NewsEast & Horn AfricaGovernment raises Kenya Airways stake in debt swap deal

Fri,17Nov2017

Posted on Monday, 13 November 2017 15:38

Government raises Kenya Airways stake in debt swap deal

By Reuters

Kenyan Airways pilots walk past a Kenya Airways plane,May 5, 2007 at Jomo Kenyatta airport in Nairobi. Photo:KAREL PRINSLOO/AP/SIPAThe Kenyan government and domestic lenders have agreed to convert more than $400 million of Kenya Airways' debt into equity, increasing the state's stake in the airline to almost 50 percent.

 

The airline is undergoing a $700 million financial restructuring aimed at reducing its debts and returning to profitability after posting heavy losses, including Kenya's biggest annual corporate loss of 26 billion shillings ($251m) in the financial year 2016.

The government is converting more than $200 million of shilling and dollar-denominated loans, the airline said in a statement on Monday to the Nairobi Securities Exchange.

The agreement will increase the government's stake from 29.8% to 48.9%.

Air France-KLM has a 26.7% stake in the airline.

Competition from foreign carriers

The deal gives 11 local banks a 38.1% stake, which will be held in a special purpose vehicle called KQ Lenders Co.

Both the government and the lenders still have outstanding portions of debt to be converted at a later date, they said.

They have applied to the market regulator for exemption from making a take-over offer, in line with regulations, since the transaction is aimed at rescuing the carrier.

Kenya Airways shares were unchanged at 5.65 shillings ($0.0546) after the announcement. "It is a hefty dilution but a lot of people knew it was coming," said Aly Khan Satchu, an independent trader and analyst.

Last month, the company said it was in talks with the government as it sought help in coping with competition from foreign carriers operating flights to its Nairobi hub.

 



Subscriptions Digital EditionSubscriptions PrintEdition

FRONTLINE

NEWS

POLITICS

HEALTH

SPORTS

BUSINESS

SOCIETY

TECHNOLOGY

COLUMNISTS

Music & Film

SOAPBOX

Newsletters

Keep up to date with the latest from our network :

subscribe2

Connect with us