Kenya Airways Shareholders Approve Doubling of Share Capital

Kenya Airways Ltd. (KNAL) shareholders approved a plan by sub-Saharan Africa’s third-biggest airline to double the carrier’s share capital and sell new equity to existing stockholders.

The size and timing of the rights offer will be determined by directors once regulatory approval has been granted in Kenya, Tanzania and Uganda, Chief Executive Officer Titus Naikuni told reporters at the company’s annual general meeting in Nairobi today. The company plans to raise as much as 23 billion shillings ($229 million), Business Daily, a Nairobi-based newspaper, reported on June 6, citing the Finance Ministry.

“We have a rough idea of the amount, but we are required to not disclose the amount until we get approval from the Capital Markets Authority,” Naikuni said. “The process of starting CMA approvals in the three countries starts immediately.”

Kenya Airways is raising new capital to fund its expansion in Africa. The airline plans to more than triple its aircraft fleet to 107 by 2020 from 33 now, Daily Nation reported on Oct. 13. In August, the company agreed to buy 10 aircraft from Sao Paolo, Brazil-based Embraer SA (EMBR3) and signed an option to acquire another 16 from the Brazilian manufacturer. On Oct. 12, it signed an agreement with General Electric Co. (GE) to lease two Boeing Co. 777-300 ER aircraft.

Shares in Kenya Airways fell the most in two weeks on the Nairobi Securities Exchange, declining 6.5 percent to 25 shillings by the close. The stock has dropped 46 percent so far this year, underperforming the bourse’s All Share index, which has declined 29 percent over the same period.

Kenya Airways current share capital is 5 billion shillings, according to the agenda circulated at today’s meeting. The company plans to create 1 billion new shares, it said.

Shareholders also approved a dividend of 1.50 shillings per share for the 12 months through March, Naikuni said.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net.

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net

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