National carrier Kenya Airways (KQ) has been suspended from trading its shares at the Nairobi Stock Exchange (NSE) as government takeover nears completion.
This follows the tabling of the National Aviation Management Bill 2020 in Parliament last week, officially opening the debate into the planned nationalisation of KQ.
If enacted, the bill will pave way for buyout of minority shareholders at a premium and converting shares held by banks into Treasury bonds.
Currently, the government holds a 48.9 per cent stake while 7.8 per cent is held by Air France-KLM. Minority shareholders hold 2.8 per cent of the shares currently valued at Ksh397 million. Local lenders own a stake of 38.1 per cent which they acquired in 2017 after the carrier was unable to service its loans of Ksh16.9 billion.
Read: KQ Posts Ksh12.9 Billion Loss For The Year Ending December 2019
KQ was privatised in 1996 but sank into losses in 2014.
“We are ready to complete the transactions once Parliament passes the Bill. A lot of work has been done in the background including striking an agreement with KLM and talks are advanced with banks on conversion of their equity to bonds,” Treasury Secretary Ukur Yatani.
Air-France KLM will also sell its shares to the government, after striking a deal.
David Pkosing, the chairman of parliament’s transport committee revealed that the government could use up to Ksh800 million for purchase of the minority investors.
Under the nationalisation plan, KQ will be a subsidiary of an aviation company alongside Jomo Kenyatta International Airport, an aviation college and Kenya Airports Authority, which will operate all other airports.
KQ posted a Ksh12.9 billion loss in the year ended December 2019, a 71 per cent increase in loss as compared to Ksh7.6 billion loss posted in the year ended December 2018.
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