Kenya Airways plane. [Photo/businessdaily.com]
National carrier Kenya Airways has prepared a delicate recovery plan that will see 11 commercial banks it owes Sh22.8 billion jointly replace Dutch airline KLM as the second largest shareholder after the National Treasury.
Kenya Airways, which is popularly known as KQ, says in a circular sent to shareholders ahead of a special general meeting that the lenders, including Equity, KCB Group and Co-operative Bank have formed a special purpose vehicle the KQ Lenders Company Limited through which they will own 35.7 per cent of the national carrier.
The national government, the single largest shareholder that the carrier owes Sh27.2 billion (inclusive of accrued interest), is also converting the debt into shares, a move that is set to increase its stake in the airline to 46.5 per cent from the current 29.8 per cent.
KLM, a KQ joint venture partner and shareholder, is taking the biggest cut in terms of actual valuation of its stake which is nearly halving to 13.7 per cent from the current 26.7 per cent despite the Dutch carrier injecting Sh7.9 billion in cash and in-kind to the airline’s recovery effort.
Mbuvi Ngunze, KQ’s former managing director and restructuring adviser, said the banks will have the option of divesting from the airline over a 10-year period by selling their stake on the stock market or to a strategic investor.
“The Treasury will have two seats in the KQ board, KLM will appoint another while the banks shall also have one director, as long as they own at least five per cent of the shares,” he said.
If the plan is approved, the 70,000 Kenya Airways’ retail shareholders will be left with a tiny 1.24 per cent of the national carrier, down from 24 per cent — making them the biggest losers in the transaction.
The investors will, however, be invited to participate in a Sh1.5 billion “open offer” to reduce the dilutive effect before the year ends