11th May 2025, Kathmandu
Himalayan Hydropower Limited has announced a major financial move. The company will issue rights shares at a 1:1 ratio. This means shareholders can buy one new share for each share they currently hold.
Himalayan Hydropower 1:1 Rights Shares
The decision came from the company’s board meeting held on Baisakh 26 (May 9, 2025). The goal is to raise capital and reduce outstanding bank loans. Company officials believe this is necessary before distributing profits to investors.
Loan Repayment Comes First
Currently, Himalayan Hydropower holds a significant amount of bank debt. According to the management, repaying these loans is essential. Only after reducing debt will the company be in a position to offer dividends to its shareholders.
This strategy aligns with long-term goals. By lowering its financial burden, the company can improve its balance sheet and enhance investor confidence.
Regulatory Approval in Progress
To proceed, the company must seek approval from the Electricity Regulatory Commission. The board has already decided to apply for pre-approval. This step is mandatory for energy companies planning to issue new shares.
The company plans to complete the application process soon. Once approved, the rights offering will move ahead.
Investor Opportunity and Future Outlook
This rights issue provides a new opportunity for existing investors. They can increase their holdings at a potentially favorable price. Additionally, as debt levels decline, the company expects improved financial performance.
In the long run, this could lead to more consistent returns. Investors may also benefit from a stronger market position and improved project efficiency.
Why Now?
The company chose this timing carefully. Market conditions are stable, and investor interest in the energy sector remains high. Moreover, the repayment of loans will allow the company to reduce interest expenses. This improves profit margins.
By issuing new shares instead of taking more loans, the company avoids additional debt. This reflects a more sustainable financial approach.
Financial Restructuring as a Growth Strategy
Himalayan Hydropower’s move is part of a broader financial restructuring plan. Reducing liabilities improves credit ratings. It also enables the company to pursue future expansion more confidently.
Moreover, the company aims to ensure compliance with financial norms and maintain transparency in operations. This will likely boost trust among investors and regulatory bodies.
Energy Sector Sees Positive Trends
Nepal’s energy sector has seen positive developments in recent years. Hydropower companies are expanding projects and upgrading infrastructure. Investors are also showing increasing interest in energy-based investments.
Given this backdrop, Himalayan Hydropower’s move is timely. It positions the company well for future growth and competitiveness.
Next Steps for Shareholders
After regulatory approval, the company will publish the rights offering notice. It will include the record date, issue price, and instructions for shareholders.
Interested shareholders will need to apply within the announced period. Any unsubscribed shares may later be sold through other means, depending on the company’s plan.
Conclusion
Himalayan Hydropower is taking a strategic step to reduce debt and prepare for future growth. The 100% rights share issue will help repay bank loans and pave the way for dividend payouts.
By aligning financial management with investor expectations, the company is setting a strong foundation. With regulatory approval underway and market support, the move is expected to benefit both the company and its shareholders in the long run.
For more: Himalayan Hydropower 1:1 Rights Shares