Scandinavian Airlines System (SAS) has taken a significant step in its financial restructuring journey by securing a substantial investment from a consortium of international backers. The airline announced an agreement with Castlelake, L.P., Air France-KLM, Lind Invest, and the Danish state, totaling an increased investment proposal of USD 1.2 billion.
The investment forms part of a strategy to pull SAS out of its voluntary restructuring under U.S. chapter 11 proceedings. The funds are earmarked to refinance existing loans, increase liquidity, and pave the way for SAS’s emergence from chapter 11. This new agreement replaces a previous USD 700 million debtor-in-possession (DIP) financing credit arrangement with Apollo Global Management, providing SAS with a fresh USD 500 million loan under more favorable terms.
After the restructuring, Castlelake will become the principal individual shareholder with approximately 32% of the shares and 55.2% of the convertible debt. The Danish state’s shareholding will be 25.8% in shares and 30% in convertible debt, while Air France-KLM will have a 19.9% stake and 4.8% of the convertible debt, and Lind Invest will have 8.6% of the shares and 10% of the convertible debt. The remaining 13.6% of the capital will be distributed among other creditor entities.
SAS aims to gain approval from the U.S. Bankruptcy Court for the Southern District of New York for this investment and financing plan within November 2023. However, the transaction is contingent on the Court’s confirmation of SAS’s chapter 11 plan of reorganization, expected to be finalized in early 2024.
The SAS FORWARD plan, as it is termed, anticipates modest recovery for general unsecured creditors, with no recoveries projected for subordinate unsecured creditors and existing shareholders of SAS AB. Furthermore, SAS’s common shares and listed commercial hybrid bonds are expected to be canceled and delisted in the second quarter of 2024.
Anko van der Werff, President & CEO of SAS, highlighted the deal as a key milestone that demonstrates investor confidence in the airline’s potential and commitment to retaining its industry leadership position.
In light of these developments, SAS’s restructuring plan is set to redefine its operational and financial landscape, reshaping its future engagements with investors, competitors, and customers in the airline market.
