In a statement published on the local dailies, Kenya Airways will see a major restructuring in its shareholding structure that will see the Government of Kenya and KQ Lenders Company own a combined 87 percent of the airline in an effort to deleverage the ailing carrier.
The government and major KQ lenders agreed to convert the loans the airline has taken from them and so far is failing to pay back into equity.
This means the airline can not borrow more money and will not be overwhelmed by the threat of defaulting on loan repayments. It also means the airline will undergo major restructuring as the lenders will want a say on how the company is run going forward.
The Government of Kenya which had a 29.8 percent stake in the airline will see its stake increased by 19.1 percent to 48.9 percent in the airline.
The Government noted that it had loaned Kenya Airways KES 4.2 billion, USD 197.3 million and accrued interest, as part of the deal some of the debt will be converted as part of the new 19.1 percent equity issued and the remaining portion of the loans will be settled through a zero coupon mandatory conversion loan that will lead to the issuance of new ordinary shares in the future.
Local banks which lent the airline a total of USD 217.2 million will see the issuance of 2.2 billion ordinary shares equivalent to a 38.1 percent ownership through a special purpose vehicle set up by the banks called KQ Lenders Company. The deal will see USD 167.2 million converted for the newly issued shares. The remaining USD 50 million will be dealt with through a ‘Mandatorily Convertible Loan Agreement’ that will see the issuance of ordinary shares at a future date.
The proposed deal will see Air France, KLM’s stake diluted from 26.7 percent to 7.8 percent in the airline.
The International Finance Corporation and retail investors will also see their 9.6 percent and 33 percent stakes diluted respectively.
read more here: Red Pepper Uganda. This post is syndicated.