Kenya Airways has confirmed that it will soon invite shareholders to participate in a rights issue aimed at optimizing the airline’s balance sheet as part of a “broader turnaround strategy.”
KQ said in a statement noted that its in discussion with its stakeholders including The Government of Kenya, KLM Royal Dutch Airlines and certain key creditors to “recapitalize its balance sheet and secure additional near term liquidity in order to place itself on a stronger footing and enhance its long term prospects.”
“As part of this process, its expected that the company’s shareholders will be invited to participate in a new issue of equity on a pro rata basis, although a significant dilution to current positions.”
Citi Bank analysts project a US$400 Million (KSh 41.4bn) equity rights issue, which would increase share count 5- fold at the current share price, more if discounted, heavily diluting existing shareholders.
“Our EPS estimates will depend critically on the terms of the rights issue. We expect the Government (29.8% holder) and KLM (26.7%) to take up their rights.” The Bank said in its weekly frontier market report.
Second Rights Issue
In 2012, Kenya Airways undertook a Sh20.7 billion ($250 million) rights issue raising Sh14.48 billion, representing a 70 per cent total subscription performance rate.