The most significant domestic lenders and Kenya’s government agreed to change $405.35 million of Kenya Airways Plc debt into equity.
Therefore, the state gets control of stake and diluting other investors counting Air France-KLM.
As Tuko Kenya informs, the government will raise its stake from 29.8% to almost 48.9% from 29.8. Lenders will change their obligation to a 38.1% holding.
“The government of Kenya will get actual control of Kenya Airways. It will make an application to the Capital Markets Authority for release from the take-over obligations according to the take-overs regulations,” Henry Rotich, Treasury Secretary, announced.
In 2016, Kenya Airways (Air France-KLM owns almost 26.7% stake), proclaimed a $690-million restructuring. It is aimed at returning the company to earnings. In 2016, the company posted a $253.5 million loss. It is the largest one the in the corporate history of Kenya. When Kenya Airways released that plan, the airline decreased the size of its fleet from 47 to 39 aircrafts, cut jobs, enlarged the focus on African network, and canceled loss-making routes.
Additionally, Kenya Airways and the government signed a convertible-loan agreement for the last portion of state loans. It will result in the issue of more shares in future. A similar deal was reached with banks.
A senior research analyst at Apex Africa Capital Limited (Nairobi), Abizer Sharafali, told that if the present plan was inadequate, they were keeping the door open for a future debt-equity exchange. “This agreement will allow them not to begin the whole process once more.”
According to the statement, KQ Lenders as well do not intend to make a takeover proposal for the airline.