SAS gets go-ahead from lenders for $1.6 billion equity plan

Scandinavian carrier SAS AB has secured enough backing from bondholders for a debt-to-equity plan that it says is needed to stave off bankruptcy.

At a crunch meeting in Stockholm on Wednesday, an overwhelming majority of creditors voted in favor of the proposals to convert their holdings into equity and new notes, according to Lars Lonnquist, a portfolio manager at Spiltan Fonder AB and acting chairman of a committee of SAS noteholders.

Noteholders representing 82% of hybrid notes (equivalent to 97.72% of the votes cast at the meeting) and 74% of fixed rate bonds (equivalent to 99.17%) have voted in favor of the conversions.

SAS statement, Sept. 2

The breakthrough now paves the way for a major restructuring of the company’s balance sheet that will potentially restore equity by 14.25 billion kronor ($1.6 billion).

The development marks a bright spot in what’s been a tortuous six months for SAS as it struggles to adapt to a slump in air travel caused by the pandemic.

The carrier, which has already slashed nearly half its 10,500-strong workforce and dramatically scaled back flight operations, had to revise the terms of the plan earlier in August to win round more creditors and its biggest shareholders: the Swedish and Danish governments and the Wallenberg family.

Next, SAS will need the formal approval of its shareholders at an extraordinary general meeting planned for Sept. 22.

“The recapitalization ensures SAS its financial stability through this crisis,” said Simplicity’s Henrik Tingstorp, who helped negotiate the terms of the plan.