The share price of Umeme Limited rallied to touch a record high of Sh24.7 on Tuesday after the company announced a surprise interim dividend per share of 222 Ugandan shillings equivalent to Sh7.96.
The dividend amounting to a total of Sh12.9 billion lifted the share price from Monday’s closing price of Sh12.35, reversing a major sell-off that had ensued after Umeme announced uncertainty over the amount it would receive from the Ugandan government as compensation following the conclusion of its electricity distribution concession.
The interim dividend will be paid on or before July 31 to shareholders on record as of July 14.
The company, which is cross-listed on the Kenya and Uganda stock exchanges, did not explain the impact of the interim dividend on the total compensation shareholders were expecting at the end of the concession on March 31.
The Uganda government has paid Umeme $118 million (Sh15.2 billion) after rejecting the company’s larger claim, with an arbitration process in London set to determine if the claimant is entitled to the balance.
The company is seeking to compel the government to pay it an additional $292 million (Sh37.7 billion). The company had indicated that the government was ready to pay additional, unspecified amounts after making the $118 million payment.
Receipt of additional cash from the government is expected to have a substantial impact on Umeme's financial position and its ability to make further distributions to shareholders.
The disputed concession claim has resulted in uncertainty and volatility for Umeme’s investors, with the company last week skipping a final dividend for the year ended December 2024 before announcing the interim dividend on Tuesday.
Umeme last week reported a net loss of 510.5 billion Ugandan shillings, equivalent to Sh18.3 billion at current exchange rates, for the year to December 2024.
The company’s shares were suspended from trading on March 31 –the day it was compelled to hand over its assets to Uganda Electricity Distribution Company Limited even as its larger claim was rejected.
The shares resumed trading on June 13, restoring liquidity for those seeking to exit the company that is winding down its operations. Retail investors have been the most active traders of the stock whose daily traded volume is often below 100,000 units.
Umeme’s biggest shareholders include Uganda’s National Social Security Fund with a 23.4 percent stake, South African asset manager Allan Gray (14.82 percent) and the International Finance Corporation (2.78 percent).
The company had expected to be paid its entire claim by the last day of the 20-year concession.
Ahead of its listing in 2012, the company had warned investors of the risk of a lower-than-expected compensation at the end of the concession due to government sabotage.
Umeme’s claim has received support and opposition from different entities in the legislative and executive arms of the government.
