The grim reaper still lurks around this counter. That USD bond ($75M) which is redeemable next year (March 2016) is going to pile up forex losses on the bottomline.

Has TCL accrued the interest due? As KES craters vs USD, the loan will balloon. I am waiting and watching TCL crash and burn.

Opinion on refinancing of convertible bond

It is likely that holders of TCL’s convertible bond will opt for the repayment of their principal considering that the conversion option is currently out of the money (current conversion price is KES 49.60 compared to TCL’s market price of KES 13.20). Considering the terms of the bond, we had estimated that TCL was to raise at least USD 80.6m (KES 8.3bn) to repay the principal on the USD denominated bond upon its maturity in March 2016 considering that the bond was to redeemed at 133.8% in cash and the outstanding amount stood at USD 60.3m as at 31st December 2015. Our view is that a refinancing of the convertible bond as indicated will limit TCL’s capacity to raise capital for new growth projects for the foreseeable future. On the other hand, we hold a positive view towards the group’s current project pipeline for the infrastructure and engineering segments and plans to raise capital for the same. These projects include a 35MW Menengai power plant where TCL is to have invested USD 5M for 25.0% shareholding, the Lake Turkana Wind Power plant and a 50MW wind power plant in the outskirts of Nairobi where Civicon is a contractor and the recent doubling of E.A. Cables copper manufacturing capacity which should all support the group’s growth. (Source: Company, Kestrel Research)

Shareholders have already been screwed so which caution are they talking about