Kenya Airways’ (KQ) plan to acquire over Sh1.5 billion through the sale of new shares to small investors at a huge discount is uncertain after the airline changed its year-end from March to December.
The company had said in a circular that guided its balance sheet restructuring that the open offer will at the conclusion of its annual general meeting for the year ended 31 March 2018 and the close of business on 31 March 2019. Now, it is unclear when the share sale will take place since the airline has not addressed the timeline issue yet.
The share sale was supposed to help retail investors to rebound from the 95 percent dilution and share reduction that took place in order to prevent the airline from collapsing. During the rescue operation, the government and a group of local banks converted their total debt of Sh58.7 billion into equity at a price of Sh2.13 per share.
The share sale offer is supposed to be the last step in the balance sheet restructuring where the government and the banks will not be involved. Rather, the shares will be sold to small investors at a price less than the aforementioned Sh2.13 per share. The price of the open offer will be set by the national carrier’s board.
In the circular, Kenya Airways said:
“It is expected that the price per open offer share will be at a discount to the post-restructuring prevailing market price of the ordinary shares (and at a discount to the value at which the government and [banks] were issued ordinary shares as part of the restructuring).”
The open offer is available to the current retail investors but they will have to apply for the new shares before they can become eligible to purchase the stocks or obtain the rights to transfer them to other investors.