Geregu Power says talks ongoing to resolve N40bn bond repayment concerns

By Abubakar Yunus

Geregu Power Plc says it is engaging relevant stakeholders and advisers to resolve concerns surrounding its N40.09 billion bond repayment obligations.

The development follows Geregu’s default on the eighth coupon payment and fourth bullet principal repayment of its N40.09 billion series 1 senior unsecured bond, which was raised to support the company’s funding requirements and planned expansion projects.

According to FMDQ Securities Exchange, the bond was issued on July 28, 2022, under the company’s N100 billion multi-instrument issuance programme, carries a 14.5 percent coupon and is scheduled to mature on July 28, 2029.

In a statement dated August 12, Geregu said it “acknowledges the concerns of the shareholders, stakeholders as well as regulators” and remains engaged with relevant stakeholders and advisers to resolve the challenges.

“The current Board and Management have undertaken a comprehensive review and reconciliation of the Company’s transactions, liabilities, operational commitments, financing arrangements, financial obligations and related corporate documentation,” the company said.

According to Geregu, the review is aimed at ensuring “transparency, accuracy and prudent financial management,” while discussions with relevant stakeholders and advisers on the challenges are ongoing.

“The Company acknowledges the concerns of the shareholders, stakeholders as well as regulators. Geregu remains actively engaged with relevant stakeholders and advisers regarding the resolution of the various challenges and is committed to achieving an orderly and mutually beneficial outcome,” Geregu said.

The power company said it remains committed to generating electricity for consumers and fulfilling its responsibilities.

Geregu added that it would continue to provide the market with appropriate updates on material developments concerning its performance in line with applicable regulatory requirements.

The company also thanked stakeholders for their “patience, understanding, and continued support” during the period.

The statement comes after reports raised concerns about Geregu Power’s bond repayment obligations, prompting the company to issue a response to shareholders, investors, regulators and the general public.

During the issuance of the bond, Global Credit Rating (GCR) assigned Geregu a national-scale long-term rating of A (NG), citing the company’s position as a leading Nigerian power generation firm and its relatively high generation capacity.

However, GCR had identified illiquidity in Nigeria’s power sector, a concentrated customer base and pressure on Geregu’s leverage metrics as challenges.

The rating company also warned that delays in project execution could increase refinancing risks.