Kenya Airways’s restructuring plan could suffer a blow after one of its key creditors hinted at seeking legal redress, which could effectively block its passage at a special general meeting the airline has called for next week.
The management of the Kenyan national carrier has been hoping to bring all its 11 local lenders on board while pushing its restructuring programme, which would see it swap debt for equity in the firm.
However, The EastAfrican understands that Ecobank, Equity and Jamii Bora, which are collectively owed $60.6 million, are holding out against the debt conversion plan.
Two weeks ago, the airline moved to court seeking orders compelling a group of banks to accept the planned conversion of the debts owed to them into substantial stakes.
Through its lawyers Coulson Harney, KQ wants the court’s consent to convene a creditors meeting to pass the proposed restructuring plan ahead of next week’s special general meeting with its shareholders.
“The petitioner desires to convene a statutory meeting with the scheme creditors for purposes of having them consider and vote on the scheme,” the petition papers read.
It wants to activate a clause in the Companies Act that allows distressed companies to make compromise financial arrangements with the same class of creditors if three quarters of them approve of the proposal. Airline ‘remains at risk’ The EastAfrican has since learnt that one of the lenders could be headed to court to block the conversion, arguing that the deal is not in its interest.