SAS revises recapitalization plan
SAS AB has updated its recapitalization plan to address the effects of the COVID-19 pandemic. The plan includes revised conversion terms for debt instruments and a modified timeline.
Scandinavian Airlines (SAS) announced on August 14, 2020, a revised recapitalization plan aimed at navigating the financial challenges posed by the COVID-19 pandemic. The airline had initially announced its recapitalization strategy on June 30, 2020.
Following an agreement in principle reached on August 7, 2020, with holders of hybrid notes and bonds, SAS's Board of Directors approved amendments. These include altered conversion terms for existing hybrid notes totaling MSEK 1,500 and bonds worth MSEK 2,250. Bondholders will now have the option to convert their holdings into new commercial hybrid notes or common shares.
The revised plan also entails an increased interest rate by 90 basis points per annum for new MSEK 6,000 state hybrid notes intended for emission to the major shareholders, the governments of Sweden and Denmark. Other components of the original plan, such as a rights issue and directed share issue to these major shareholders, remain unchanged. However, the timeline for completing the recapitalization has been extended.
SAS stated that without the implementation of this revised plan, the company would be unable to remedy liquidity shortages and negative equity caused by the pandemic, potentially leading to bankruptcy. The company's board has strongly encouraged bond, hybrid, and shareholders to vote in favor of the proposals at upcoming meetings, emphasizing that no other alternatives are available. The revised plan requires approval at an extraordinary general meeting scheduled for around September 22, 2020.