Kenyan government,banks to control 87 per cent of national airline in debt swap deal

The shares will be owned by a new special purpose vehicle called KQ Lenders Company

The Kenyan government and domestic lenders have agreed to convert loans of Sh44.2 billion ($426 million) to equity which will see them control 87 per cent of national carrier Kenya Airways.

The government, which has given Kenya Airways shilling loans totaling Sh24.6 billion ($238.1 million), will under the airline's debt restructuring plan increase its stake to 48.9 percent from 29.8 percent.

“The government of Kenya shall acquire effective control in Kenya Airways and it shall make an application to the Capital Markets Authority for exemption from the take-over requirements in compliance with the Take-overs regulations,” Treasury Secretary Henry Rotich said on Monday.

The ten banks will on the other hand acquire a 38.1 percent stake following a conversion of the Sh17.3 billion ($167.24 million) of the Sh22.5 billion ($217.2 million) in loans issued to the airline.

The shares will be owned by a new special purpose vehicle called KQ Lenders Company managed by Minerva Fiduciary Services from Mauritius.

Both the Treasury and the banks have also applied to the Capital markets Authority (CMA) for exemption from a requirement to make a takeover offer for the airline, on the grounds that the restructuring is on the basis of rescuing a firm in financial distress in the interest of the public.

Kenya Airways, in which Air France-KLM has a 26.7 percent stake, announced a $690-million reorganization last year aimed at returning the company to profit. The carrier posted a 26.2 billion-shilling ($253 million) loss in 2016 -- the biggest in Kenyan corporate history.

Since the plan was announced, the airline cut jobs, reduced the size of its fleet and canceled unprofitable routes.

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.

Eyewitness? Submit your stories now via social or:

Email: news@pulselive.co.ke

Recommended articles

Kenyans can now travel to 72 countries without a visa

Kenyans can now travel to 72 countries without a visa

Ini Edo posts new photos amid reports of welcoming a baby through surrogacy

Ini Edo posts new photos amid reports of welcoming a baby through surrogacy

Referee behind chaos at AFCON was rushed to hospital after match

Referee behind chaos at AFCON was rushed to hospital after match

Willy Paul wins against Diana Marua in court

Willy Paul wins against Diana Marua in court

KDF moves to forcibly acquire Sh 500M supermarket land in Nairobi

KDF moves to forcibly acquire Sh 500M supermarket land in Nairobi

Zuchu forced to apologize to fans after viral video raised eyebrows

Zuchu forced to apologize to fans after viral video raised eyebrows

Guardian Angel weds Esther Musila in private wedding [Photos]

Guardian Angel weds Esther Musila in private wedding [Photos]

I'm not in the US - Eddie Ndichu's photos explained

I'm not in the US - Eddie Ndichu's photos explained

Kenyans rate Kabogo's Karate skills [Video]

Kenyans rate Kabogo's Karate skills [Video]