Kenya Airways planes at the JKIA in Nairobi. FILE PHOTO | NMG A Bill that will guide the sale of Kenya Airways (KQ) to the State was tabled in Parliament on Thursday, setting the stage for the buyout of minority shareholders at a premium and converting shares held by banks into Treasury bonds.
MPs will now start debate on The National Aviation Management Bill 2020 as the National Assembly seeks to have the government take back full control of the national carrier by October.
The loss-making airline, which is 48.9 percent government-owned and 7.8 percent held by Air France-KLM, was privatised 24 years ago but sank into debt and losses in 2014.
“We are ready to complete the transactions once Parliament passes the Bill,” Treasury Secretary Ukur Yatani told the Business Daily in an interview.
“A lot of work has been done in the background including striking an agreement with KLM and talks are advanced with banks on conversion of their equity to bonds.”
Air-France KLM, which had the option of selling its stake to the government and staying on as a technical partner for the airline, has opted to exit.
Kenya has reached an agreement with Air-France KLM on the offer price, which will be a premium on the carrier’s prevailing trading price at the Nairobi bourse. The same KLM offer price will be used to acquire the minority shareholders, who hold about 2.8 percent of the shares currently valued at Sh397 million.
“We have already developed a formula for valuing the shares owned by the minority shareholders,” Solomon Kitungu, the Principal Secretary at the Ministry of Transport, said Thursday.
“We cannot make it public before we share with CMA (Capital Markets Authority) because Kenya Airways is a listed firm.”
Kenya Airways shares closed trading at Sh2.49 on Thursday compared to Sh9.65 in May 2018.
David Pkosing, the chairman of parliament’s transport committee, said Thursday MPs will seek to pass the Bill swiftly.Mr Pkosing said the committee has set a budget of Sh800 million for purchase of the minority investors, representing a premium of 101 percent.A consortium of local lenders, who acquired 38 percent of the company’s equity during the 2017 restructuring, could be paid through government debt, possibly in 10-year Treasury bonds, Mr Yatani said.The lenders’ shares have a market value of Sh5.38 billion. KQ issued the banks the 38.1 percent stake to settle their claims of Sh16.9 billion.A failed expansion drive and a slump in air […]
