The US-based advisory firm spearheading Kenya Airways’ (KQ) #ticker:KQ balance sheet restructuring will get the lion’s share of the Sh1.4 billion budgeted for payment to transaction advisers.
PJT Partners, which was appointed the national carrier’s restructuring adviser in February 2016, will receive the huge payout, which includes expenses incurred during the negotiations.
Audit firm Deloitte will also receive part of this money as the carrier’s independent transaction adviser, according to a circular that KQ has sent to its shareholders.
New-York based White & Case (KQ’s international counsel) and Coulson Harney (their local lawyers) will also pocket a large portion of the Sh1 billion set aside for legal advisory work.
This bill includes the amount each company invoiced as well as the incidental costs incurred when the legal and transaction advisers were negotiating with the airline’s lessors, the government and the Kenyan banks, all of which KQ is footing.
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“The payment to transaction advisers is mainly to PJT. It also includes all costs we incurred when negotiation to change terms with our creditors and lessors,” Mr Mbuvi Ngunze, KQ adviser and former chief executive, said in an interview.
“KQ is bearing the costs for all stakeholders involved in this transaction be it at the legal or financial advisory level.”
“Other advisers”, including Redhouse Public Relations, will pocket about Sh31 million for their services. Kestrel Capital is listed as the airline’s sponsoring broker.
KQ will pay the Capital Markets Authority Sh36 million for approvals and listing of the new shares at the Nairobi bourse.
The airline is implementing a restructuring plan that will see the government and 11 Kenyan banks swap loans totalling Sh50.2 billion for equity.
The transaction will improve is KQ’s liquidity by Sh37 billion over five years and reduce debt by Sh51 billion to Sh191 billion.
The restructuring, which is expected to be completed in September, will see the banks, Treasury and KLM receive new shares in exchange for their capital contributions.