NAIROBI, KENYA: The government has agreed to convert debt of Kenya Airways into equity giving it a controlling stake in the airline.
The government currently owns ordinary shares in Kenya Airways comprising 29.8 percent of the issued share capital.
“The effect of the debt conversion and subscription agreement is the acquisition by government of an additional 19.1 percent of the ordinary voting shares in the capital of KQ resulting in the increase of shareholding from 29.8 percent to 48.9 percent of the ordinary voting shares,” reads an order by CS Henry Rotich.
In addition to the acquisition of equity under the debt conversion and subscription agreement, the government and KQ have entered into a zero coupon ordinary mandatorily convertible loan agreement in relation to settlement of remaining portion of the government loans.
The government has given Kenya Airways more than $200 million of Kenyan shilling and dollar-dominated loans, the airline said in a statement on Monday to the Nairobi stock exchange.
The deal also gives 11 local banks a 38.1 percent stake, which will be held in a special purpose vehicle called KQ Lenders Co.
Air France-KLM has a 26.7 percent stake in Kenya Airways.