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HomeAviationKenya Government takes control of Kenya Airways in debt-swap deal

Kenya Government takes control of Kenya Airways in debt-swap deal

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1 min read

The Kenya government in conjunction with domestic lenders have agreed to convert Kenya Airways debt into equity giving it a controlling stake in the airline.

The deal will see the Kenyan government and domestic lenders convert more than $400 million of the airline’s debt into equity, giving the government a controlling stake in the airliner.The agreement will increase the government’s stake from 29.8% to 48.9%. Air France-KLM holds a 26.7% stake in the airline.

According to a statement issued to the Nairobi stock exchange, the government has given Kenya Airways more than $200 million of Kenyan shilling and dollar-dominated loans.

“The government of Kenya shall acquire effective control in Kenya Airways and it shall make an application to the Capital Markets Authority for exemption from the take-over requirements in compliance with the Take-overs regulations,” Treasury Secretary Henry Rotich said.

In addition to the acquisition of equity under the debt conversion and subscription agreement, the government and Kenya Airways have entered into a zero coupon ordinary mandatorily convertible loan agreement in relation to settlement of remaining portion of the government loans.

The deal also gives 11 local banks a 38.1% stake, which will be held in a special purpose vehicle called KQ Lenders Co.

Jeanette Briedenhann
Jeanette Briedenhann
Jeanette Phillips joined the team in 2016. She developed a passion and love for all things-travel related in her role as travel journalist, a position she held for over seven years. A brief exodus into the corporate marketing sphere proved that there is no better industry than the travel industry. Research and writing are two of Jeanette’s greatest passions, but she is always open to new challenges and different ways of doing things.

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