Capital Markets

Kenya Airways shares suspension extended for nine months

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Summary

  • KQ shares were initially suspended from trading on the Nairobi Securities Exchange (NSE) in July last year.
  • Shareholders will be waiting to know the price the government will be offering to buy them out.

The Capital Markets Authority (CMA) has extended a share trading freeze on national carrier Kenya Airways #ticker:KQ for another nine months as the airline prepares for the State takeover bid.

KQ shares were initially suspended from trading on the Nairobi Securities Exchange (NSE) in July last year after MPs began to review the law that will pave the way for the government to take back full control of the airline.

“Notice is hereby given on the extension of suspension from trading of Kenya Airways Plc shares. The company is yet to finalise on its operational and corporate restructure for the eventual Government buy-out, following the publication of the National Management Aviation Bill, 2020, on 18th June 2020,” the NSE said in a statement on Wednesday.

“The extension of suspension from trading the company’s shares will remain in force for an additional nine (9) months, with effect from April 5th, 2021.”

The government owns a 48.9 per cent stake in the loss-making airline, while Air France-KLM, which has opted to exit, owns 7.8 per cent.

The airline was privatised 24 years ago but sank into debts and losses since 2014.

In July 2019, lawmakers approved Treasury's plan nationalise Kenya Airways.

KQ’s proposed corporate restructuring, including the nationalisation, could hurt the value of current and prospective investors’ holdings.

The shareholders will be waiting to know the price the government will be offering to buy them out, among other terms.

Before its suspension from trading at the NSE, the airline's share was trading at Sh3.83. The share price represents a major premium given that KQ's liabilities exceed its assets.

Kenya wants to emulate countries like Ethiopia which run air transport assets — from airports to fuelling operations —under a single company, using funds from the more profitable parts to support others.

Under the model approved by MPs, Kenya Airways will become one of four subsidiaries in an aviation holding company.

The others will be Jomo Kenyatta International Airport, an aviation college and the Kenya Airports Authority, which will operate all other airports.