Jetlink cuts Sh544m debt repayment deal with suppliers
Lawyers say Jetlink has reached an agreement with Finejet to settle its debt by end of April. FILE
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Lawyers representing the two firms on Friday told the High Court that Jetlink has reached an agreement with Finejet to settle its debt by end of April.
Finejet filed a winding up petition on March 19, 2013 alleging that Jetlink owed it Sh14 million ($163,700) in unpaid fuel bills.
The parties will report to court on the progress of the negotiations and confirm the payment to Finejet on May 7.
Jetlink has reached a debt-repayment deal with a supplier company that had filed a court petition for its winding up, raising possibility that the airline could resume operations in the coming months.
Lawyers representing the two firms on Friday told the High Court that Jetlink has reached an agreement with Finejet to settle its debt by end of April, and to subsequently withdraw the court petition.
“After some negotiations I have received a letter from Jetlink and they have proposed to pay 35 per cent of the debt by March 31 and 65 per cent by April 30,” Finejet lawyer Fred Athwok told Justice Jonathan Havelock.
Finejet filed a winding up petition on March 19, 2013 alleging that Jetlink owed it Sh14 million ($163,700) in unpaid fuel bills. Later more creditors joined the suit.
Jetlink’s lawyer confirmed the proposal, adding that the firm is in talks with other creditors with a view to settle the debts by May 7.
The parties will report to court on the progress of the negotiations and confirm the payment to Finejet on May 7.
Jetlink owes Sh554 million to its creditors, including Aerotech Limited, KenolKobil, Avmax Spares East Africa and Finejet. The firm also separately owes Equity Bank Sh703 million.
The airline suspended services in November 2012 due to cashflow difficulties after it was unable to access about $2 million (Sh170 million) worth of ticket sales held in bank accounts in South Sudan. This constrained its cash flows, which led to the filing of the winding up petition.
Jetlink was launched in 2005 and was one of the airlines on the highly competitive domestic and regional routes before suspending services.
Jetlink has been seeking means to settle the debt and last year it offered shares to its creditors in a recovery plan that would have seen the troubled carrier receive funding from CfC Stanbic Bank.
In a plan presented to court last June to stave off winding up, the carrier said it will offer a 51 per cent stake to be shared between the equity investor, the creditors and a firm arranging the debt.
The firm asked creditors to write off Sh360 million out of the Sh554 million total debt and convert the remaining 35 per cent debt into preference shares — which it was to buy back after five years.
CfC Bank was then to provide undisclosed working capital that was not meant to be paid to the creditors.
But the creditors questioned the writing off of the 65 per cent debt, which Jetlink argued was a lesser pain than losing the entire liability if the carrier was wound up.
Equity Bank also opposed the offer arguing that as a secured creditor it supported winding up since it is entitled to sale of the assets of Jetlink Express Limited.
