Umeme investors face lower pay
Umeme technician carries out a connection. PHOTO/ FILE
What you need to know:
- Delays in paying out beyond the one-month window would attract interest of 10 percent per annum for the period between 30 and 45 days, 15 percent per annum if the delay runs between 46 and 90 days, and 20 percent per annum for a delay of more than 90 days, until the amount is settled in full.
Umeme shareholders are looking at a lower-than-expected payout after the buyout was slashed by almost half. Investors had expected a higher payout, with the company having anticipated a buyout of at least $234m (Shs855b).
However, during the handover of the distribution and sales licenses, Umeme announced that the government had paid at least $118.39m (Shs432 billion) as the buyout amount. Umeme has been listed and cross-listed on the Uganda Securities Exchange and Nairobi Securities Exchange, respectively, since December 2012.
The concession required Umeme to hand back assets and operations to a government entity – Uganda Electricity Distribution Company Limited - by March 31, 2025, with private shareholders getting compensated at the value of unrecovered capital investments plus a premium of 5 percent. The company had submitted a final buyout demand of $234m (Shs855b), equivalent to Shs526.4 per share.
However, the government, through a final report from the Auditor General’s Office, authorised a payment of $118.39m (Shs432 billion), which works out a payment of Shs266.49 per share. In an earlier draft, the Auditor-General had put the buyout amount at $191m (Shs697.9b) or Shs15.21 per share.
Umeme said in a notice on March 30 that it had been compelled by the government to hand over the distribution system to Uganda Electricity Distribution Company Limited, which was subsequently done on Monday, March 31.
“The company has, without prejudice, invoiced for and received the government’s admitted sum of $118.39m. Umeme disputes, amongst several things, the audited figure in the [Office of the Auditor General’s] report and has informed government, that the company will issue a formal notice of dispute … in accordance with the terms of the support agreement,” said the notice. The notice further noted that the Umeme board remained committed to ensuring an accurate and appropriate return for its shareholders and is optimistic that the matters in dispute will be resolved during the ensuing 30-day good faith negotiations period or in any event subsequently by an arbitral tribunal in London.”
Delays in paying out beyond the one-month window would attract interest of 10 percent per annum for the period between 30 and 45 days, 15 percent per annum if the delay runs between 46 and 90 days, and 20 percent per annum for a delay of more than 90 days, until the amount is settled in full.
There are also additional costs of $9.79m (Shs35.7b) that are pending verification, which, if agreed upon, would add Shs22.04 to the buyout price per share, taking the total due to Shs10.21.
