SAS receives court approval of its Chapter 11 plan, backed by Air France-KLM as new investors

SAS receives court approval of its Chapter 11 plan, backed by Air France-KLM as new investors

Time Stamp: March 20, 2024 10:59 AM
Source Node: 2520676

SAS has announced that the U.S. Bankruptcy Court for the Southern District of New York (the “Court”) has approved SAS’ Plan of Reorganization (“Chapter 11 Plan”).

The effectiveness of the Chapter 11 Plan remains subject to various conditions precedent, including approvals from various regulatory authorities and the completion of a Swedish company reorganization at the SAS AB level.

SAS currently expects to emerge from the chapter 11 process around the end of the first half of 2024, and reiterates its expectation that there will be no recovery for subordinated creditors and no value for SAS AB’s existing shareholders. All of SAS AB’s common shares and listed commercial hybrid bonds are expected to be cancelled, redeemed and delisted in connection with emergence from the restructuring proceedings. SAS’ operations and flight schedule remain unaffected by the restructuring proceedings and SAS will continue to serve its customers in the ordinary course throughout this process.

SAS initiated voluntary chapter 11 proceedings in the U.S. in order to accelerate the implementation of its comprehensive business transformation plan, SAS FORWARD. The aim of the chapter 11 process was to reach agreements with key stakeholders, restructure the company’s debt obligations, reconfigure its aircraft fleet, and emerge with a significant capital injection. 

Over the course of the chapter 11 process, SAS has successfully reconfigured its aircraft fleet and reached amended lease agreements with 15 lessors, representing 59 aircraft. Through the amended lease agreements, SAS expects to achieve the targeted annual cost savings of at least SEK 1.0 billion in reduced aircraft lease expenses and annual cash flow items relating to aircraft financing. 

SAS has also successfully concluded a competitive exit financing solicitation process, selecting Castlelake, L.P., on behalf of certain funds or affiliates (“Castlelake”), Air France-KLM S.A. (“Air France-KLM”) and Lind Invest ApS (“Lind Invest”), together with the Danish state, as the winning bidder consortium. The agreed transaction structure includes a total investment in reorganized SAS corresponding to USD 1,200 million, which includes USD 475 million in new unlisted equity and USD 725 million in secured convertible debt. 

The Chapter 11 Plan, which was approved by the Court, is supported by more than 99 percent of the creditors that voted on the Chapter 11 Plan.

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