The Kenyan government will convert its Ksh20.9 billion ($207 million) debt to equity in power producer KenGen as it takes up its rights in a cash call.

Nairobi Securities Exchange-listed electricity producer has opened its Ksh28.8 billion ($285 million) rights issue almost two weeks after the firm got regulatory approval from the Capital Markets Authority (CMA).

KenGen will be selling 4.4 billion new shares at Ksh6.55 ($0.065) to its existing shareholders in the ratio of two for each share held. The government owns 70 per cent of KenGen.

The rights issue will open for three weeks to close on June 10.

The power generating firm intends to use the Ksh8.6 billion ($85 million) cash raised from the issue to finance capital expenditures in geothermal and wind power generation.

Investors willing to participate in the rights issue but are not shareholders can buy rights of owners who are not willing to exercise their option at the securities exchange.

Non-shareholders also have an option of buying the shares that will not be taken up at the end of the rights issue period through what is known as a rump.

Existing shareholders who do not participate in the offer will have their ownership diluted.

Listing and commencement of trading of new shares at the NSE will be on July 6.