WASHINGTON, D.C., Jan. 16 -- The International Finance Corporation (IFC) has announced the signing of an agreement between the Government of Kenya and KLM Royal Dutch Airlines for KLM to purchase 26 percent of the Government's shares in Kenya Airways Limited for US$26 million. A comprehensive cooperation agreement has also been signed between Kenya Airways and KLM detailing corporate governance and management and stating that KLM will deliver US$3 million in goods and services to Kenya Airways free of charge.
"The Government's ambitious privatization program of Kenya Airways, including overhaul of routes, fares, and fleet, is the first privatization of a major airline in Africa and will serve as a model for airline privatization throughout the region," said Philippe Lietard, Director of IFC's Corporate Finance Services Department. "The agreements with KLM mark the beginning of a long partnership that will help to fully integrate Kenya Airways into an international airline alliance."
The next phase of the privatization program, which will begin immediately, will be to complete the sale of the shares of Kenya Airways to the Kenyan public through an offering on the Nairobi Stock Exchange and to Kenyan and international institutional investors through private placements. A small portion of shares will be made available to Kenya Airways staff through an employee share ownership plan.
The signing took place in Nairobi, January 11, 1996. Present at the signing were the Honorable Minister of Finance, Musalila Mudavadi; the Honorable Minister of Transportation, Dalmas Otieno; the Attorney General, Amos Wako; the Permanent Secretary of the Ministry of Finance, Benjamin Kipkulei; the Acting Chairman of Kenya Airways, Isaac Omolo Okero; and the Managing Director and Chief Financial Officer of KLM Royal Dutch Airlines, RJN Abrahamsen.
IFC, which designed the privatization program, serves as the principal advisor to Kenya Airways and has assembled a Kenyan team to carry out the financial investor and domestic responsibilities. IFC, a member of the World Bank Group, is the largest multilateral source of equity and loan financing for private sector projects in developing countries.
