Kenya Airways rights issue attains minimum sale target
Kenya Airways Boeing B777-200ER plane at their maintenance hangar in Nairobi. The KQ rights issue has achieved the minimum 70 per cent subscription threshold that was required to make the offer a success. Photo/File
The Kenya Airways rights issue has achieved the minimum 70 per cent subscription threshold that was required to make the offer a success, a source close to the transaction advisory team has told the Business Daily.
Total uptake of the rights, however, fell slightly short of full subscription in the issue that sought to raise Sh20.6 billion.
“The rights issue was successful and the board was satisfied with the result,” said the source who requested anonymity, citing confidentiality clauses that permit that only the airline’s chief executive to announce the results.
According to the original rights issue timetable, the airline was supposed to announce the performance of the offer on Wednesday, but pushed it forward by a week.
A statement by the airline said the last day of payment for irrevocable bank guarantees and letters of undertaking had been postponed by a week to June 11, indicating that the airline may have been providing time for some of the buyers of the rights to pay up for their applications.
Results from the rights issue will now be announced on June 6, the same day that the KQ is expected to release its full year results for the year ending March.
Officials from the airline including the finance director Alex Mbugua and his communications counterpart, Chris Karanja, declined to comment on the reasons for the postponement and indications by our source that investors had taken up to 77 per cent of the rights.
The postponement has now extended the deadlines for payments on promises to take up rights by major shareholders through irrevocable bank guarantees to Monday, June 11.
A clause in the information memorandum allowed investors who bought rights from the market a claim to additional shares.
It is the same clause that the World Bank’s investing arm, the International Financing Corporation, will rely on to acquire a 7.4 per cent stake in the airline (143 million shares) after buying 2.5 million rights from shareholders who forfeited their portion in the ongoing cash call.
The KQ Sh20.6 billion rights issue is the largest in the history of the local capital markets, after the KCB’s which raised Sh12.5 billion against a Sh15 billion target in 2010.
Information about the subscription rate was corroborated by another investment banker, quoting well-placed market intermediaries, who said uptake of the rights issue was ‘just above the 70 per cent target’.
