The Treasury and 10 local banks will control 87 per cent of Kenya Airways (KQ) under the national carrier’s debt restructuring plan which will see them convert loans of Sh. 44.2 billion to equity.
The plan, which is set to be concluded this week, will see KLM’s shareholding substantially whittled down to seven per cent from 26.73 per cent, while tightening the State’s grip on the struggling airline by increasing its stake to 48.9 per cent from 29.8 per cent previously.
“The effect of the debt conversion and subscription agreement is the acquisition by government of an additional 19.1 percent of the ordinary voting shares in the capital of KQ resulting in the increase of shareholding from 29.8 percent to 48.9 percent of the ordinary voting shares,” reads an order by CS Henry Rotich.
In addition to the acquisition of equity under the debt conversion and subscription agreement, the government and KQ have entered into a zero coupon ordinary mandatorily convertible loan agreement in relation to settlement of remaining portion of the government loans.
The government has given Kenya Airways more than $200 million of Kenyan shilling and dollar-dominated loans, the airline said in a statement on Monday to the Nairobi stock exchange.