Upper Tamakoshi's Financial Revitalization: The 100% Right Share Issuance to Navigate Project Challenges
Wed, Jan 10, 2024 2:17 PM on Dividend, Bonus & Rights, Company Analysis, Latest,
Upper Tamakoshi Hydropower Limited (UPPER) is currently in the process of auctioning its unclaimed right shares, which began on the 13th of Poush and is scheduled to conclude on the 29th of Poush, 2080. The auction involves 1,70,19,530 units of ordinary right shares, representing the remaining portion of the rights offering issued by the company.
The rights offering, in the ratio of 1:1, took place between the 18th of Bhadra and the 22nd of Ashwin, 2080, wherein a total of 105,900,000 shares were issued to eligible shareholders at a par value of Rs. 100 per unit. Eligible applicants were allotted 8,88,80,470 shares, leaving 1,70,19,530 shares unclaimed. The auction is currently ongoing, with Sunrise Capital Limited serving as the issue manager.
The minimum bid rate for the auction is set at Rs. 100, with a minimum bid quantity of 100 units and a maximum bid quantity of 5,00,000 units. After the adjustment of the proposed right share, the paid-up capital of UPPER will increase to Rs. 21.18 Arba.
In its latest financial report for the first quarter of the fiscal year 2080/81, UPPER reported a net profit of Rs. 1.00 Arba, leading to an annualized earnings per share of Rs. 25.20. The net worth of the company stands at Rs. 60.97. The company holds Rs. 73.01 Arba in long-term loans and Rs. 3.04 Arba in short-term loans.
Upper Tamakoshi Hydropower Limited (UPPER) closed at Rs. 198 per share on January 9th. Over the past 52 weeks, the stock reached a high of Rs. 590 and a low of Rs. 190.
Upper Tamakoshi Hydropower Limited, established in March 2007 by the Nepal Electricity Authority (NEA), is a key player in the hydropower sector. The company's flagship project, the Upper Tamakoshi Hydroelectric Project, is a national priority initiative and, upon completion, will be the largest hydroelectric plant in Nepal. The company's ownership structure includes major public entities such as NEA, Nepal Telecom (NTC), Citizen Investment Trust (CIT), and Rastriya Beema Sansthan, collectively holding a 51% stake.
Objectives and Implementation Plan for the Right Share Issuance
The company's decision to issue 100% right shares, marks a significant move to fortify its financial position amidst challenges faced during the construction of the Upper Tamakoshi Hydroelectric Project. The company's journey, initiated in Chaitra 2065, encountered hurdles such as the devastating earthquake in Baisakh 2072, the Terai unrest, disruptions at the India-Nepal border, and the global COVID-19 pandemic.
The estimated cost approved in Chaitra 2065 for the project was based on a loan-to-equity ratio of 70:30. However, the unforeseen circumstances and prolonged construction period led to an increase in construction costs and, subsequently, a rise in interest expenses. The completion of the project, including the successful commissioning of the 20.66 megawatts Rolwaling Hydropower Project, has prompted UPPER to focus on the financial restructuring of the company.
The decision to issue 100% right shares was recommended by a committee of financial experts, whose suggestions were presented in a comprehensive report during the meeting held on the 9th of Magh, 2078. Subsequently, the proposal was approved during the 14th Annual General Meeting on the 3rd of Baisakh, 2079.
The company's objective in issuing these right shares is to enhance its financial resilience and address the challenges posed by increased interest expenses. The decision aligns with the company's commitment to strengthening its financial structure, ensuring sustainability, and providing a stable foundation for future growth.
The construction phase of the project initially had a loan-to-equity ratio of 70% to 30%. However, the evolving financial landscape and increased costs necessitate a shift in this ratio. The proposed right shares will contribute to stabilizing the company's financial health and facilitate further growth opportunities.
With the 100% right share issuance, UPPER aims to not only fulfill its financial requirements but also to ensure that the company remains well-positioned to navigate future challenges and contribute significantly to Nepal's energy sector.
Overview of Company's Capital Across Fiscal Years:
| Fiscal Years | Authorized Capital | Issued Capital | Paid-Up Capital |
|---|---|---|---|
| 2078/79 | Rs. 11 Arba | Rs. 10.59 Arba | Rs. 10.59 Arba |
| 2079/80 | Rs. 30 Arba | Rs. 10.59 Arba | Rs. 10.59 Arba |
| After Adjustment of 100% Right Shares | |||
| 2080/81 | Rs. 30 Arba | Rs. 21.18 Arba | Rs. 21.18 Arba |
Project Information:
| Name of Project | Mathillo Tamakoshi Jalbidhyut Yojana |
| Type of Project | Run-of-River |
| Maximum Output | 456 MW |
| Annual Energy | 2,281 GWh |
| Electricity Generation License received | Mangsir 17, 2067 |
| Generation Valid Date | Mangsir 16, 2103 |
| RCOD | Bhadra 25, 2078 |
| Transmission line | 220 kVA Double Circuit, 47.0 km (Gongar to Khimti Substation) |
| Construction Cost | NRs.35.29 Billion equivalent to US$ 441 Million (Excluding Interest During Construction) |
| Construction Time Period | 6 Years |
Management Team:
| Mr. Mohan Prasad Gautam | CEO |
| Mr. Murli Prasad Sharma | Legal Counsellor |
| Mr. Ram Sundar Shrestha | Company Secretary |
| Mr. Manoj Tamrakar | Manager |
| Mr. Purna Gopal Ranjit | Manager |
| Mr. Bimal Gurung | Manager |
| Mr. Suresh Raj Khakurel | Deputy Director (Accounts) |
| Mr. Mitramani Pokharel | Senior Administration |
| Mr. Padam Prasad Pokharel | Senior Engineer |
Board of Directors:
Conclusion:
Upper Tamakoshi Hydropower Limited's move to issue 100% right shares not only aims at fortifying its financial standing amid project challenges but also presents a unique opportunity for investors. With the ongoing auction of unclaimed right shares, investors have a chance to acquire shares at a lower price. For existing shareholders, this provides an opportunity to average their cost price, fostering a potential avenue for enhanced returns.
