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.