Kenya Airways says not selling its Precision stake

Kenya Airways says not selling its Precision stake

Fri Jul 16, 2010 3:18pm GMT





By Duncan Miriri
NAIROBI (Reuters) - Kenya Airways will not sell any of its shares in Precision Air when the Tanzanian carrier offers stock to the public later this year, both companies said on Friday.
With an 85 percent market share, Precision is the main airline in Tanzania, which is east Africa's second-largest economy.
It wants to raise about $28 million by selling 65 percent -- 55 million shares -- of its authorised but unissued shares.
The money will be used to fund acquisitions of new planes for route expansion, aimed at capitalising on opportunities created by enhanced regional integration and demand for freight services amid economic expansion.
Precision -- which contributed 77 million shillings to Kenya Airways' profit before tax for its year ended in March -- is 51 percent held by Tanzanian businessman Michael Shirima. Kenya Airways owns 49 percent.
"The dilution will result in Mr. Shirima's ownership declining from 51 percent to 34.6 percent, while Kenya Airways ownership will move from 49 percent to 34.2 percent," the firms said in a statement.
Precision wants to strengthen its regional position before taking on longer international routes in the next three to four years, its management said.
Titus Naikuni, chief executive of Kenya Airways, told reporters on a teleconference that three firms -- Stanbic, Ernst and Young and Kenya's NIC Capital -- have been shortlisted to offer transactional services during the IPO.
The number of passengers that both airlines feed into each other has grown in recent years, Naikuni said, adding it was imperative that Precision expand its fleet and routes.
"You can't just continue operating within Tanzania and survive," he said.
Precision said the number of passengers ferried by its planes has grown by 15 percent annually in recent years, while revenue has also grown by 10-15 percent during the period.

© Thomson Reuters 2010 All rights reserved
Kenya Airways says not selling its Precision stake | Reuters

something bad is cooking up! ina maana when the PW chairman announced about the sell, there was no communication between the parent company and the subsidiary? au ndo "Ukenya" wenyewe unaoifanya TZ kuwa na mistrust na hawa watu kwenye ku-invest pamoja? au ndo yaleyale ya EA Brew na TBL? i hope Serengeti Brew is learning sth here!

Geza Ulole said:

something bad is cooking up! ina maana when the PW chairman announced about the sell, there was no communication between the parent company and the subsidiary? au ndo "Ukenya" wenyewe unaoifanya TZ kuwa na mistrust na hawa watu kwenye ku-invest pamoja? au ndo yaleyale ya EA Brew na TBL? i hope Serengeti Brew is learning sth here!

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In this scenario can you tell which is the parent company and which is the subsidiary?.

Anyway KA have realized that they were making a big mistake by selling their stake because that could give a lot of power to the main shareholder. Its an open secret that KA don't want to allow PW to operate in the major routes like Dar-Jburg, Kinshasa, Harare etc.

I am afraid KA decision is purely a strategic move aiming to clip PW wings...:smash:

Bantugbro said:

In this scenario can you tell which is the parent company and which is the subsidiary?.

Anyway KA have realized that they were making a big mistake by selling their stake because that could give a lot of power to the main shareholder. Its an open secret that KA don't want to allow PW to operate in the major routes like Dar-Jburg, Kinshasa, Harare etc.

I am afraid KA decision is purely a strategic move aiming to clip PW wings...:smash:

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Its obvious KA is the parent co. though has a minor stake in PW!

its business people dont get too nationalistic about it. money is always the bottom line in these kinds of deals

4 starters, principle ya kwanza ni kutumruhusu NYOKA kuingia ndani ya nyumba yako....

Kwani hawawezi kununulika kwa lazima?? They are taking our local market na vilevile wanakava routes zote za kutoka na kuingia EA, waTz wanabakia mikono mitupu.

money is the bottom line. your nationalistic emotions dont matter.

nomasana said:

money is the bottom line. your nationalistic emotions dont matter.

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When we have leadership which understand the meaning of protecting the national interests thru markets and labour ndo utaelewa tafsiri sahihi ya nationalism.

nomasana said:

money is the bottom line. your nationalistic emotions dont matter.

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We gonna fix you don't worry i am sure the final sayer is KLM and not KA! i know KA wants to kind of control PW growth path dn't worry we will fix you by the way who is the majority owner? Shirima yah? :brushteeth:

KA found themselves in a Prisoner's Dilemma situation...

Wabongo wenzangu kabla mjaanza kuropoka na kuonyesha ulimbukeni someni hiyo press release vizuri halafu mtafuteni mtu anayejua masuala ya finance awaeleweshe.
Kilichofanyika ni kwamba precision wameongeza idadi ya share halafu wanaziuza za kwao na kenya wameamua kuziweka za kwao sio lazima kuuza. Na ndio maana ukiangalia asilimia ya umiliki wa kampuni zote mbili umepungua.
Hii kwa tanzania ni sula jipya hivyo litawatatiza sana lakini kwa nchi za wenzetu ni mambo ya kawaida na hutokea kila siku.

masssaiboi said:

Wabongo wenzangu kabla mjaanza kuropoka na kuonyesha ulimbukeni someni hiyo press release vizuri halafu mtafuteni mtu anayejua masuala ya finance awaeleweshe.
Kilichofanyika ni kwamba precision wameongeza idadi ya share halafu wanaziuza za kwao na kenya wameamua kuziweka za kwao sio lazima kuuza. Na ndio maana ukiangalia asilimia ya umiliki wa kampuni zote mbili umepungua.
Hii kwa tanzania ni sula jipya hivyo litawatatiza sana lakini kwa nchi za wenzetu ni mambo ya kawaida na hutokea kila siku.

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Mkuu inaelekea wewe unajua sana FINANCE ebu tueleweshe!

masssaiboi said:

Wabongo wenzangu kabla mjaanza kuropoka na kuonyesha ulimbukeni someni hiyo press release vizuri halafu mtafuteni mtu anayejua masuala ya finance awaeleweshe.
Kilichofanyika ni kwamba precision wameongeza idadi ya share halafu wanaziuza za kwao na kenya wameamua kuziweka za kwao sio lazima kuuza. Na ndio maana ukiangalia asilimia ya umiliki wa kampuni zote mbili umepungua.
Hii kwa tanzania ni sula jipya hivyo litawatatiza sana lakini kwa nchi za wenzetu ni mambo ya kawaida na hutokea kila siku.

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ni kweli KA hawauzi shares zao bali PA wanataka kuraise hela kwa ajili ya expansion
PA wakienda benki kukopa $28m interest rate itawaumiza sana na watakuwa na obligation ya kulipa deni kila mwaka na hii ita put pressure kubwa sana kwenye firm, lakini waki raise hela kwa kudilute shares hawatakuwa obliged to pay dividend kwa shareholders mpaka watakapopata faida/shaholders waamue kwenye AGM.
baada ya dilution of shares thamani ya shares zao inashuka lakini idadi ya shares zao inabakia pale pale
eg PA kuna total of 200 shares before dilution
shirima ana 120 shares which is 60% of PA total shares
na KA wana 80 shares which is 40% of PA total shares

after dilution PA wamekuwa na 300 total shares
shirima amebakia na 120 shares which is 40% of PA total shares (300)
KA wamebakia na 80 shares which is 27% of PA total shares (300)
semilong amenunua shares 100 which is 33% of PA total shares (300)

kwa hiyo hapo utaona KA hawajauza shares zao bado ni zile zile 80 lakini % ya ownership imeshuka kutokana idadi ya shares imeongezeka.

na hapo utamuona tajiri semilong amenunua shares 100, na kama kila share ina $280,000 utaona PA wamejipatia (280,000 x 100) = $28m hela ambayo walikuwa wanahiitaji.

It is a good decision for both parties involved (shirima na KA). Hamna siasa hapa this is purely a business decision.

Semilong said:

ni kweli KA hawauzi shares zao bali PA wanataka kuraise hela kwa ajili ya expansion
PA wakienda benki kukopa $28m interest rate itawaumiza sana na watakuwa na obligation ya kulipa deni kila mwaka na hii ita put pressure kubwa sana kwenye firm, lakini waki raise hela kwa kudilute shares hawatakuwa obliged to pay dividend kwa shareholders mpaka watakapopata faida/shaholders waamue kwenye AGM.
baada ya dilution of shares thamani ya shares zao inashuka lakini idadi ya shares zao inabakia pale pale
eg PA kuna total of 200 shares before dilution
shirima ana 120 shares which is 60% of PA total shares
na KA wana 80 shares which is 40% of PA total shares

after dilution PA wamekuwa na 300 total shares
shirima amebakia na 120 shares which is 40% of PA total shares (300)
KA wamebakia na 80 shares which is 27% of PA total shares (300)
semilong amenunua shares 100 which is 33% of PA total shares (300)

kwa hiyo hapo utaona KA hawajauza shares zao bado ni zile zile 80 lakini % ya ownership imeshuka kutokana idadi ya shares imeongezeka.

na hapo utamuona tajiri semilong amenunua shares 100, na kama kila share ina $280,000 utaona PA wamejipatia (280,000 x 100) = $28m hela ambayo walikuwa wanahiitaji.

It is a good decision for both parties involved (shirima na KA). Hamna siasa hapa this is purely a business decision.

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Yes we know but the first deal was better cause it would have left Shirima as main shareholder and hence more authority now there won't be a main shareholder and that's the problem! when you have many shareholders the decision is hard to go by if all are minority!

Geza Ulole said:

Yes we know but the first deal was better cause it would have left Shirima as main shareholder and hence more authority now there won't be a main shareholder and that's the problem! when you have many shareholders the decision is hard to go by if all are minority!

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shirima was the majority(main) shaholder and will remain so after the IPO. Most of big companies are owned by hudreds of thousands of shareholders. It is time for PA to expand its wings and IPO is the wright way to raise the money needed

Mkuu Semilong

I also don't have a problem with the FINANCIAL aspect of the deal, my problem is on the ECONOMIC side of it! (i.e., limiting the new entrant to the market). What KA did is purely a strategic move that will enable them to continue remote-controlling PW....

masssaiboi said:

Kilichofanyika ni kwamba precision wameongeza idadi ya share halafu wanaziuza za kwao na kenya wameamua kuziweka za kwao sio lazima kuuza. Na ndio maana ukiangalia asilimia ya umiliki wa kampuni zote mbili umepungua.

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"The dilution will result in Mr. Shirima's ownership declining from 51 percent to 34.6 percent, while Kenya Airways ownership will move from 49 percent to 34.2 percent," the firms said in a statement

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Sijui mimi ndio sijasoma vizuri hii press release au mmasaiboi?

Semilong said:

shirima was the majority(main) shaholder and will remain so after the IPO. Most of big companies are owned by hudreds of thousands of shareholders. It is time for PA to expand its wings and IPO is the wright way to raise the money needed

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in industrial organization and decision making ur tail is cut cause you are only owning 33% and not 51% since you can't ask anyone to divest if there is a difference on opinion in the running of the company! I want KQ to decrease its shares in PW! I have a feeling currently there is misunderstanding between the two partners on how to expand! KQ will hold back PW since uses PW as only a strategic feeder project! sth i think PW can fledge its wings to international markets (continental) alone while remaining in alliance with KQ for mutual benefits as they seem to be under Sky Team !