Kenya Airways Obligated to Repay $150 Million to Government by 2025

Kenya Airways is obligated to repay $150 million to the Kenyan government by mid-2025, following a loan agreement. The Treasury settled this amount to prevent default after banks rejected earlier bond repayment offers. The settlement is now part of a supplementary budget for parliamentary consideration.

Kenya Airways, designated by the code KQ, will need to repay $150 million to the Kenyan government under a shareholder loan agreement. Treasury Cabinet Secretary John Mbadi announced in a parliamentary notice that negotiations for this agreement must be completed by mid-2025. This requirement arises after the Treasury, acting as a sovereign guarantor, settled KES19.3 billion (equivalent to $150 million) in unpaid loans of Kenya Airways with a consortium of banks by August 2024 to prevent a potential sovereign default.

The settlement was necessary to avoid a downgrade of Kenya’s credit rating. Initial repayment proposals through a 6.5-year bond were rejected by the banks, known collectively as the KQ Lenders, which hold a 38.1% stake in Kenya Airways. This consortium includes major institutions such as Equity Bank, KCB Group, and Cooperative Bank.

On January 3, the Kenyan government withdrew the required amount as an emergency fund without prior approval from parliament. Business Daily has reported that this financial settlement is now part of the supplementary budget, awaiting parliamentary review.

Ch-Aviation has sought comments from Kenya Airways regarding these developments.

In summary, Kenya Airways faces a commitment to repay $150 million to the Kenyan government through a shareholder loan agreement due by mid-2025. This comes after the government’s intervention to settle the airline’s unpaid loans to avert significant financial repercussions. The recent settlement has been included in the supplementary budget for further parliamentary assessment.

Original Source: www.ch-aviation.com