Jetlink seeks to fly out of debts

Troubled airline Jetlink Express is pursuing a restructuring deal that could lift it off the ground and provide relief to hundreds of its former employees.

Aviation fuel supplier Finejet had moved to court in March to wind up the grounded Jetlink on account of a Sh14 million ($163,700 million) debt.

The suit attracted at least five other companies, including Equity Bank and the Kenya Civil Aviation Authority, that also filed claims of various amounts against the airline.

However, Jetlink and a majority of the creditors are now pursuing a restructuring plan aimed at putting its airplanes back in the skies and settle its debts.

“If the debt restructuring proposal is concluded and the capital injection of funds for working capital by the financiers is availed, the company will resume its operations,” Jetlink managing director Elkana Aluvale says in an affidavit.

Jetlink owes Sh21 million locally and Sh535.01 million in foreign debts ($5.5 million and Euro 600,000 separately). The firm’s woes began last year when it suspended operations after a Sh166 million ($2 million) cash crisis emanating from its South Sudan business.

Jobs of 350 Kenyan employees now hang in the balance, predicated upon the restructuring negotiations.

Minutes covering four meetings between Jetlink and its creditors indicate that Finejet, the company that filed the wind-up suit, did not participate.

Restructuring plan

Mr Aluvale yesterday remained positive that the absence of Finejet would not affect the restructuring plan. He said the fuel supplier has rejected calls to join the negotiations and has opted to pursue the case even when other creditors have agreed to the restructuring plan.

CFC Stanbic Bank is expected to provide the working capital for resumption of services while Xplico Insurance has been engaged guarantee the creditors in case the restructuring plan fails.

The High Court was informed of the negotiations on Friday, as the airline’s lawyers sought an adjournment of the winding up case to allow them more time to finalize the restructuring agreement.

Justice Jonathan Havelock said that the court supported the move. Jetlink’s creditors are considering two restructuring options. In the first, debt amounts to which the creditors are entitled could be reduced by 65 per cent.

Preference shares

The remaining 35 per cent would be swapped with redeemable preference shares in favour of the creditors, making them shareholders of the airline.The airline will then buy back the preference shares from the creditors over a five year period.

The other option is the formation of a new company to be called Jetlink Investments Ltd. The debts would be converted into a common stock, and the creditors would be allocated 51 per cent of the firm’s shares.

They will also retain five out of seven positions in the new company’s board of directors.