Kenya Airways gets firm offers for 70 per cent of rights issue
Kenya Airways has received commitments for 70 per cent of the KSh20.6 billion rights offer, Dyer and Blair Investment Bank said Thursday, quoting the airline’s management.
“According to the chief executive (Titus Naikuni), in addition to the Kenyan government and KLM, who are currently the biggest shareholders, a couple of local and institutional shareholders have committed to take up rights,” said Dyer and Blair in a research note sent out Thursday.
“This is positive news after the share market price fell below the discounted rights offer price raising fears about the rights issue success,” added Dyer. Tanzania and Ugandan capital markets regulators also approved the rights issue, easing fears that investors in the two countries would be locked out of the regions biggest ever cash call.
News of the approval came on the eve of the opening of the share sale expected today. “We have approvals for both,” said the airline’s communications manager, Chris Karanja, in an email response. The delay by Dar and Kampala in approving the offering had raised fears that shareholders of the national carrier, which is cross-listed in both countries, would be locked out.
The rights issue will be open to investors who were on KQ’s shareholders’ register on March 19.
KQ is traded on the Nairobi Securities Exchange (NSE), Uganda Securities Exchange (USE) and the Dar es Salaam Stock Exchange (DSE).
Only Kenya’s Capital Markets Authority had approved the rights issue by the March 19 date, but the delay was not expected to have a material impact on the cash call as the only requirement at the time was to buy the shares before the closure of the register.
All investors who bought shares by the end of trading on March 19 will have an opportunity to purchase 16 new shares for every five at a price of Sh14. The last day to renounce the rights is April 10, after which investors can start trading them on the three stock exchanges through to April 18.
The new shares which have been taken up by investors will start trading at the NSE, USE and DSE on June 12.
Last week, KQ’s share price slipped below the discounted rights issue price at the NSE, dropping to as low as Sh12.55 on Friday which made it more attractive for investors to buy the stock in the open market than wait for the rights issue.