SAS secures Court approval for crucial investment agreement in exit financing solicitation process

SAS Scandinavian Airlines (SAS) has achieved a significant milestone in its SAS FORWARD plan as the U.S. Bankruptcy Court for the Southern District of New York grants approval for the airline’s entry into an investment agreement with the winning bidder consortium. Comprising Castlelake, Air France-KLM, Lind Invest ApS and the Danish state, the investors are set to inject a total of US$1,200 million (SEK 13.2 billion) into the reorganised SAS.

The investment agreement, previously announced on November 4, 2023, has received the green light from the Court, marking a crucial step forward for SAS. The agreed-upon transaction structure involves US$475 million (SEK 5.225 billion) in new unlisted equity and US$725 million (SEK 7.975 billion) in secured convertible debt. This development underscores the investors’ confidence in SAS and its potential to lead the airline industry for years to come.

In addition to the investment agreement, SAS secures final Court approval for a new debtor-in-possession (DIP) financing credit agreement with Castlelake, amounting to US$500 million (SEK 5.5 billion). This funding plays a vital role in refinancing SAS’ original DIP term loan, extending the financing period to facilitate a smooth transition out of Chapter 11. The Court has authorised SAS to draw the full US$500 million (SEK 5.5 billion) under the new DIP facility, further solidifying SAS’s financial position.

Anko van der Werff, President and Chief Executive Officer of SAS, expresses optimism about the approved investment agreement, stating, “This is a key milestone in our SAS FORWARD plan, showing that our new investors believe in SAS and our potential to remain at the forefront of the airline industry for years to come.”

While the exit transaction remains subject to approval in connection with SAS’ Chapter 11 Plan, the airline aims to receive Court approval in early 2024, followed by regulatory approvals and the implementation of a Swedish company reorganization at the SAS AB level, likely in 2024. The transaction’s effectiveness hinges on fulfilling specific conditions precedent, including regulatory approvals, as outlined in the press release from October 3, 2023. Notably, no approval from existing shareholders of SAS AB is anticipated for the transaction. (£1.00 = US$ 1.23 / SEK13.11 at time of publication).