Kenya Airways must repay $150 million to the government by mid-2025 due to a shareholder loan agreement. The Treasury has paid the airlines’ overdue loans to banks to avoid a credit rating downgrade. A $150 million settlement was made without parliamentary approval and is now included in supplementary budget discussions.
Kenya Airways is obligated to repay $150 million to the Kenyan government, as per a shareholder loan agreement expected to be finalized by mid-2025, according to Treasury Cabinet Secretary John Mbadi. This amount follows the Treasury’s role as a guarantor, which necessitated settling 19.3 billion Kenyan shillings (approximately $150 million) owed by Kenya Airways to a consortium of local banks by the end of August 2024. The failure to secure this payment could lead to a sovereignty default that may adversely impact Kenya’s credit rating.
The engaged banks, collectively referred to as the KQ Lenders, include prominent institutions such as Equity Bank, KCB Group, and Cooperative Bank, and they possess a 38.1% ownership stake in the airline. Notably, these banks rejected the Treasury’s proposal for repayment via a 6.5-year bond. Following a governmental emergency withdrawal of funds on January 3 without parliamentary consent, this issue has been added to the supplementary budget for review by the parliament.
Further commentary from Kenya Airways is pending, as ch-aviation has reached out for insights regarding this financial obligation and its potential implications.
In summary, Kenya Airways is set to repay a significant amount of $150 million to the government over a specified period, following an urgent withdrawal by the Treasury. The failure to meet prior loan obligations has instigated this repayment agreement, with implications for Kenya’s national credit if default occurs. Additional financial maneuvers, including an unsuccessful bond offer, emphasize the complexities of the airline’s financial landscape.
Original Source: www.ch-aviation.com
