Kenya Airways has revived plans to implement a rights issue by selling new shares to small investors at a huge discount.
The transaction was earlier estimated to raise more than Sh1.5 billion.
The
national carrier remained silent as the deadline for the cash call was
breached in March but now says it plans to proceed with the transaction.
“A
rights issue was approved to be offered to the diluted existing
shareholders. Plans for the issue are currently ongoing,” KQ, as the
airline is known by its international code, says in its latest annual
report.
The company’s retail investors were diluted 95
per cent besides their number of shares being reduced by a factor of
four as part of efforts to rescue the airline from collapse.
The
Government and a consortium of local banks also converted their
combined debt of Sh58.7 billion ($587.6 million) into equity at a price
of Sh2.13 per share.
KQ said the rights issue (alternatively dubbed the open offer)
—in which the Government and the banks are barred from participating —
would be one of the final steps in the balance sheet restructuring.
The
company said the shares will be sold to small investors at a price
below which the major shareholders converted their debt, implying an
unprecedented discount of more than 40 percent against current market
price of Sh3.50.
The open offer will be made to
existing retail investors but they will have to apply for the new shares
before they qualify to buy the stocks or acquire the rights to transfer
them to other investors.
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