kQ should try to fill up the gap left by South African Airways

https://www.businessdail...552354-2mxful/index.html

The blind leading the blind
Jokes aside, KQ is in much better share than SAA considering the appointment of Joseph and Mikosz was an admission that the likes of Naikuni cannot be trusted.
MJ said during the last AGM that he is in it for the "patroitism" [he was asked to take this job and did not seek it]. He then spearheaded the search for a competent CEO.

https://www.businessdailyafrica.com/corporate/companies/Banks-get-window-to-sell-Sh6-4bn-KQ-shares/4003102-4588348-15trlao/index.html

Ten local banks have started the process of selling 663.5 million Kenya Airways shares currently worth Sh6.4 billion as part of the effort to recover funds that have been stuck in the carrier since the May 2016 loans default.

The banks, including Kenya’s largest KCB and Equity , will trade the shares over 10 years using an investment vehicle, KQ Lenders 2017 Limited.

The investment company, through which the banks own Kenya Airways, is then expected to convert their respective claims to the shares sold on the Nairobi Securities Exchange (NSE) .

Hellen Mathuka, the finance director at Kenya Airways, told the Business Daily the banks sold 143,000 shares with a current market value of Sh1.3 million between March and April, marking their first trade in the company’s shares.

“Each conversion will be effected following receipt of a conversion notice from KQ Lenders to the company,” Kenya Airways said in a statement.

This is the second time that the banks are being issued with shares after they received 2.2 billion units, equivalent to a 38.1 per cent stake, in November last year in a transaction that has left them with a Sh4.5 billion paper gain.

KQ issued the banks a 38.1 per cent stake to settle their claims of $167.2 million (Sh16.9 billion) now valued at much more going by current market valuation of Sh21.5 billion.

The latest transaction also looks profitable for the banks based on the airline’s share price of Sh9.65. If issued, the 663.5 million shares will settle loans worth $50 million (Sh5 billion), but currently have a market value of Sh6.4 billion, making for Sh1.3 billion paper gains.

The lenders are being issued the new shares at a conversion price of Sh7.6 or a 21.2 per cent discount on the market price.

The lenders, who claim a total of Sh22 billion, now have total paper gains of Sh5.8 billion they can realise by selling their holdings to other investors.

This turn in fortunes is in sharp contrast to the major paper losses that retail investors, who held onto KQ shares as it went into the restructuring exercise last year, have continued to make. Most are expected to break even when the share price hits Sh21.2.

KQ says no decision has been made with regard to selling new shares to retail investors at a discount, a plan that was meant to help mitigate their deep dilution during the airline’s debt restructuring.

While banks are sitting on major gains, selling their large stake is likely to take years and will also be influenced by the attractiveness of the airline to institutional investors.

If the lenders will not have finished selling the new 663.5 million shares within 10 years, the remaining units will automatically be converted into KQ shares. Emphasis on selling the new shares is meant to ensure that the bank’s stake does not rise above the current 38.1 per cent.

The Business Daily has learnt that Jamii Bora Bank, which was owed Sh412 million, sidestepped the airline’s debt-to-equity transactions by selling its claims to one of the other banks at a small discount in December last year.

The interest rates that the banks charged KQ varied by up to 5.5 percentage points, indicating varying risk perceptions among the lenders.

KCB’s Sh2 billion loan, for instance, had the highest interest rate of 12.5 per cent, followed by National Bank of Kenya’s Sh3.5 billion at 11.22 per cent.

Equity, Commercial Bank of Africa and Ecobank all priced their respective loans of Sh5.1 billion, Sh3 billion and Sh824 million at 10 per cent.

The Sh412 million that KQ owed Jamii Bora had an interest rate of nine per cent, the same level as NIC Bank’s Sh2 billion.

Co-op Bank priced its Sh3.3 billion loan at 8.83 per cent, followed by Diamond Trust Bank’s Sh2 billion (at 8.5 per cent) and Chase Bank’s Sh721 million (8.25 per cent).

I&M , which lent KQ Sh824 million, offered the national carrier the lowest interest rate of seven per cent.

All the loans were unsecured.

#KCAAProblems
FAA officials were in Kenya last weekend and they are not impressed with KE preparation. TSA has refused to give KQ permissions to access US airports. Senior KCAA officials messing the preparations.

Obiero is this true

We would not need diplomacy if we just did what we were supposed to!
How long has KCAA/KAA known about the FAA requirements. Let's be realistic, we (KQ) need the NYC flights more than they do! Tourism, etc...

@Obiero nilikuwambia lakini haukuniamini... Everything has been reduced significantly even GH costs in almost all out stations... Cost reduction imefika mwisho...

Kq seeks to run JKIA for a minimum 30 years as part of its turnaround efforts. Its chairman has said

Conflict of interest?

As South African airways faces problems till it has had to lease pilots and staff to other airlines