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Kenya airways Right Issue
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guru267
#151 Posted : Friday, March 23, 2012 3:21:25 PM
Rank: Elder

Joined: 1/21/2010
Posts: 6,675
Location: Nairobi
VituVingiSana wrote:

Furthermore, Citibank will INSIST in being the main bank for KQ's Rights Issue thus earning fees, commissions & arbitrage income.


I thought KCB was appointed the main bank for the rights issue??

VituVingiSana wrote:
Citi will also get a DISCOUNT on the Rights Issue. Yes, suckers, Citi will pay less than 14/-.


How exactly will this happen??
KQ is raising 20.7 billion meaning that they require a MINIMUM of 14bob per share on the rights which CITI has underwritten..

So if the shares are under subscribed CITI must buy the remaining rights at 14bob even if the shares on the market are 7bob..
Mark 12:29
Deuteronomy 4:16
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stocksmaster
#152 Posted : Friday, March 23, 2012 3:49:07 PM
Rank: Member

Joined: 9/26/2006
Posts: 463
Location: CENTRAL PROVINCE
guru267 wrote:
VituVingiSana wrote:

Furthermore, Citibank will INSIST in being the main bank for KQ's Rights Issue thus earning fees, commissions & arbitrage income.


I thought KCB was appointed the main bank for the rights issue??

VituVingiSana wrote:
Citi will also get a DISCOUNT on the Rights Issue. Yes, suckers, Citi will pay less than 14/-.


How exactly will this happen??
KQ is raising 20.7 billion meaning that they require a MINIMUM of 14bob per share on the rights which CITI has underwritten..

So if the shares are under subscribed CITI must buy the remaining rights at 14bob even if the shares on the market are 7bob..


With the price falling much below the rights price, the possibility of citi bank having to underwrite upto 20% of the rights (about the fraction of local KQ shareholders) becomes a real possibility. By underwritting about 20% of rights (about 290M shares), Citi bank may end up owning 15% of KQ post rights!!!

I still believe the KQ expansion is over ambitious especially considering the many variables currently affecting the airline business. The Ksh 20.7B to be raised by the rights issue is only a 10% down payment for the planes!!! My concern is the level of debt they will have to take to pay the balance.

It would be prudent to stay out of this share for the short to medium term.

Happy Hunting
x handle: @stocksmaster79
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FUNKY
#153 Posted : Friday, March 23, 2012 3:57:41 PM
Rank: Veteran

Joined: 4/30/2010
Posts: 1,635
Underwriters buy at a discount...incase if it gets undersubscribed citi will buy it less at less than 14/-
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VituVingiSana
#154 Posted : Friday, March 23, 2012 4:00:43 PM
Rank: Chief

Joined: 1/3/2007
Posts: 18,376
Location: Nairobi
guru267 wrote:
VituVingiSana wrote:

Furthermore, Citibank will INSIST in being the main bank for KQ's Rights Issue thus earning fees, commissions & arbitrage income.


I thought KCB was appointed the main bank for the rights issue??

VituVingiSana wrote:
Citi will also get a DISCOUNT on the Rights Issue. Yes, suckers, Citi will pay less than 14/-.


How exactly will this happen??
KQ is raising 20.7 billion meaning that they require a MINIMUM of 14bob per share on the rights which CITI has underwritten..

So if the shares are under subscribed CITI must buy the remaining rights at 14bob even if the shares on the market are 7bob..

There are local sales & foreign sales. A lot of KQ shares are owned by 'foreigners' so the forex would remain with Citi.

Underwriters get a fee or discount to underwrite a Rights Issue. This fee/discount means Citi effectively pays LESS than 14/-.
Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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QW25091985
#155 Posted : Friday, March 23, 2012 4:02:35 PM
Rank: User

Joined: 1/24/2012
Posts: 1,675
Location: In Da Hood
its very important to know the market trend when approaching this right . remember britak ? the market was down and yet people were buying the ipo . me i would urge people to keep off this one and buy after the rights start trading .
i just donot see where a rally will come from given that KQ is mostly a foreign investors dominated and currently they arenot in this market !
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mlennyma
#156 Posted : Friday, March 23, 2012 5:07:17 PM
Rank: Elder

Joined: 7/21/2010
Posts: 6,194
Location: nairobi
So citibank had signed a price edge gambling or what?why havent they pulled out?
"Don't let the fear of losing be greater than the excitement of winning."
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jerry
#157 Posted : Friday, March 23, 2012 6:50:00 PM
Rank: Elder

Joined: 9/29/2006
Posts: 2,570
mlennyma wrote:
So citibank had signed a price edge gambling or what?why havent they pulled out?

The contract was binding ama? There must be an exit clause to comply with.
The opposite of courage is not cowardice, it's conformity.
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  | | Edit by user: Friday, March 23, 2012 6:57 PM | Reason: Not specified
QW25091985
#158 Posted : Friday, March 23, 2012 7:02:11 PM
Rank: User

Joined: 1/24/2012
Posts: 1,675
Location: In Da Hood
mlennyma wrote:
So citibank had signed a price edge gambling or what?why havent they pulled out?


Laughing out loudly Laughing out loudly Laughing out loudly there's nothing like price edge gambling
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Aguytrying
#159 Posted : Sunday, March 25, 2012 9:55:56 PM
Rank: Elder

Joined: 7/11/2010
Posts: 5,040
I will tell my children and generation to never buy airline stocks
The investor's chief problem - and even his worst enemy - is likely to be himself
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mwekez@ji
#160 Posted : Monday, March 26, 2012 8:23:59 AM
Rank: Chief

Joined: 5/31/2011
Posts: 5,121
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