According to analysts, the recent Kenya Airways rights issue was severely under-subscribed with many small shareholders of the company not taking up their rights shares. Numbers reported by the Daily Nation newspaper indicate that the total subscription level did not exceed 77 percent.
The paper goes on to say that the stake held by Kenyans and institutions was formerly at 39 percent but has now dropped to 23.8 percent following the under-subscription. The Government of Kenya however had applied to take up its rights in full and its stake is now supposed to rise from 23 percent to approximately 27.9 percent.
National Carrier
If these figures stick, KQ will maintain its tag as “national carrier” with the combined shareholding of the government and local citizens and institutions exceeding the necessary 51 percent shareholding (to be called a national carrier). To add a twist to the saga, according to the Capital Markets Authority regulations, the government cannot increase its holdings to more than 25 percent without declaring a takeover. This adds some complexity to the whole issue with the government supposed to get a 27.9 percent but the regulations not allowing more than 25 percent without declaring a takeover.
Takeover
A takeover declaration, for whatever reason, may not send the best signal to KQ shareholders and other investors in the market in general and the government may want to explore other options such as convincing the CMA to relax its rules concerning the takeover declaration. The official announcement of the rights issue is expected tomorrow and we will have verified facts and figures on the performance of the rights issue.
{The figures given above are not verified figures and as such should not be considered that way}