11 May 2014

Uganda: Utility Shares Suspended for Two Weeks

Kampala — The buying and selling of Umeme shares, Uganda's electricity distributor, has been suspended for two weeks as potential new owners line up their bids.

In a statement last week, the utility company said: : 'Umeme has been informed by its majority shareholder Umeme Holdings Limited (UHL) that it is a contemplating a sale of a substantial block of its shares in the company'.

It goes on to state, 'In view of this fact, and in keeping with their obligations under the Uganda Securities Exchange (USE) Listing Rules, the Directors of Umeme Ltd resolved to voluntarily apply to the Uganda Securities Exchange to suspend trading of the shares until the transaction is concluded and trading in the shares has since been suspended for two weeks'.

Employees, customers and business partners were assured that the changes would not have any adverse impact on how Umeme operated.

UK-based equity firm, Actis took over the ownership of Umeme following a privatisation process in 2005.

The company said the new potential investors will add considerable financial and reputational credibility to Umeme, the sector and to the Ugandan economy.

'As a result we believe that Umeme will be a stronger and more creditworthy business,' the statement reads in part.

In contrast, during November last year, Actis signed a deal with American energy giant, AES, to buy up the majority interest in three power assets in Cameroon for $220 million.

The government gave its approval in January. The investment gives Actis a 56% stake in Cameroon's national integrated utility, Société Nationale d'Electricité (SONEL), and in two independent power plants, Kribi and Dibamba.

According to the statement, Umeme, which is listed on both the Kenyan and Ugandan stock exchanges, has recommended a final dividend of Ush16.8 per share, to be approved by shareholders at the next AGM. The company has this year announced a rise in pre-tax profits of 89%, to Ush115.2 billion shillings ($45 million), and 12.3% in revenue to Ush 966 billion shillings.

Since 2005, Umeme has invested over $224 million in modernising its distribution systems, improved the networks performance, introduced education programmes on electricity and connected more than 50,000 new customers.

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