13 November 2017

Kenya: KLM Shareholding at Kenya Airways Diluted to 7.8% in New Deal

Nairobi — KLM shareholding at Kenya Airways has been diluted further down to 7.8 per cent from 26.7 per cent following the capital optimization plan.

The plan has seen the government increase its stake to 48 per cent through conversion of its loans to KQ amounting to Sh24 billion and sovereign contingent guarantees worth Sh77 billion to 19 per cent resulting in the increase of the government shareholding from the current 29 per cent of the ordinary shares.

KQ Lenders Company that compromises 11 banks will also take over 38.1 per cent stake in the company through the conversion of their Sh17.3 billion debt to equity.

Minority shareholding is now at 5.2 per cent.

KQ owes Equity Bank Sh5.2 billion, National Bank NBK Sh3.5 billion, Co-operative Bank Sh3.3 billion, CBA Group Sh3.1 billion and Sh2.1 billion each to NIC Bank, and KCB Group KCB.

I&M Bank and Ecobank are claiming Sh824 million each while Chase Bank and Jamii Bora Bank are owed Sh721 million and Sh412 million respectively.

Banks under the KQ Lenders Company will get two seats on the board, while the government will have three seats on the board, KLM will have one seat.

"We are sure of a revival for the airline, we will hold the equity up to 10 years, but we hope that the airline will get back to profitability soon, and then we can get a strategic investor to come in," Treasury Cabinet Secretary Henry Rotich told journalists on Monday.

Kenya Airways Board Advisor Mbuvi Ngunze says plans for an open offer to happen after the closure of the transactions which could be in the second quarter of 2018.

The airline cut its loss by 61 per cent in 2017 to register a new loss of Sh10.2 billion compared to the Sh26 billion it recorded in 2016.

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