SAS Airlines Shares Crash 95% after Announcing Restructuring Deal

SAS Airlines Shares Crash 95% after Announcing Restructuring Deal

UTC by Tolu Ajiboye · 3 min read
SAS Airlines Shares Crash 95% after Announcing Restructuring Deal
Photo: Depositphotos

SAS will leave exchanges as part of its restructuring deal, in addition to splitting equity and debt among members of a takeover consortium.

Scandinavian Airlines (SAS) stock fell on Wednesday morning after the company announced a restructuring deal. As markets opened, SAS stock crashed 95% in reaction to an official release stating a restructuring deal that will take the airline off commercial exchanges.

SAS has regained a tiny bit of its losses as of writing time and is trading over 86% less than its previous kr.0.21 close.

SAS published a statement on the news, explaining a few details of the restructuring deal. The Tuesday press release notes:

“All of SAS AB’s common shares and listed commercial hybrid bonds are expected to be canceled, redeemed and delisted (currently expected to occur during the second quarter of 2024.) Consequently, no value is expected for existing shareholders in SAS AB and only a modest recovery is expected for the holders of commercial hybrid bonds.”

The press release also includes details of a transaction structure for the restructuring deal as agreed by SAS and investors. These details include a total investment worth $1.175 billion. This would be split as $700 million in secured convertible debt and $475 million in new unlisted equity.

The release states that the winning consortium in the company’s financing solicitation process comprises global investment firm Castlelake, Air France-KLM, independent investor Lind Invest, and the Danish State. According to the details, Castlelake will hold about 32% of equity and 55.1% of the convertible debt, while the Danish State gets 25.8% equity and 29.9% debt. Furthermore, 19.9% of the equity will go to Air France-KLM in addition to 5% of the debt, while Lind Invest will get 10% of the debt and about 8.6% of the equity. SAS will distribute the rest of the equity among some creditors eligible for recovery.

SAS Bankruptcy and Restructuring

Scandinavian Airlines filed for Chapter 11 bankruptcy in the United States last July to help with debt. The company had begun talks with its pilots about wages but could not make any headway as the pilots started a strike. At the time, SAS President and Chief Executive Officer Anko van der Werff said the strike sped up the company’s decision to file for bankruptcy. However, the negotiator representing the pilots stated that the CEO’s comment blaming the strike action was “beneath contempt.” The negotiator had said SAS had already planned a bankruptcy filing for months.

In a court filing last year, SAS had stated that the strike would cost the company between $10 million and $13 million every day. Experts had also expressed concerns that the filing would make it easy for SAS to fire staff.

The current restructuring deal is still subject to multiple conditions, including the approval of the New York Bankruptcy Court. However, SAS intends to join airline group Sky Team Alliance, which includes Air France-KLM, and leave Star Alliance, where it is a founding member.

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