Equity Bank’s Sh703m demand threatens sale of broke Jetlink

Equity Bank has thrown its weight behind the winding up of troubled Jetlink Express over a Sh703 million debt in what could scupper the recovery and the sale of the grounded carrier to a strategic investor.

The bank made the claim in papers filed at the High Court in support of the winding up petition initiated by Fine Jet — which moved to court in March seeking to wind up Jetlink for Sh14 million in unpaid fuel bills.

This could derail attempts by the carrier to offer a 51 per cent stake to be shared among the equity investor, other creditors and a firm arranging a debt in a plan aimed at staving off the winding up petition.

The airline suspended services in November due to cashflow challenges after it was unable to access about $2 million (Sh170 million) worth of ticket sales held in bank accounts in South Sudan.

“That as a secured creditor, Equity Bank is entitled to the assets of Jetlink Express Limited in its winding up and supports the winding up petition,” says Joyce Munene, Equity legal services officer, in an affidavit filed in court last week.

Jetlink Express was set to offer shares to its creditors, which excluded Equity Bank, in a recovery plan that was to see the carrier receive funding from CFC Stanbic Bank. The creditors included Aerotech Limited, KenolKobil and Avmax Spares East Africa.

Jetlink is asking them to write off Sh360 million of the Sh554 million it owes them and convert the remaining 35 per cent debt into preference shares — which it will buy back after five years.

CFC Bank is set to provide undisclosed working capital that is not meant to be paid to the creditors. But this now hangs in the balance with the entry of Equity Bank in the winding up petition with a demand for Sh703 million.

Elkana Aluvale, the managing director of Jetlink said in an affidavit that it has received capital from CFC Bank that will aid the airline’s recovery and ultimately settle the debts.

“If the debt restructuring proposal is concluded... the company will resume operations and be able to meet all the debt obligations,” noted Mr Aluvale.