Wednesday, 17 April 2024
WorldSAS plummets on the stock market after announcing its rescue and exit...

SAS plummets on the stock market after announcing its rescue and exit from the stock market

The price of the airline Scandinavian Airlines Systems (SAS) plummeted this Wednesday after announcing the day before that a consortium that includes the Franco-Dutch airline Air France-KLM and the Danish State will invest 1,116 million euros in the reconstruction process of the company, which will no longer be listed on the stock market.

The Scandinavian airline’s shares lost 95% of their value at the opening of the session on Wednesday.

The agreement presented by SAS establishes that the Castlelake fund will control 32% of the capital; the Danish State, 25.8%; Air France-KLM, 19.9% ​​and Lind Invest (a family office founded by entrepreneur Henrik Lind), 8.6%. The remaining 13.6% will “probably” be distributed among some of the airline’s creditors

The operation includes an investment of around 1,110 million euros: around 450 million euros in new unlisted shares and 665 million euros in guaranteed convertible debt. In addition, Castlelake, which has specialized in financing the airline sector for 18 years, is going to lend 500 million euros for debt refinancing.

The SAS agreement provides for a reorganization of the Swedish-listed parent company for next year, with its delisting expected to take place in the second quarter. SAS will cease trading in 2024 on the Stockholm, Copenhagen and Oslo stock exchanges and its shares will cease to have value.

The Scandinavian airline, which will continue to operate normally, must leave Star Alliance and join the alliance founded by Air France-KLM, SkyTeam. In fact, SAS and Air France KLM will establish a commercial collaboration framework.

With this move, Air France-KLM seeks to improve its position in the Nordic countries at a time when three major aeronautical operations in southern Europe are also at stake: the takeover of ITA by Lufthansa, the acquisition of Air Europa by IAG , and the privatization process of the Portuguese company TAP, in which the large European conglomerates are interested.

Bankruptcy in 2022

Scandinavian SAS requested bankruptcy in the United States in mid-2022, a procedure for declaring bankruptcy that would allow it to reorganize to solve its economic problems, after years of fighting against high costs combined with low customer demand caused due to the pandemic, further exacerbated by a pilots’ strike.

The airline also then closed an agreement with the American fund Apollo in the form of DIP financing (debtor-in-possession) of 702 million euros. Months earlier, it had presented a plan to reduce more than 700 million euros annually in costs, convert 1.9 billion euros in debt and promissory notes into shares, in addition to raising at least 900 million euros in new equity capital.

The Danish State announced months ago that it would increase its stake in the company and forgive debt, while the Swede, which was another of the main shareholders, soon rejected the possibility of investing more money.

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