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Transcorp Power pays off $215 million loan used in acquiring Ughelli Power Plant

Transcorp Power has fully repaid all of its foreign currency loans, according to the details provided in the company’s investor presentation.

The company secured a $215 million acquisition loan to purchase a 100% stake in Ughelli Power Plc.

This loan was restructured in 2022 at an interest rate of 8.5% plus LIBOR, with approximately $1.6 million of the loan remaining at that time.

However, the company has now confirmed that it repaid the loans in January 2024, freeing itself from any significant foreign currency loans.

What Transcorp Power is Saying

According to the company’s audited accounts for 2022, the group had a total borrowing of about N103.7 billion, which included foreign currency debts amounting to approximately $1.6 million.

These forex loans have been fully repaid as of January 9, 2024.

  • “We are also excited that we have now fully paid off the USD loan in January 2024. We had a balance of $1.6mn from the $215mn syndicate acquisition loan. We had expected the inflow to come in December 2023 to clear off the balance, but the inflow came in early January 2024 and the full and final loan repayment was made January 9, 2024. With this our FCY inflow will now be used to finance our CAPEX.”

By clearing its foreign currency loans, Transcorp Power can now use its foreign currency cash flows to fund capital expenditures.

Other Key highlights

On profitability

  • Transcorp Power closed FY 2023 with gross earnings of N142 billion representing 57.30% year on year growth.
  • The growth in revenue is driven by a surge in energy delivery and capacity charge, coupled with the expansion into international markets and the international market accounted for 18% of its revenue.
  • Transcorp Power also grew its EBITDA margins from 44% FY 2022 to 49% FY 2023.
  • Profit before tax was N52.8bn representing 84.4% year on year growth.
  • In terms of efficiency of running its plant, cost to income ratio reduced from 68% FY 2022 to 63% FY 2023.
  • Transcorp Power return on equity of 52.3% and return of assets of 13.5%

On capital structure

The company’s total assets grew by 32.8% year-on-year, increasing from N168 billion to N223 billion. The company anticipates continued growth in total assets as they plan to invest more in capital expenditures (CAPEX), aiming to bring at least an additional 250 MW to the grid by FY 2024.

  • The company also indicated that, going forward the weighted average number of shares would be 7.5 billion as they do not expect any changes to the outstanding number of shares.
  • According to the company, “there were changes (additions) to the outstanding shares of the company within the FY 2023. As at January 2023 the outstanding shares was 80.2 million and on the 19th December 2023 the company increased its outstanding shares to 7.5 billion thus the weighted average number of shares for FY 2023 was 327.75 million.”
  • The company also stated that this was not misleading rather the proper way of accounting as recommended by IFRS.
  • However, going forward the weighted average number of shares would be 7.5 billion as they do not expect any changes to the outstanding number of shares.
  • The board of directors have recommended a dividend of N23.4 billion subject to shareholders rectification at the next AGM.
  • The dividend declared represents a 77% payout ratio which is in line with the dividend policy.

 

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