A financial restructuring of loss-making Kenya Airways is due to be finalised this week.
The overhaul is be made through a conversion of some debt into equity and the provision of some government guarantees.
Minority shareholder Air France-KLM will see its stake fall from 26.7% to 7.8% with the Kenyan government owning 48.9% and a group of 11 local banks 38.1%, according to the Financial Times.
All other shareholders, which previously owned 43.5% of the carrier, will be diluted down to 5.2%, according to Kenya’s finance minister Henry Rotich.
But he insisted the deal was not a bailout.
“The government expects a return on its investment once the company returns to profitability,” Rotich said.
The government also expects to retain its stake for up to a decade, he added.
The government will convert some $182 million of its $267 million of debt and accrued interest into 19.1% of the airline, which is suffering from negative equity and is $2 billion in debt.
Its stake in Kenya Airways before the restructuring was 29.8%.
Rotich said the government did not want its stake to exceed 50% but that a deal was crucial to ensure the carrier’s survival.
“Kenya Airways is a strategic national asset and plays an important role in the economy,” he said. “Letting [it] go was not an option.”
Neither the government nor the banks intend to make a takeover offer for Kenya Airways, they said in announcement in local media.
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