lending money to LCEY at 8%

tubal · 1 lending money to LCEY at 8% Fri Apr 15, 2011 10:37 pm

tubal

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If you are an LDEV shareholder, you will probably subscribe to their rights issue, by doing so, you are effectively lending money to LCEY at 9% So you might want to weigh this against a fixed deposit at the same rates of interest

LDEV (a company with an annualized net loss of about 3.2 per share) has a rights issue that will raise about 2500 million rupees half of this money will be used to pay for Agrapathana plantations ltd. Out of that, 150 million goes to KOTA. KOTA in turn has agreed to provide a loan for 300 million to LCEY.
Since Agrapathana is not a listed company, we do not know what it's financials are but Agrapathana is famous for tea and not for rubber.

So the net effect of the rights issue is that 150 million of the funds will be given as a loan to LCEY. So call your bank and ask them what the best rate of interest they can offer you.

smallville · 2 Re: lending money to LCEY at 8% Sat Apr 16, 2011 9:13 am

smallville

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I was never convinced of this sister company transfer.. glad I didnt buy LDEV Wink

So u mean to say KOTA is also benefited from this LDEV deal eh?
So its 150 from LDEV + 150 from KOTA itself finance LCEY on the 300 mn deal?

Good for LCEY, bad for the minorities of KOTA, LDEV Mad

Slstock · 3 Re: lending money to LCEY at 8% Sat Apr 16, 2011 9:26 am

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tubal wrote:If you are an LDEV shareholder, you will probably subscribe to their rights issue, by doing so, you are effectively lending money to LCEY at 9% So you might want to weigh this against a fixed deposit at the same rates of interest

LDEV (a company with an annualized net loss of about 3.2 per share) has a rights issue that will raise about 2500 million rupees half of this money will be used to pay for Agrapathana plantations ltd. Out of that, 150 million goes to KOTA. KOTA in turn has agreed to provide a loan for 300 million to LCEY.
Since Agrapathana is not a listed company, we do not know what it's financials are but Agrapathana is famous for tea and not for rubber.

So the net effect of the rights issue is that 150 million of the funds will be given as a loan to LCEY. So call your bank and ask them what the best rate of interest they can offer you.

One thing, as tubal is pointing out , I don;t see how all this family internal deals are going to help LDEV sharesholder in the near future. Ofcourse they can manipulate the share price so the right issue becomes attractive. Maybe that can bring some money ( am not saying it will happen). If not how is LDEv going to get fundametally strong to support it price levels if this money is not utilized correctly is the question.

mark · 4 Re: lending money to LCEY at 8% Sat Apr 16, 2011 10:54 am

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LDEV shoot up after the announcement of right issue.,it's a big doubt that whether LDEV good at it's current fundamentals.to me it's not worth......but you know if a run starts our retailers also run after it and giving wings to share price,finally peak buyers suffer...they don't care about financials...........

nice point out tubal.......

tubal · 5 Re: lending money to LCEY at 8% Sat Apr 16, 2011 12:34 pm

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thanks for your input. One should be very of groups with too many intra company transactions. Many years ago I recall seeing CSD borrow several hundred million rupees from one ceylinco company at 14% and lend to another at 15%

In the normal course of events a rights issue by a loss making company like LDEV would be laughed at. But they are dragging the name of a plantation into the picture just because there is a bunch of investors who are crazy over plantations. Since agrapathana is not listed we don't know how much money they are losing each year.

In essence, LDEV rights issue is pretty much like an IPO. The only difference is that you don't get to read a prospectus,

innam · 6 Re: lending money to LCEY at 8% Sat Apr 16, 2011 12:51 pm

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KOTA's 300 million has already been "appropriated" into LCEY's bank account so in theory there is no link between LDEV and LCEY's loan, however KOTA has been used as a piggybank for LCEY before (when LCEY tookover CWM, 20% of the funds came from KOTA-an investment that is yielding around 3% in dividends at the moment for KOTA), so eventually LCEY may use the 150 million for their purposes rather then for the benefit of minority shareholders .
One good thing about LCEY's management of KOTA is that they don't "appropriate" minority shareholder money through a management fee (they do that through loans).
KOTA is being used as a piggybank so it will interesting to see how LCEY uses LDEV. Lets' face it as long as "investors" line up to hand over their money for rights and IPOs the LCEY/CFLB group will continously go for rights within their subsidiaries (2 rights for MARA, 2 for LITE and 1 for MULL).
It'll be interesting to see whether this 2.5 billion rights is going to be oversubscribed and what LCEY is going to do with the extra 1.2 billion (Agarapathana is going to cost 1.2 billion). Maybe we can see more sister company takeovers.
Of more pressing concern is that all these billion plus IPOs and rights are going suck the liquidity out of the secondary market. When the supply of bacon runs out the party will come to a crashing stop.

Slstock · 7 Re: lending money to LCEY at 8% Sat Apr 16, 2011 1:05 pm

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innam wrote:KOTA's 300 million has already been "appropriated" into LCEY's bank account so in theory there is no link between LDEV and LCEY's loan, however KOTA has been used as a piggybank for LCEY before (when LCEY tookover CWM, 20% of the funds came from KOTA-an investment that is yielding around 3% in dividends at the moment for KOTA), so eventually LCEY may use the 150 million for their purposes rather then for the benefit of minority shareholders .
One good thing about LCEY's management of KOTA is that they don't "appropriate" minority shareholder money through a management fee (they do that through loans).
KOTA is being used as a piggybank so it will interesting to see how LCEY uses LDEV. Lets' face it as long as "investors" line up to hand over their money for rights and IPOs the LCEY/CFLB group will continously go for rights within their subsidiaries (2 rights for MARA, 2 for LITE and 1 for MULL).
It'll be interesting to see whether this 2.5 billion rights is going to be oversubscribed and what LCEY is going to do with the extra 1.2 billion (Agarapathana is going to cost 1.2 billion). Maybe we can see more sister company takeovers.
Of more pressing concern is that all these billion plus IPOs and rights are going suck the liquidity out of the secondary market. When the supply of bacon runs out the party will come to a crashing stop.

Not to mention LCEY right issue

$$$ · 8 Re: lending money to LCEY at 8% Sat Apr 16, 2011 2:26 pm

$$$

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Nicely done Tubal Smile

+ rep .... these are the sort of arguments that should be presented backed with facts and figures . Done this way the forum will be an active place for investors to source information with clear analysis and not mere fortune telling Smile

keep it up buddy

Aro · 9 Re: lending money to LCEY at 8% Sat Apr 16, 2011 3:05 pm

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Gents ... pardon my ignarance ... but wont this help LCEY as they have borrowed @ significantly lower rate .. and hence probably increasing the stock price??? Or would it have a negative impact due to the fact they have borrowed??? Would someone be able to explain this?

innam · 10 Re: lending money to LCEY at 8% Sat Apr 16, 2011 3:07 pm

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Aro wrote:Gents ... pardon my ignarance ... but wont this help LCEY as they have borrowed @ significantly lower rate .. and hence probably increasing the stock price??? Or would it have a negative impact due to the fact they have borrowed??? Would someone be able to explain this?

of course it helps LCEY (doesn't justify a massive jump in share price though), the discussion is about the minority shareholders of KOTA.