DEAL: Kenya’s largest debt-for-equity restructuring

Author: John Crabb | Published: 29 Nov 2017

Loss-making Kenya Airways has successfully restructured more than $2 billion of its debt, converting a quarter of it into newly formed equity. This is the country’s largest ever debt-for-equity swap to date.

Exceptional in terms of scale for the Kenyan market, the corporate deal saw nearly $500 million of unsecured debt converted into equity, opened $750 million of sovereign guarantees and required the largest ever scheme of arrangement in the country on record.

According to Richard Harney, partner at Bowmans in Nairobi who advised Kenya Airways, there were a number of key components that led to this particular structuring. "We didn’t want the company to end up in state ownership, and the government didn’t want to take control of the company either," he said.

The government wanted to ensure that the airline had a future because of its strategic value to the economy overall. "It was willing...