This archive report was first published on 26 June 2020.
Published on June 26, 2020, a Bill that will guide the sale of Kenya Airways to the State was tabled in Parliament, setting the stage for the buyout of minority shareholders at a premium and converting shares held by banks into Treasury bonds.
The National Aviation Management Bill 2020 seeks to have the government take back full control of the national carrier by October. Kenya Airways, which is 48.9 per cent government-owned and 7.8 per cent 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 said 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.”
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 per cent of the shares currently valued at Ksh397 million ($3.9 million).
Kenya Airways shares closed trading at Ksh2.49 ($0.024) on Thursday compared to Ksh9.65 ($0.09) in May 2018. David Pkosing, the chairman of parliament’s transport committee, said MPs will seek to pass the Bill swiftly.
Mr Pkosing said the committee has set a budget of Ksh800 million ($8 million) for purchase of the minority investors, representing a premium of 101 percent. A consortium of local lenders, who acquired 38 per cent of the company’s equity during the 2017 restructuring, could be paid through government debt, possibly in 10-year Treasury bonds, Mr Yatani said.
