Kenya Airways has finished restructuring $2 billion of debt, the carrier said on Wednesday, completing a key part of its turnaround plan after heavy losses.
The airline’s top shareholder, the Kenyan government, and 11 local lenders converted the bulk of their debts into shares, helping to relieve cash flow pressure.
“This has been a $2 billion restructuring,” Mbuvi Ngunze, the former Kenya Airways CEO who has been advising on the transaction since June, told Reuters.
That figure includes full commitments to financiers and operating aircraft leasing companies, which are not normally reflected in the balance sheet, he said.
As part of its assistance to the company’s revival efforts, the government also offered contingent guarantees for $750 million of the airline’s debt for 10 years.
“We will pay less now to allow us a bit of time to reshape the business to pay a bit more on the tail end,” Ngunze said, referring to the debt restructuring.
Kenya Airways, which is part owned by Air France KLM, posted the country’s biggest ever annual corporate loss of 26 billion shillings ($251 million) in its 2016 financial year, hit by a slump in travel and high financing costs after buying new Boeing planes.
The losses pushed the company into negative equity of 45 billion shillings in its financial year to the end of March.
Ngunze said he expects that to move into positive territory next year after the restructuring.
On Wednesday the Nairobi Securities Exchange suspended trading of Kenya Airways shares for two weeks to allow the listing of additional shares created in the restructuring.
The financial restructuring diluted all existing shareholders by 95 percent.
Kenya Airways is set to brief investors on the first half of its financial year on Friday.