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KPLC 10 Billion rights issue- a possibility or a pipedream?
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guru267
#1 Posted : Thursday, March 18, 2010 5:55:17 AM
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Joined: 1/21/2010
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Location: Nairobi
@wazurians
when KPLC announced that they planned to carry out a rights issue i anticipated that they would attempt to raise a maximum of sh4billion..

yesterday i got wind that they are attempting to raise sh10billion.. i,ve tried all the possible math to see how this would be possible but haven't been able to come up with anything..

Does anyone have a clue how they plan to raise this amount???
Mark 12:29
Deuteronomy 4:16
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mukiha
#2 Posted : Thursday, March 18, 2010 7:18:51 AM
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How did you come up with the maximum of sh4b?
Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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guru267
#3 Posted : Thursday, March 18, 2010 7:29:27 AM
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Location: Nairobi
@mukiha since the rights issue price most times is a discount to the market price i calculated the amount of shares that GOK would offer and multiplied that by any price les than sh110..

but the way it looks to me for KPLC to raise 10bn the rights issue price would have to be above sh250 and it doesnt make any sense to me...

please... i stand to be corrected???
Mark 12:29
Deuteronomy 4:16
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mukiha
#4 Posted : Thursday, March 18, 2010 8:11:10 AM
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Joined: 6/27/2008
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Rights issue will NOT involve the disposal of government shares! They will sell any authorised but not issued shares and create new ones to cover the sh10b

Suppose the rights price is sh100; then they will need to sell 100m shares.

At the moment, there are 18m un-issued shares in the company's books. Thus they will need to create 82m more to get the required 100m. That will be done through a shareholder resolution.
Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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TUPAC
#5 Posted : Thursday, March 18, 2010 8:23:28 AM
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Joined: 12/8/2009
Posts: 274
Location: Ltktk
@mukiha what do you think will happen to gov. shares that will be converted from pref. to ordinary? is it that the gov. will keep them and subsequently denounce the rights? coz i thought the gov. was to sell their converted pref shares to raise money.
...things fall apart...the centre cannot hold..mere anarchy is loosed upon the world...w b yeats
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guru267
#6 Posted : Thursday, March 18, 2010 8:23:33 AM
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@mukiha i now understand better.... but just one more question.. does that mean that none of the converted pref shares will be given up in the rights issue by GOK????
Mark 12:29
Deuteronomy 4:16
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mukiha
#7 Posted : Thursday, March 18, 2010 8:34:10 AM
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Joined: 6/27/2008
Posts: 4,114
If one shareholder [GoK in this case] sell their shares, then that's not a rights issue... it would be a secondary offer and the shares would be offered to everyone, not just to the existing shareholders.

GoK will not renounce its rights, rather it will sell them in the NSE to any willing buyer at some premium. That's the way it can make money from its converted shares....and still keep them.

But at then of the process, GoK's percentage holding in KPLC will be diluted even though their total number of shares will remain the same.
Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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guru267
#8 Posted : Thursday, March 18, 2010 8:51:45 AM
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@mukiha thanks alot for the insight.... it was very helpful
Mark 12:29
Deuteronomy 4:16
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guru267
#9 Posted : Thursday, March 18, 2010 9:04:04 AM
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
@mukiha i,ve just done some quick calculations according to your info it looks like the issue price will be about sh120...

did you come up with anything close to that??
Mark 12:29
Deuteronomy 4:16
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mukiha
#10 Posted : Thursday, March 18, 2010 9:10:40 AM
Rank: Elder

Joined: 6/27/2008
Posts: 4,114
@guru267; price of rights is usually set after considering the average market price for the last several months, 3 to 6. Then a discount is applied depending on the wisdom of directors.

Thus the info I have given cannot be used to get the price!!! I was only using it to illustrate the point...you will notice I wrote "SUPPOSE the rights price is sh100; then..."
Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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