News just in and as this is from the NSE, I trust that this is not an April fools prank.

KenolKobil will be creating an ADDITIONAL 300 Million new shares for the purpose of providing additional shares for the ESOP.

The authorised share capital will be increased by a further 200 Million new ordinary shares to facilitate more trading of KK shares by investors.

I can understand the need to reward staff and management by granting them more shares under the ESOP, But 300 million shares is more than 20% of the current issued shares, which is just too much in my view. I expect this announcement to put the brakes on the share price of the counter as a consequence.

I read it as a move by employees to take over the company from the shareholders. I will only be mollified if they will be buying these shares at a price comparable to that in the market.

This has already been posted on the NSE website for those who may be interested.


http://www.nse.co.ke/newsite/pd...pital%20announcement.pdf

VVS, What say you?

Aikaramba!!

The dilution is good with me as long as the eps grows @ a higher rate. It has worked so with Scan, KK should do better.

I agree on issuance over time,it would be reckless to do it at once,seeing the possible effect on the price.I am sure the company will avail the finer details.The announcement may be an indicator of the managements confidence in company performance going forward and if it gets the employees putting in sufficient effort to get the company growing ,why not entice them? And reward them subsequently.

I tend to agree with the Deal. The 0.3B new shares out of about 1.772B represents almost 17% of the entire shareholding of the company.If not spread over at least 10 years (the first ESOP by Kenol Kobil of 2003 only apportioned about 0.65% of the total shareholding of the company), then the 467 employees (as at March 2010)through the ESOP will rank among the top three shareholders of KK. I wonder what the percentage of issued shares constitutes the ESOP in the other NSE listed companies.The management will need to do alot of justification for this even to the CMA (does CMA have a limit of what the ESOP should constitute as a percentage of the total issued shares?).

Having said that, the management must be very optimistic of growth especially with the ongoing expansion for them to seek such a collosal amount of shares for the ESOP. By the time all the ESOP shares have been allocated to employees (in 5 - 10 years), the issued shares should be in the range of 6B in order for the employee stake to be about 5%.

Happy hunting.

SELL, SELL, SELL!!

. this issue is so hot till it removed @ stockmaster where he was hidding...Mr.Stockmaster how do you like the bear markets so far. are you invested in any defensive stocks.coz its the only way you can do another 100% (ifnot close to) in this market.as for me my stand is know am bearish till year's end.

@qw,over time the company profits should also grow to justify any employee rewards,otherwise they should pay for them at market price,like the case at Access.
At Equity bank the ESOP has a 3.8% holding,which is reasonable.That is why i do not expect the management at KK to be blind to the dilution angle and expect issuance over a period backed by growth.But hey if they can sustain 40% YOY,that is another matter.

The CMA should look into this. E in ESOP means employee but we know its only the executives who benefit. When the dust settles Segman will be a few billions richer