Kenya Airways’ #ticker:KQ plan to raise more than Sh1.5 billion by selling new shares to small investors at a huge discount faces uncertainty after the airline blurred the timing of the proposed transaction.
The company says in a circular that guided its balance sheet restructuring that the open offer will expire on the later of the conclusion of its annual general meeting for the year ended March 31, 2018 and the close of business on March 31, 2019.
Kenya Airways subsequently changed its year-end from March to December, muddying the timing of the share sale that was meant to help retail investors recover from a major dilution.
KQ, as the carrier is known by its international code, did not respond to our queries on the timetable of the open offer. The company’s retail investors were diluted 95 per cent besides their number of shares being reduced by a factor of four as part of efforts to rescue the airline from collapse.
The government and a consortium of local banks also converted their combined debt of Sh58.7 billion ($587.6 million) into equity at a price of Sh2.13 per share.
KQ said the offer –in which the government and the banks will not participate— is one of the final steps in the balance sheet restructuring.
The company said the shares will be sold to the small investors at a price below which the major shareholders converted their debt, implying an unprecedented discount of more than 80 per cent against current market price of Sh12.9.
The airline’s board of directors has the mandate to set the price of the open offer, among other terms.
“It is expected that the price per open offer share will be at a discount to the post-restructuring prevailing market price of the ordinary shares (and at a discount to the value at which the government and (banks) were issued ordinary shares as part of the restructuring),” KQ says in the circular.
The open offer will be made to existing retail investors, but who will have to apply for the new shares before they qualify to buy the stocks or acquire the rights to transfer them to other investors.