Kenya Airways to Repay $150 Million to Treasury by Mid-2025
Kenya Airways will repay $150 million to the Kenyan government by mid-2025 as part of a shareholder loan agreement. This follows the government’s need to settle unpaid loans to banks to avert a sovereign default. The repayment terms will soon be negotiated and included in the parliamentary budget review.
Kenya Airways is set to repay $150 million to the Kenyan government under a shareholder loan agreement, with negotiations expected to be finalized by mid-2025. This disclosure was made by Treasury Cabinet Secretary John Mbadi during a notice to the Kenyan Parliament. The arrangement follows the government’s need to cover Kenya Airways’ unpaid loans to a consortium of Kenyan banks due to the ongoing financial strain.
As reported by Business Daily, the Treasury had to pay KES19.3 billion (approximately $150 million) to a group of commercial banks by the end of August 2024. Alternatively, the government would need to secure an acceptable instrument to prevent a sovereign default, which would adversely affect Kenya’s credit rating. The banks involved, known collectively as the KQ Lenders, own 38.1% of Kenya Airways and include notable institutions such as Equity Bank, KCB Group, and Cooperative Bank.
Furthermore, the Treasury’s initial proposal to settle the debt via a 6.5-year bond was rejected by these banks. Consequently, on January 3, the government took the step of withdrawing the necessary funds as an emergency measure without prior parliamentary approval. This settlement amount has now been incorporated into the supplementary budget for parliamentary review.
In conclusion, Kenya Airways is required to repay $150 million to the Kenyan government due to a shareholder loan agreement, with terms set to be finalized by mid-2025. Following the government’s emergency withdrawal to cover the airline’s unpaid debts, the matter has been included in the supplementary budget for legislative consideration, highlighting the ongoing financial challenges facing the national airline.
Original Source: www.ch-aviation.com
