KQ seeks more time for talks on rights issue

Photo/FILE

The national carrier was targeting to raise Sh20.6 billion from the cash call that closed on April 27. However, it is understood that the airline’s shareholders failed to take up all their shares.

Kenya Airways has postponed announcing the outcome of its rights issue by one week, as it seeks more time to negotiate with international investors to take up the unsubscribed shares.

In a statement sent to the Nairobi Securities Exchange (NSE) on Wednesday, the airline said it will announce the results on June 6, 2012.

Sources familiar with the transaction told the Nation that the airline was yet to conclude a deal with a major international investor by Monday, forcing it to amend the timetable to allow for more time to complete the deal.

“The rights issue was under-subscribed and Kenya Airways has had to look for alternative investors to boost it,” the source who requested anonymity because he was not authorised to speak to the media said.

The airline, however, refused to comment on who the investor was. According to the original information memorandum on the rights issue, the national carrier was supposed to release the results on Wednesday.

It also postponed the date of commencement of trading of the new shares on the NSE from June 14 to 21st of this year.

Electronic crediting of CDS Accounts with the new shares and the dispatch of the share certificates for the new shares or refunds will now be completed on June 14.

Timetable

“The above changes to the timetable have been approved by the Capital Markets Authority,” read the statement in part.

The national carrier was targeting to raise Sh20.6 billion from the cash call that closed on April 27. However, it is understood that the airline’s shareholders failed to take up all their shares.

It was further complicated by the fact that its share price on the bourse remained below the rights price for a better part of the issue time, dampening demand for the rights.

For example, on the first day of the offer, the share price dropped below the discounted cash call cost of Sh14 to Sh13.95.

In the period, it dropped to as low as Sh12.55 making it more attractive for investors to buy the stock in the open market than take up the rights.