Kenya offers guarantees to national airline

The Kenyan government will offer Kenya Airways’ creditors $750m in guarantees to help the heavily-indebted and lossmaking airline raise additional capital to continue its recovery, official documents have revealed. The US$238m the government has lent the company since 2014 will be converted into equity, government officials said. The guarantees, which are subject to parliamentary approval, will cover $525m owed to the US ExIm Bank and $225m borrowed from local lenders, according to a cabinet document seen by the Financial Times.  The Kenyan government owns 29.8% of the airline. It is not clear how many shares its debt will be converted into, when the conversion will happen or how much other shareholders will be diluted. Air France-KLM owns 26.7% and the International Finance Corporation, the investment arm of the World Bank, 9.6%.  Henry Rotich, finance minister, said in a statement released by the airline that the cabinet made the decision because it wanted “to support Kenya Airways as it is a valuable national strategic asset”.  “We are keen to secure the airline’s future and ensure it has a healthy liquidity profile and remains operational,” he said, adding that the proposed restructuring “will generate concessions from all stakeholders”.  Aly-Khan Satchu, a Nairobi-based investment adviser, said the government guarantee “is a big statement because they’ve been reluctant to give these guarantees in recent years”. <br/>