SAS gets backing to raise capital in bid to end insolvency

SAS AB won backing from a US court to secure fresh capital from investors as the Scandinavian airline seeks to emerge from its bankruptcy filing.

Stockholm-based SAS filed for Chapter 11 in July amid headwinds from the Covid-19 pandemic, high fuel prices and a pilot strike. The company has given potential equity investors a deadline of about 13 weeks to present final bids, according to a statement late on Monday.

The airline struggled last year to get the backing of its largest shareholders for the financial restructuring. While Denmark said it’s open to adding to its holding, Sweden’s government flagged it will accept a conversion of debt it is owed into equity, but won’t participate in a new capital raise. The two governments have a 21.8% stake each in SAS.

“Even though the capital injection plan now is on track — and that’s definitely good news for SAS’ survival — we still see an imminent risk that the existing shares will be worthless, or at best, almost worthless,” Jacob Pedersen, head of equity research at Sydbank, said in a note. The stock closed at 0.3 Swedish kronor (2.9 US cents) per share on Monday.

In April, Danish newspaper Berlingske reported that SAS would probably delist its shares since Apollo Global Management Inc. was planning to take a 70% stake in the airline. The Danish state would take the remaining 30%. Apollo provided the company with a $700 million debtor-in-possession term loan as part of Chapter 11.

SAS said it plans to complete bankruptcy proceedings in the US toward the end of this year. As part of that process the carrier needs to raise at least 9.5 billion Swedish kronor in new equity and convert or cut its debt pile of about 20 billion kronor.

Attracting new equity “will help drive our airline forward and facilitate our emergence from the chapter 11 process,” SAS Chief Executive Officer Anko van der Werff said.