The Kenyan government has agreed to convert some of Kenya Airways' debt into equity, which means it will own a almost 50 per cent stake in the troubled carrier, according to state media.
The airline is undergoing a $700 million financial restructuring aimed at reducing its debts and returning to profitability after posting heavy losses, including Kenya's biggest annual corporate loss of 26 billion shillings ($251 million) in the financial year 2016. The state has given the carrier a loan in shilling and USA dollars totalling US$238.1 million and previously held a 29.8 per cent stake.
Kenya plans to increase its stake in the national airline from 29.8 percent to 48.9 percent as part of efforts to revive the loss-making firm, a senior government official said on Monday.
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Local banks which lent the airline a total of Dollars 217.2 million will see the issuance of 2.2 billion ordinary shares equivalent to a 38.1 percent ownership through a special goal vehicle set up by the banks called KQ Lenders Company.
The government and major KQ lenders agreed to convert the loans the airline has taken from them and so far is failing to pay back into equity.
Last month, the company said it was in talks with the government as it sought help in coping with competition from foreign carriers operating flights to its Nairobi hub.
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