Kenya Airways #ticker:KQ is set to call its shareholders for an extraordinary general meeting (EGM) to approve the recently announced restructuring plan aimed at saving the national carrier.
Parliament last month approved a government guarantee of $750 million (about Sh77.3 billion) loans owed by the ailing national carrier in a restructuring which will also see 11 banks and Treasury convert their existing debt into equity.
Mbuvi Ngunze, who now serves as KQ’s advisor after stepping down as chief executive, says the airline will later this month release a circular detailing specifics of the plan and ask shareholders to sign off on it at the EGM.
“The circular will contain a lot more details including how much liquidity we shall generate and also the specifics of what the major shareholders are contributing as well as the shareholder dilution factor,” said Mr Mbuvi.
“We are in the final stages of the commercial and regulatory discussions and I am bound on what I can say now. Once done, we shall release the circular and invite shareholders to approve the balance sheet restructuring transaction.”
The Treasury is set to convert the Sh25 billion that KQ owes it into shares, raising its ownership from 29.8 per cent to about 40 per cent. This may however change depending on the other shareholders’ contributions.
The local banks, which include big lenders Equity, KCB Group and Co-operative Bank, will also convert Sh23 billion in risky KQ debt as well as commit to offering the airline financial assistance in future.
KQ shareholders will “before the end of the year” be invited to participate in a right issue to defend their stakes from massive dilution following the debt to equity swaps.