The Kenyan government has signalled its intention to handover Kenya Airways (KQ, Nairobi Jomo Kenyatta) to a strategic investor once it has completed a ten-year stint at the helm of the carrier.
As part of a debt-to-equity plan, the state recently acquired an additional 19.1% of the ordinary voting shares in Kenya Airways' share capital resulting in its overall stake in the airline rising from 29.8% to 48.9%.
Kenya's Cabinet Secretary for the National Treasury, Henry Rotich, said in a statement marking the event that the move, which came about through the conversion of a KES25 billion (USD241.5 million) loan to equity, would allow the government to ensure the carrier returns to profitability before investors are found to run it.
"The government expects a return on investment once the airline returns to profitability," he said in an order seen by Kenya's The Star newspaper. "In addition to entrenching high standards of corporate governance, the company is expected to continue implementing a focused operational turnaround based on a profitable and sustainable business model and supported by a professional and accountable management."
In July, Kenya Airways unveiled its Optimization Plan aimed at reducing its current gross debt from KES242 billion (USD2.3 billion) to KES191 billion (USD1.8 billion). As part of its debt-to-equity scheme, a consortium of eleven creditor banks, collectively the KQ Lenders Co., will convert KES22.5 billion worth of loans to a 38.1% stake.
The Nairobi Securities Exchange (NSE) has since suspended trading of Kenya Airways (KQ) shares for two weeks to facilitate the reconfiguration of the airline's share capital. With the transactions complete, the carrier is then expected to unveil a new financial restructuring plan towards month-end.
