Ten local banks including Equity , KCB and CBA have suffered a combined paper loss of Sh8.6 billion on their Kenya Airways’ shares as the airline’s stock plummeted in the wake of continued losses. KQ, as the national carrier is known by its international code, in 2017 issued the lenders with 2.2 billion shares to settle their loans amounting to Sh17 billion. The shares were acquired at a price of Sh7.78 each but the airline’s stock price has since dropped 51.7 percent to close at Sh3.75, resulting in the lenders’ paper loss of Sh8.6 billion. This means that banks will find it difficult to sell their holdings at a profit, with KQ’s continued losses and wipeout of shareholder funds making a recovery less likely in the medium term. The share price drop also hurts the lenders’ plans to sell an additional 663.5 million shares through the NSE over the next nine years. KQ is to issue the second batch of shares at a similar price of Sh7.78 each upon request and the lenders are to sell them immediately in the open market.
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