VVS

Have you ever been to an accounting class. We have spent the past few days trying to tell you the obvious. The 14B is horribly confusing you suggesting you may not have very good knowledge of a balance sheet which isn't a crime and with all due respect to you.

What we are saying is KPLC is creating 100m shares in the company and giving them to one shareholder in exchange for capital which they already used 5 years ago. The company's value doesn't change unless you are suggesting it has been trading at a massive discount with the pref conversion in mind which i don't believe is the case due to the low level of sophistication of our market. Now you have a loaf of bread which previously was divided 79m times. We are now saying we need to divide the loaf 179m times which is almost 3 times as the earlier case. What do you think will happen? Will the loaf become bigger or will the slices become smaller.

Key lessons for you. Any conversion into ordinary shares involving prefs or debt always has a dilutive effect. The tricks are how big the conversion is relative to existing shares and whether there are any cash flows accruing back to ordinary shareholders from converting. This gimmick is a favorite tool of PE companies and corporate financiers.

As mentioned earlier PE's of utilities are normally low because utilities grow at very slow paces and dividend payout is normally small due to need to support future capex,working capital and debt. 8.50/40 is a fifth. A fifth of 18bob is 3.5bob. Don't expect an increased dividend payout from KPLC.

Your smart option,keep your chums and wait for rights,government won't take up theirs otherwise you are definately going to leave your shirt in the soko when you buy at 160 per share.

We may not get to 65 due to sentimentalists like you but we will dip below 80 bob for sure,on a straight logic basis we should end up at 67. GoK is getting those shares for the prefs,they basically pay nothing. But those same shares rank parri passu with yours of 160 bob which assume 79m shares in issue for a 12B company. Add another 100m shares not paid for in practical terms and spread the 12B cheer across the 180m share and tell me whether you purchase today makes sense...You sound like the chaps who would buy cables at 700 coz a split had been announced.......we will revive this thread once the dilution takes place. For now i rest my case.

Here is the full story:

http://www.businessdaily.../-/mvfhrkz/-/index.html

10 Months since i posted this, and KPLC is yet to decide on how to restructure................

With a 10B rights issue in the offing, and with the majority shareholder sitting out of the rights, i think it would be prudent to wait for the rights as the entry point to KPLC.

Happy hunting.

Seems my prediction of almost a year ago was not far off the mark (see post No.1).

Looking at the restructuring, the GoK will end up with almost 108M shares out of 155M Pre split.

Post split = 864M shares which qualify for 864/1240 x 490M = 340M rights.

Assuming the rights are at a Price of Ksh 20, then the floating (unsubscribed for) rights from the GoK will be almost 70% of the rights (Ksh 7 Billion out of Ksh 10B).

With this amount of 'free float', all i need is a very small holding in KPLC (maybe just buy 100 rights and apply for whatever quantity i fancy).

Post split, post rights, this share should be trading at the Ksh 24 - 27 range (at a P/E of about 12 - 13). Approximately 20% to 30% gain post rights for those who will only have entered at the time of the rights.

To me the rights represent a more strategic entry point into KPLC as they will be in plenty (almost like an IPO) and will be offered at a discount to the prevailing market price.


Happy hunting

Reading through the entire thread for a second time, am left wondering why somebody was advocating for a thinkers room. The exchange between @VVS and @Kausha is an excellent piece by thinkers!

So now between @VVS and @Kausha who is smiling?.......Supposing @VVS sold his shares bought at 160/=, for 240/=?

@Kausha now that most of the previously unknown parameters are out, what say you?