because the parent entity of Electricite du Laos would maintain a 75 percent shareholding in EDL-Gen.

The public company expects to raise about 1,605 billion kip (US$200 million) from the issue of additional shares, which it plans to use to purchase holdings in new power plants and enable it to increase its asset value and increase electricity generation capacity from its current 387MW to 880MW.

EDL-Gen plans to spend about US$132 million to acquire a 60 percent stake in the Theun Hinboun hydropower plant in Khammuan province, US$2.7 million to purchase 20 percent of the Houay Ho hydropower plant in Champassak province, and about US$4 million to take 10 percent ownership of the Nam Lik 1-2 plant in Vientiane province.

The company will also spend about US$56 million to acquire a 25 percent share in the Nam Ngum 2 hydropower plant in Vientiane province.

According to BCEL-KT, current shareholders of EDL-Gen will face a loss when they exercise their right to acquire new shares in the company. However, current shareholders can look forward to a bright long-term future as the company will be able to generate more revenue and profit through its planned expansion.

BCEL-KT forecasts that EDL-Gen's profit will increase by 23 percent to US$95 million next year, up from US$75 million at present.

The acquisition of holdings in new power plants will mean EDL-Gen should be able to boost its business growth by 70 percent over the next year. At present, the company is growing by five percent annually.

The EDL-Gen share price rose slightly last week after the company announced it would pay a mid-year dividend of 160 kip per share.

The dividend announcement provided a clearer picture of the benefits of investing in the stock market to Lao investors, many of whom bought shares so they could receive dividends, which are anticipated to be higher than de posit account interest rates offered by commercial banks.

vientiane times