By EVELYN KWAMBOKA
Efforts by a businessman to stop the ongoing Kenya Airways rights issue has flopped.
The High Court on Friday declined to suspend the rights issue of 1,477,169 shares after certifying the case urgent and ordered Mr Rakesh Gadani to serve KQ with the suit papers.
Justice Fred Ochieng said he should serve the airline and the case heard inter partes on April 17. Rakesh wanted the airline directors temporarily stopped from offering the shares at Sh14 or listing them at the Nairobi Stock Exchange, pending hearing and determination of his case.
The case was filed on grounds that existing shareholders who cannot exercise their rights offer in full could lose 66 percent of the value of the shares.
"In essence, one is being forced to give up Sh28 per share (two third of the value)," he stated. KQ intends to raise Sh20.68 billion by way of the rights issue of new ordinary shares.
He stated the Rights Issue offer price represents a discount of 32.2 percent to the volume weighed average price of KQ ordinary shares on the NSE for the past 90 trading days up to February 29, being the date the board approved the rights issue terms.
"Current shareholders have not had the chance to question the board of directors to explain the logic behind selling shares at Sh14 when the net asset value is Sh42, which is 66 percent," he added.
On Friday, his lawyer, Mr Stephen Gitonga told the court the issuance of shares is oppressive to his client and minority shareholders, adding that KQ issued the Information Memorandum which is the basis of the trading of the rights share issue after the rights started trading.