Geregu net profit drops by 11.51% in H1 2023, debt blocks dividends to shareholders

Geregu Power Plc’s revenue in the first half (H1) of 2023 rose to N34.69 billion, the electricity firm revealed in its H1 financial report for the year.

The company’s turnover during the period increased by 2.64 per cent compared to the N33.80 billion Geregu generated in the corresponding H1 last year.

Likewise, the firm’s gross profit from January to June 2023 was N18.16 billion, surpassing the N16.83 billion reported during the same period in 2022.

However, profit after tax fell by 11.51 per cent, as Geregu, a company largely owned by Femi Otedola, closed the period in review with N8.05 billion net profit, below the N9.10 billion posted in H1 last year.

Meanwhile, shareholders of the company will not receive dividends this year due to the N40.085billion debt Geregu owes to the bond market.

Recall that in July 2022, Geregu issued N40.08 billion unsecured corporate bond for a 7-year tenor at a coupon and effective interest rate of 14.5% and 14.70% respectively.

The company said until it fulfils its obligations to the bondholders, there will be no dividends, distributions or other payments to shareholders.

“The Issuer covenants that for so long as any of the Series 1 Bonds remain outstanding in any year, no dividends, distributions or other payments shall be made to the Shareholders of the Issuer in that year, unless the Issuer has fully discharged its payment obligations under this Deed to the Bondholders in respect of that year.

“The Issuer covenants with the Trustees that until such time when all outstanding Bonds have been fully redeemed and the Issuer’s liability has been discharged, it shall not without the prior written consent of the Trustees (such consent not to be unreasonably withheld, delayed or conditioned)borrow or raise funds or procure any person to borrow or raise funds on its behalf, by any means whatsoever except by the issuance of bonds under the Programme Trust Deed or this Series Trust Deed,” Geregu wrote in the financial statement.

The N40.08 billion was borrowed from the bond market to finance the acquisition of one of the power generation companies which is currently in the final stage of bidding processes by the Bureau of Public Enterprises (BPE).

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