Kenya Airways is required to repay USD 150 million to the Kenyan government via a shareholder loan agreement by mid-2025. This follows the Treasury settling substantial unpaid loans to avoid a sovereign default. The repayment terms are now under parliamentary review.
Kenya Airways is mandated to repay USD 150 million to the Kenyan government as part of a shareholder loan agreement, with final terms expected by mid-2025. Treasury Cabinet Secretary John Mbadi conveyed this requirement in a communication to the Kenyan parliament.
This repayment follows the Treasury’s role as a sovereign guarantor, which necessitated the settlement of KES 19.3 billion (USD 150 million) owed by Kenya Airways to a group of Kenyan commercial banks. The deadline for this cash settlement is set for August 2024, failing which an acceptable government security instrument must be provided to avert a potential sovereign default, which could adversely impact Kenya’s credit rating.
A consortium of banks, called the KQ Lenders, holds 38.1% of the airline and includes notable institutions like Equity Bank, KCB Group, and Cooperative Bank. They declined the Treasury’s initial repayment offer via a 6.5-year bond, prompting the need for immediate cash settlement.
On January 3, the government allocated this sum as an emergency measure without prior parliamentary authorization. According to Business Daily, this financial settlement will now appear in the supplementary budget for parliamentary review. Ch-aviation has requested a comment from Kenya Airways regarding this situation.
In summary, Kenya Airways is obligated to repay USD 150 million to the Kenyan government by mid-2025. The Treasury intervened to cover the airline’s debts to commercial banks, necessitating urgent repayment measures to maintain the nation’s credit standing. The situation is under review by parliament as part of the supplementary budget.
Original Source: www.ch-aviation.com
