US Firm Gets Lion's Share in Kenya Airways' Fees

A United States-based advisory firm leading Kenya Airways’ (KQ) balance sheet reformation will be getting the lion’s share of the Sh1.4 billion that is set aside for payment to transaction advisers.

The firm, PJT Partners was selected as the Kenya Airways’ reorganization adviser in February 2016 and will get the biggest payout, which comprise expenses incurred during the negotiations.

A circular sent by the National Carrier to its stakeholders shows that, audit firm Deloitte will be another firm that will receiving part of this money as the KQ’s independent transaction consultant.

New-York based White & Case (KQ’s international counsel) and Coulson Harney (their local lawyers) are other companies who will take home large portion of the Sh1 billion budgeted for legal advisory work.

“The payment to transaction advisers is mainly to PJT. It also includes all costs we incurred when negotiation to change terms with our creditors and lessors,” Mbuvi Ngunze, KQ adviser and former chief executive, said in an interview.

“KQ is bearing the costs for all stakeholders involved in this transaction be it at the legal or financial advisory level.”

“Other advisers”, including Redhouse Public Relations, will pocket about Sh31 million for their services. Kestrel Capital is listed as the airline’s sponsoring broker.

Additionally, Kenya Airways’ will pay Sh 36 million to the Capital Markets Authority for approvals and listing of the new shares at the Nairobi bourse.

The airline has embarked in a reorganization plan that will see the government and 11 Kenyan Financial institutions swap loans amounting to Sh50.2 billion for equity. This will improve carrier’s liquidity by Sh37 billion for the next five years and reduce debt by Sh51 billion to Sh191 billion.

The restructuring is expected to be complete by September and will see the banks; Treasury and KLM receive new shares in exchange for their capital contributions.