I listened to the Md and finance guy in a video interview with Aly Khan. I know how that already sounds. Anyway. They are not worried about the unrealized forex losses, were the shilling to strengthen they will be mitigated. If the convertible bond is redeemed as shares it will be mitigated. If the first 2 don't happen, they will use their dollar earnings to pay off the loan. It's due IFRS rules that they have to pass it through profit and loss. Also the recently completed tanga plants' borrowing is now being reflected in finance costs after being commissioned.

On management, that is the real reason I like this company. Please do not compare this with KQ. In management they are worlds apart. The company's revenues or expenses are intact. On capacity, Pradeep reckons that Kenya is far away from the global average, that could be a problem if he is wrong.

They are trying to lengthen the repayment periods to reduce stress on the cashflows. The finance costs may not decrease.

But ARM was around 33 for a number of days over the last 3 trading weeks!!!

didn't have money and didn't buy

How will this affect the company:

http://www.businessdaily...82/-/1usnfc/-/index.html

Whoa. The dilution happening to ARM is not small.

Current market cap at 35.00 is 17.5bn Kes

Incoming investment of preference shares is 12.5 bn Kes

After crunching some hypothetical numbers the eps will be diluted to become 55% of what it currently is. The last good/normal year it was 3.01 eps. 55% of 3.01 is 1.66 eps.

Current PE is 11.75, assuming this is maintained 11.75*1.66= 19.75.

So 1 ARM share should be at 19.75 when you factor in the dilution.

( some may argue. But they are preference shares? True, but the earn dividends and they WILL be converted, so other than not trading, they are dilutive to the equity, it would be wrong not to include them in the valuation)

If you use a pe of 10. 16.60 Kes per share.

Let's await the final numbers on the shares that will be issued, but it won't be far from this, depending on arm negotiating skills, I've pegged investors to buy price at 30.00 per share.

Those with interest int ARM what is the impact on dilution by the new investment esp on EPS and PE??

@Aguy - I don't have shares in ARM but there might not be a dilution in the EPS since CDC is putting in new cash at a "not-so-cheap" price. Think Helios' investment in Equity which helped Equity super-charge growth. The current PER is meaningless if the EPS is negative.

I am not 100% sure but thanks to the CDC cash, the banks have gone easy on ARM which was struggling for Working Capital. Even the CP folks are now voluntarily renewing their CPs.

ARM shareholders are facing a 40% dilution. The company is also creating another 21 million shares under Employee Share Ownership Programme (ESOP). All in all, this stock is a gem