Kenya Airways will repay USD150 million to the Kenyan government by mid-2025 due to a shareholder loan agreement. The Treasury had to settle this amount after banks rejected bond repayments, complicating the airline’s financial situation. The matter is currently included in the supplementary budget pending parliamentary review.
Kenya Airways is set to repay a total of USD150 million to the Kenyan government as part of a shareholder loan agreement. Treasury Cabinet Secretary John Mbadi announced that the details of this arrangement are to be finalized by mid-2025, as communicated to the Kenyan parliament.
This development follows the Treasury’s role as a sovereign guarantor, wherein it had to settle KES19.3 billion (USD150 million) in unpaid loans owed by Kenya Airways to a consortium of Kenyan commercial banks by the end of August 2024. Failure to do so could have resulted in a sovereign default, adversely affecting Kenya’s credit rating.
The consortium of banks, which includes Equity Bank, KCB Group, and Cooperative Bank, rejected a proposal from the Treasury to repay this debt via a 6.5-year bond. Notably, these banks hold a 38.1% stake in Kenya Airways. On January 3, the government withdrew the funds as an emergency measure without prior parliamentary approval, but this settlement has since been incorporated into the supplementary budget for review by parliament.
Further communications have been initiated with Kenya Airways for additional comments regarding this financial situation.
In summary, Kenya Airways is under obligation to repay USD150 million to the government by mid-2025, following the Treasury’s settlement of unpaid loans. This action highlights the critical role of the government in safeguarding the airline’s financial obligations and the potential implications for the national credit rating. The situation underscores the importance of parliamentary oversight in financial matters.
Original Source: www.ch-aviation.com
