SAS Scandinavian Airlines (SK, Copenhagen Kastrup) has initiated an attempt to acquire equity funding while recognizing that when it emerges from Chapter 11 bankruptcy proceedings in the United States, there will be minimal reimbursement for debts incurred to existing creditors.
As part of the Chapter 11 proceedings, the bankrupt airline announced on April 6 that it had begun “a process to solicit equity investment in the reorganized SAS,” in which “potential investors can place bids to take a lead position or be paired with other investors in acquiring equity interests” in the airline.
SAS stated that company need a new capital injection of SEK9.5 billion kronor in late May 2022. (USD911 million). The actual amount raised, though, “will rely on the competitive equity issue process as well as the company’s continuous capacity to create additional liquidity,” it says now. Flight operations would continue as usual throughout the process, according to the statement.
However, given that it faces approximately SEK20 billion (USD1.92 billion) in claims, as well as the need for significant new equity capital, SAS stated that it “expects only modest recovery for general unsecured creditors and little or no recovery for subordinated unsecured creditors” upon exiting Chapter 11. Existing shareholders – the Swedish and Danish governments each own 21.8% of SAS – will be left with nothing or very little of value because they have a lower priority of payment in respect to creditors, it claimed.
SAS also disclosed updated financial expectations. Revenues are expected to return to pre-pandemic levels in the fiscal year ending December 31, 2024, and to reach approximately SEK58 billion (USD5.56 billion) in 2026, up from the SEK49 billion (USD4.7 billion) forecasted for that year last September. According to the revised predictions, the amount of liquidity in 2023 “is likely to significantly exceed” the previously estimated 15%.
The airline announced in January that it had finalized talks with lessors, reaching agreements with 15 of them representing 59 aircraft. SAS claimed it has achieved yearly cost reductions of more than SEK1 billion (USD96 million) through revised leasing agreements, savings that will be reflected in the company’s financial results after it emerges from Chapter 11.
According to a separate legal notice filed on April 5, a hearing for the approval of the equity financing has been scheduled for the morning of April 19, and any objections to the motion must be expressed no later than 1600L (2000Z) on April 12.
