Kenya Airways confirmed in a statement that the government's debt-for-equity deal will give it a 48.9 per cent stake in the airline.
Cabinet Secretary of the National Treasury Henry Rotich said in a statement released in Nairobi that the government advanced loans to Kenya Airways (KQ) amounting to approximately 240 million USA dollars.
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The Government noted that it had loaned Kenya Airways KES 4.2 billion, Dollars 197.3 million and accrued interest, as part of the deal some of the debt will be converted as part of the new 19.1 percent equity issued and the remaining portion of the loans will be settled through a zero coupon mandatory conversion loan that will lead to the issuance of new ordinary shares in the future.
"As a result of the transaction, the government shall acquire effective control of Kenya Airways as a matter of public interest", he added.
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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 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.
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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.