Kenya Airways #ticker:KQ is moving closer to nationalisation as the carrier together with the National Treasury are conducting valuation of the individual and small shareholders to ascertain their value.
The airline opened talks with the minority shareholders as they seek to get them out of the shareholding ahead of the nationalisation of the carrier.
The shareholders who are in talks with the KQ include KLM and banks, who are discussing buyout plan of their stakes as the nationalisation process takes shape following the passage of the Bill that legally underpins the proposal.
The airline’s board chair Michael Joseph said the talks on reverting of shares to government has already started and discussions have been ongoing with all the involved parties.
“We are having discussion with minority shareholders that include banks to determine how to take them out of current shareholding,” he said.
Mr Joseph, who spoke during the company’s investors briefing, said they are also in talks with individual shareholders and they are at the moment in the process of valuing the shares, pointing out that they will be bought out once the valuation has been completed.
“Share prices are not true reflection of the value. We are at the moment doing the valuation and they (shareholders) will receive value for their shares,” he said.
He said the relevant Bill is currently at the committee stage in parliament and after it has been passed it will be taken to the President for endorsement, establishing an aviation holding company that will bring together all the aviation agencies at the airport.
Air-France KLM, which had the option of selling its stake to the government and staying on as a technical partner for the airline, has opted to exit.
Kenya has reached an agreement with Air-France KLM on the offer price, which will be a premium on the carrier’s prevailing trading price at the Nairobi bourse. The same KLM offer price will be used to acquire the minority shareholders, who hold about 2.8 percent of the shares currently valued at Sh397 million.
The state said in June that they had come up with a formula that will be used in buying out the minority shareholders.
The government at the moment has a 50 percent stake on the national carrier, with 38 percent belonging to the banks after they converted their loans into shares, seven percent owned by the Dutch based airline KLM with the remaining shares owned by individual shareholders.
In 2017, the State converted Sh16.8 billion worth of loans it had provided to the company into shares as part of the airline’s debt restructuring. The government also holds another Sh7.7 billion worth of convertible debt.
Mr Joseph said the nationalisation process is ongoing and it is currently at the committee stage in parliament and it is expected to take effect once it has been gazetted.
Under the plan, the government is expected to buy out the remaining holders of 51.1 per cent of the shares and form Aviation Holding Company to run the national carrier and Kenya Airports Authority (KAA), which manages airports in the country.
KQ is seeking a new lease of life after the parliament shot down its plans to take the management of the KAA.
The airline has been making losses for years with the carrier plunging into deeper financial woes in its half year with Sh14 billion loss from Sh8 billion in corresponding period last year.
The loss was largely due to the grounding of services in March this year occasioned by Covid-19 pandemic that saw countries worldwide close their airspace for passenger flights.