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Kplc restructure plan out
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mwanahisa
#21 Posted : Thursday, October 28, 2010 6:39:41 PM
Rank: Elder

Joined: 6/2/2008
Posts: 1,438
guru267 wrote:
If G.O.K plans to raise 8.795 billion from the NSE then that will be great for the share and I will up my stake....

This is better than was expected meaning i will use less money to take up rights....

with 1.734 billion shares the stock will be worth 34 bob after restructuring and the rights will only be at 18.5 which is like a 40% discount


@g267. How do you arrive at a valuation of 34 (post split) or today's equivalent of Kshs 272?
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VituVingiSana
#22 Posted : Thursday, October 28, 2010 9:33:35 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,354
Location: Nairobi
So we are back to my dilemma... LOL... Since I like KPLC & I have the cash ready [well... working on it] I will keep the existing shares [might take a small hit] but ensure my 40% Rights [which I hope will explode in price]...

2009-10 had low levels of hydropower this KPLC sales were 'suppressed' according to KPLC. Since we have had rain so far in 2010-11... I hope the sales will increase substantially in 1H 2010-11. If thi happens then I can see a gain when 1H 2010-11 Results are out in Feb/Mar 2011.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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stocksmaster
#23 Posted : Thursday, October 28, 2010 10:10:33 PM
Rank: Member

Joined: 9/26/2006
Posts: 463
Location: CENTRAL PROVINCE
The KPLC Circular has lead me to the following observations/conclusions:
1. The Offer price will most likely be below Ksh 20 (Ksh 18 + 5% Restructuring costs should give an offer price of Ksh 19).
2. This is a very enticing offer price and despite the size of the GoK free float, the offer will attract at least 20B (Thus a person using my prefered strategy of buying 100 rights and applying for additional shares will end up with about 40-50% of what is applied for).
3. It is still prudent to purchase the rights on the market rather than chase the share at current prices. the risk of significant price depreciation in the short term (period between now and end of rights) is very real. If the govt is getting KPLC at Ksh 207 why pay a 10% premium at current prices?
4. I anticipate the price will fall below Ksh 200(Ksh 25 post split) in the near future (I am surprised that the share is still trading at above Ksh 200 - This may however be an indication of the high level of interest on this share.)

Happy hunting
x handle: @stocksmaster79
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PKoli
#24 Posted : Thursday, October 28, 2010 11:31:51 PM
Rank: Elder

Joined: 2/10/2007
Posts: 1,587
stocksmaster wrote:
The KPLC Circular has lead me to the following observations/conclusions:
1. The Offer price will most likely be below Ksh 20 (Ksh 18 + 5% Restructuring costs should give an offer price of Ksh 19).
2. This is a very enticing offer price and despite the size of the GoK free float, the offer will attract at least 20B (Thus a person using my prefered strategy of buying 100 rights and applying for additional shares will end up with about 40-50% of what is applied for).
3. It is still prudent to purchase the rights on the market rather than chase the share at current prices. the risk of significant price depreciation in the short term (period between now and end of rights) is very real. If the govt is getting KPLC at Ksh 207 why pay a 10% premium at current prices?
4. I anticipate the price will fall below Ksh 200(Ksh 25 post split) in the near future (I am surprised that the share is still trading at above Ksh 200 - This may however be an indication of the high level of interest on this share.)

Happy hunting



Well put SM

I will use a two pronged approach, like I did with KCB. With my 100 shares, I will apply for a significant chunk of rights. The second set of funds will be for purchasing the rights in the market.

My only dissapointment is that all these funds will go to gava and not to KPLC to grow the business...unlike KCB
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TUPAC
#25 Posted : Friday, October 29, 2010 5:33:15 AM
Rank: Member

Joined: 12/8/2009
Posts: 274
Location: Ltktk
@koli
all the proceeds from the rights issue goes to kplc.
...things fall apart...the centre cannot hold..mere anarchy is loosed upon the world...w b yeats
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VituVingiSana
#26 Posted : Friday, October 29, 2010 6:40:10 AM
Rank: Chief

Joined: 1/3/2007
Posts: 18,354
Location: Nairobi
TUPAC wrote:
@koli
all the proceeds from the rights issue goes to kplc.
Except any premium for Rights...
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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VituVingiSana
#27 Posted : Friday, October 29, 2010 6:47:53 AM
Rank: Chief

Joined: 1/3/2007
Posts: 18,354
Location: Nairobi
stocksmaster wrote:

2. This is a very enticing offer price and despite the size of the GoK free float, the offer will attract at least 20B (Thus a person using my prefered strategy of buying 100 rights and applying for additional shares will end up with about 40-50% of what is applied for)

Nope. If the total application is for 20bn [KPLC wants 10bn] then those with existing Rights are 'guaranteed' the shares.

Let's say of the total Rights [incl GoK] of existing shareholders only 25% are taken = 2.5bn
Another 25% are Rights bought in the market & exercised = 2.5bn
That leaves 5bn (50% of Rights) to be shared among 15bn worth of applications = 33% allocation [best case. See below]

I have a feeling that some firms/funds [pension funds, insurance firms, Foreign funds] will buy most of the Rights off the market.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Aguytrying
#28 Posted : Friday, October 29, 2010 8:21:36 AM
Rank: Elder

Joined: 7/11/2010
Posts: 5,040
Does one need to be an existing shareholder, to buy the rights of the market?
The investor's chief problem - and even his worst enemy - is likely to be himself
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mwanahisa
#29 Posted : Friday, October 29, 2010 10:47:38 AM
Rank: Elder

Joined: 6/2/2008
Posts: 1,438
Aguytrying wrote:
Does one need to be an existing shareholder, to buy the rights of the market?


No, you do not have to be.
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mwanahisa
#30 Posted : Friday, October 29, 2010 11:01:52 AM
Rank: Elder

Joined: 6/2/2008
Posts: 1,438
VituVingiSana wrote:
stocksmaster wrote:

2. This is a very enticing offer price and despite the size of the GoK free float, the offer will attract at least 20B (Thus a person using my prefered strategy of buying 100 rights and applying for additional shares will end up with about 40-50% of what is applied for)

Nope. If the total application is for 20bn [KPLC wants 10bn] then those with existing Rights are 'guaranteed' the shares.

Let's say of the total Rights [incl GoK] of existing shareholders only 25% are taken = 2.5bn
Another 25% are Rights bought in the market & exercised = 2.5bn
That leaves 5bn (50% of Rights) to be shared among 15bn worth of applications = 33% allocation [best case. See below]

I have a feeling that some firms/funds [pension funds, insurance firms, Foreign funds] will buy most of the Rights off the market.


Actually, I think most existing shareholders other than Govt will take up their rights. Remember KPLC has a heavy institutional presence in their shareholder roll.

Now if Govt finds a couple of well heeled institutions and sells them their rights (or a large chunk thereof) on the market, you will no longer have the anticipated massive free floating rights.

If that happens and with my 100 rights I attempt to apply for say 50,000 (pre-split) shares. I can do this with the help of bank financing, chances are that I may not even get 20% of my desired quantity. I therefore simply have to buy the rights on the market and pay the premium.

If the price of the share falls badly enough to the level cited by SM of below 25, say to 22-23, then I will also consider buying the actual share on the market. Remember during the KCB rights issue the share price fell to 18 or thereabouts. So, if KPLC falls it is a risk worth taking.
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