SAS Airlines Shares Crash 95% after Announcing Restructuring Deal

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In addition to dividing equity and debt among the members of the takeover consortium, SAS will leave the exchange as part of its restructuring deal.

Scandinavian Airlines (SAS) stock fell Wednesday morning after the company announced a restructuring deal. As markets opened, SAS stock fell 95% in reaction to an official release that mentioned a restructuring deal that would delist the airline from commercial exchanges.

SAS has recovered a bit of its losses at the time of writing and is trading 86% lower than its previous kr.0.21.

SAS published statement on the news, explaining some details of the restructuring deal. Tuesday’s press release notes:

“The cancellation, redemption and delisting of all ordinary shares and listed commercial hybrid bonds of SAS AB are expected to occur (currently expected to occur during the second quarter of 2024.) As a result, there will be no value to existing shareholders in SAS AB. The recovery for commercial hybrid bond holders is not expected and only modest.

The press release also includes details of the transaction structure for the restructuring deal agreed to by SAS and investors. These details include a total investment of $1.175 billion. This will be divided into $700 million in secured convertible debt and $475 million in new unlisted equity.

The winning consortium in the company’s financing solicitation process includes global investment firm Castlelake, Air France-KLM, independent investor Lind Invest and the Danish state, the release said. According to the details, Castlelake will hold about 32% equity and 55.1% convertible debt, while the Danish state gets 25.8% equity and 29.9% debt. Additionally, 19.9% equity in addition to 5% debt will go to Air France-KLM, while Lind Invest will get 10% debt and about 8.6% equity. SAS will distribute the remaining equity among certain creditors eligible for recovery.

SAS bankruptcy and restructuring

Scandinavian Airlines filed for Chapter 11 bankruptcy in the United States last July to help with debt. The company had begun negotiations with its pilots regarding wages but no progress could be made as the pilots began a strike. At the time, SAS Chairman and CEO Anko van der Werff said that the strike hastened the company’s decision to file for bankruptcy. However, the negotiator representing the pilots said the CEO’s comments blaming the strike action were “under contempt”. The negotiator said that SAS had already planned the bankruptcy filing for months.

In a court filing last year, SAS said the strike would cost the company between $10 million and $13 million a day. Experts also expressed concern that the filing would make it easier for SAS to fire employees.

The current restructuring deal is still subject to a number of conditions, including New York Bankruptcy Court approval. However, SAS intends to join the airline group SkyTeam Alliance, which includes Air France-KLM, and will leave Star Alliance, where it is a founding member.