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kengen announcement :rights issue resolution
Rank: Elder Joined: 7/11/2010 Posts: 5,040
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sparkly wrote:Aguytrying wrote:sparkly wrote:enyands wrote:Gatheuzi wrote:winmak wrote:sparkly wrote:mthaka wrote:@sparky this is getting murky,does one sell currently ,take up the rights or wait to buy post rights??? For those who are already in, defend your rights or sell the rights (not shares). For those who are out, wanting to get in, buy after rights issue is concluded. @Sparkly forgive my ignorance, has the rights price been officially determined? And, these rights, how do you sell them before buying them? I have not been involved in one of these, so baby steps will be appreciated here... If you have KenGen shares, you will be given "rights" depending on the ratio agreed. If you have say, 100 shares and they announce rights of 2:1 it means you can buy 200 shares at the right price (say 5bob) requiring you to invest 1K. If you don't want to buy the 200 shares (or you don't have cash) you can sell the 200 rights at prevailing market price say, 1 Bob (so you pocket 200). The person you sell the rights to will pay 1000 to KenGen for him to get the shares. Bottomline; you must have the shares to get the rights. How can spectators like me rip from this In Kenya, Rights depress the share price. However for solid profitable companies, prices tend to recover and shoot up within one year. This is from my experience in KCB, TPS, NIC. If you want to make money, buy ex-rights and wait for the ride IMO @Sparkly. I do not understand your optimism with this 70% owned gava stock. What I wonder is, why has the share been depressed since the IPO its around 30% down, 7 years later? What makes you think the next 7 years or more will be any different? @Aguy its just another stock in my portfolio where I expect >100% return from capital gains + Dividend in the next 2-3yrs. My average buy is around 9.85. If I wasn't already in it, I would have waited for the rights issue to be completed before jumping in but since I am in already, I must defend/sell my rights or be irredeemably diluted. That's the extent of my relationship with this share. Understood. In that case watch the rights issue price, IF its too high (they are too greedy), forfiet your rights and average down after rights after the ensuing almost 100% guaranteed price slump The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Elder Joined: 1/21/2010 Posts: 6,675 Location: Nairobi
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I hope they stick to raising KES 28Billion then the rights price will be below 4 bob...  However if they go for KES 50Billion the rights price will be above 6 bob...  Mark 12:29
Deuteronomy 4:16
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Rank: Chief Joined: 1/3/2007 Posts: 18,121 Location: Nairobi
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lochaz-index wrote:Ex-rights for a short term ride you will make money. Longterm however, kengen is a sad tale of a company with respectable performance which happens to be in a capital intensive industry.
Large capex with government involvement tends to be a vicious cycle of debt conversions and rights issues. This means dilution is always around the corner which begets a low share price. Bingo. The NAV/share is almost irrelevant for utilities. You cannot sell the assets, many of which are politically sensitive, immovable or have terms and conditions attached. The dividend yield is important since utilities act almost like bonds. And in Kenya utilities have the stain of massive corruption in their ranks. Utilities are also affected by politics and populism. Look at KPLC. It makes little profit, it gets criticized. It makes a fair profit, it gets criticized. It makes super-normal profits, it get criticized. Greedy when others are fearful. Very fearful when others are greedy - to paraphrase Warren Buffett
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Rank: Member Joined: 12/1/2007 Posts: 539 Location: Nakuru
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Gatheuzi wrote:winmak wrote:sparkly wrote:mthaka wrote:@sparky this is getting murky,does one sell currently ,take up the rights or wait to buy post rights??? For those who are already in, defend your rights or sell the rights (not shares). For those who are out, wanting to get in, buy after rights issue is concluded. @Sparkly forgive my ignorance, has the rights price been officially determined? And, these rights, how do you sell them before buying them? I have not been involved in one of these, so baby steps will be appreciated here... If you have KenGen shares, you will be given "rights" depending on the ratio agreed. If you have say, 100 shares and they announce rights of 2:1 it means you can buy 200 shares at the right price (say 5bob) requiring you to invest 1K. If you don't want to buy the 200 shares (or you don't have cash) you can sell the 200 rights at prevailing market price say, 1 Bob (so you pocket 200). The person you sell the rights to will pay 1000 to KenGen for him to get the shares. Bottomline; you must have the shares to get the rights. Back up a bit, say the rights price is 5 but once trading, it goes for 2/-, wont everyone pay 2 at the bourse rather than 5 to kengen? For investors as a whole, returns decrease as motion increases ~ WB
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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winmak wrote:Gatheuzi wrote:winmak wrote:sparkly wrote:mthaka wrote:@sparky this is getting murky,does one sell currently ,take up the rights or wait to buy post rights??? For those who are already in, defend your rights or sell the rights (not shares). For those who are out, wanting to get in, buy after rights issue is concluded. @Sparkly forgive my ignorance, has the rights price been officially determined? And, these rights, how do you sell them before buying them? I have not been involved in one of these, so baby steps will be appreciated here... If you have KenGen shares, you will be given "rights" depending on the ratio agreed. If you have say, 100 shares and they announce rights of 2:1 it means you can buy 200 shares at the right price (say 5bob) requiring you to invest 1K. If you don't want to buy the 200 shares (or you don't have cash) you can sell the 200 rights at prevailing market price say, 1 Bob (so you pocket 200). The person you sell the rights to will pay 1000 to KenGen for him to get the shares. Bottomline; you must have the shares to get the rights. Back up a bit, say the rights price is 5 but once trading, it goes for 2/-, wont everyone pay 2 at the bourse rather than 5 to kengen? Read thisLife is short. Live passionately.
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Rank: Elder Joined: 6/23/2009 Posts: 13,549 Location: nairobi
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only government can afford to sit out a rights issue. in any case there are only two options. one is to sell off entire holding if calculations show the price is likely to dip post rights. second is to buy into the rights and load up more if price drops after the issue. the latter option has been noted by myself to be cost effective since the element of commissions doesnt arise and prediction of a fall can at times be sketchy
HF 90,000 ABP 3.83; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Member Joined: 12/1/2007 Posts: 539 Location: Nakuru
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sparkly wrote:winmak wrote:Gatheuzi wrote:winmak wrote:sparkly wrote:mthaka wrote:@sparky this is getting murky,does one sell currently ,take up the rights or wait to buy post rights??? For those who are already in, defend your rights or sell the rights (not shares). For those who are out, wanting to get in, buy after rights issue is concluded. @Sparkly forgive my ignorance, has the rights price been officially determined? And, these rights, how do you sell them before buying them? I have not been involved in one of these, so baby steps will be appreciated here... If you have KenGen shares, you will be given "rights" depending on the ratio agreed. If you have say, 100 shares and they announce rights of 2:1 it means you can buy 200 shares at the right price (say 5bob) requiring you to invest 1K. If you don't want to buy the 200 shares (or you don't have cash) you can sell the 200 rights at prevailing market price say, 1 Bob (so you pocket 200). The person you sell the rights to will pay 1000 to KenGen for him to get the shares. Bottomline; you must have the shares to get the rights. Back up a bit, say the rights price is 5 but once trading, it goes for 2/-, wont everyone pay 2 at the bourse rather than 5 to kengen? Read this Thanks, I now understand... Now critique this strategy: I have 12000 KEGN shares, I will defend the rights in their entirety (sopefully priced sub 5 for a 2:1); if the rights price at the bourse will be lower than the offer price, I will further average down this. For investors as a whole, returns decrease as motion increases ~ WB
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Rank: Member Joined: 9/30/2013 Posts: 254
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 we are heading to seven(7) shillings as predicted,so the rights will be 5 bob
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Rank: Elder Joined: 7/21/2010 Posts: 6,183 Location: nairobi
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mthaka wrote: we are heading to seven(7) shillings as predicted,so the rights will be 5 bob signs of a killer brew "Don't let the fear of losing be greater than the excitement of winning."
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Rank: Chief Joined: 5/9/2007 Posts: 13,095
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Spikes wrote:I pity those guys who swerved in impulsively after the announcement of record high profit. Some were screwed exorbitantly 11bob per share and watched as tears rolled down their eyes as the price went down every second till today. If since then they have not exited bruised with more massive losses than the mantra to jump in naively are just waiting for a disaster. Poleni wasee!!! Tihihihi....I actually exited at 11bob, zote kabisa. They can now do the rights thing and I might re-enter at 3bob for long term.
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Rank: New-farer Joined: 5/22/2014 Posts: 78
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VituVingiSana wrote:lochaz-index wrote:Ex-rights for a short term ride you will make money. Longterm however, kengen is a sad tale of a company with respectable performance which happens to be in a capital intensive industry.
Large capex with government involvement tends to be a vicious cycle of debt conversions and rights issues. This means dilution is always around the corner which begets a low share price. Bingo. The NAV/share is almost irrelevant for utilities. You cannot sell the assets, many of which are politically sensitive, immovable or have terms and conditions attached. The dividend yield is important since utilities act almost like bonds. And in Kenya utilities have the stain of massive corruption in their ranks. Utilities are also affected by politics and populism. Look at KPLC. It makes little profit, it gets criticized. It makes a fair profit, it gets criticized. It makes super-normal profits, it get criticized. Thanks @lochaz-index. @vvs, you have explained so much in a niiiice summary.. ..I keep getting wiser on the Wazua forum . I await the price post Rights-Issue
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Rank: Elder Joined: 12/4/2009 Posts: 10,702 Location: NAIROBI
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Technical analysis of the amount of money to be raised suggests the following; The rights issue will be a 2:1 bringing total number of shares to be issued at 4.4bn GOK will be allocated 70% or 3.08bn shares for the debt to equity conversion. Private shareholders owning 30% will be left to scramble for the remaining 1.32bn shares. The rights issue price will be about ksh.6.5 Private shareholders will be required to raise ksh.8.58bn The conversion of GOK debt is as follows (3.08bn *6.5=20.02bn which equals the amount KENGEN debt converts to equity Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 7/11/2010 Posts: 5,040
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Ericsson wrote:Technical analysis of the amount of money to be raised suggests the following;
The rights issue will be a 2:1 bringing total number of shares to be issued at 4.4bn
GOK will be allocated 70% or 3.08bn shares for the debt to equity conversion.
Private shareholders owning 30% will be left to scramble for the remaining 1.32bn shares.
The rights issue price will be about ksh.6.5
Private shareholders will be required to raise ksh.8.58bn
The conversion of GOK debt is as follows (3.08bn *6.5=20.02bn which equals the amount KENGEN debt converts to equity Undersubscription pap. No way private shareholders will raise 8 bn in this liquidity crunch and bear market. Let's be realistic. Fahari I reit know what I mean The investor's chief problem - and even his worst enemy - is likely to be himself
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Rank: Elder Joined: 12/4/2009 Posts: 10,702 Location: NAIROBI
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@Aguytrying Fahari reit guys had no faith in it;it had nothing to do with liquidity crunch and bear market. Remember KENGEN PIBO which was oversubsribed in 2009 was during a bear market run. If guys have faith in something pesa watatoa. If we are in liquidity crunch how will you explain the huge traffic jam been experienced in Nairobi and number plates moving bubble gums being chewed Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Elder Joined: 12/4/2009 Posts: 10,702 Location: NAIROBI
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So I can't quickly judge that it will be undersubscribed Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle
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Rank: Veteran Joined: 8/28/2015 Posts: 1,247
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How wanjikus got screwed up in kengen was a marvel. Let's it all begin again. It's a wash and wear thing. And wash and wear again. ,Behold, a sower went forth to sow;....
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Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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muandiwambeu wrote:How wanjikus got screwed up in kengen was a marvel. Let's it all begin again. It's a wash and wear thing. And wash and wear again. How exactly was Wanjiku screwed in Kengen?? For your info GOK offered 30% to the public in March 2006 at KES 11.90 which was oversubscribed by 236%. The company has consistently returned a profit, grown the balance sheet and paid a dividend. The price has been higher than IPO price most of the time (rose to 40 post listing). Kengen also successfully issued a KES 15B tax free PIBO at 12.5%. Again how has Wanjiku been screwed by Kengen? Life is short. Live passionately.
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Rank: Veteran Joined: 8/28/2015 Posts: 1,247
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Wanjiku bought a piece of company to own. How many sold at forty? So many of them laments they had no idea this thing would tank this much and we are not down yet. ,Behold, a sower went forth to sow;....
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Rank: Veteran Joined: 11/15/2013 Posts: 1,977 Location: Here
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obiero wrote:only government can afford to sit out a rights issue. in any case there are only two options. one is to sell off entire holding if calculations show the price is likely to dip post rights. second is to buy into the rights and load up more if price drops after the issue. the latter option has been noted by myself to be cost effective since the element of commissions doesnt arise and prediction of a fall can at times be sketchy Myself too. Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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Rank: Veteran Joined: 11/15/2013 Posts: 1,977 Location: Here
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muandiwambeu wrote:Wanjiku bought a piece of company to own. How many sold at forty? So many of them laments they had no idea this thing would tank this much and we are not down yet. That's not enough reason. Selling and holding is a personal decision depending on one's strategy. We all know shares move up and down and they always will. A shareholder decides what to do when. Recently a wazuan refused to offload CFC @140 and its back to his buying price. Everybody STEALS, a THIEF is one who's CAUGHT stealing something of LITTLE VALUE. !!!
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