SAS has reached a major milestone in its ongoing chapter 11 process in theU.S. and has selectedCastlelake, L.P. , on behalf of certain funds or affiliates ("Castlelake "),Air France-KLM S.A. ("Air France-KLM ") andLind Invest ApS ("Lind Invest"), together with the Danish state (collectively, the "Investors") as the winning bidder consortium in its exit financing solicitation process. The agreed transaction structure includes a total investment in the reorganizedSAS corresponding toUSD 1,175 million (SEK 12.925 billion [1]), includingUSD 475 million (SEK 5.225 billion ) in new unlisted equity andUSD 700 million (SEK 7.7 billion) in secured convertible debt, as well as a USD 500 million (SEK 5.5 billion ) refinancing byCastlelake ofSAS ' current debtor-in-possession ("DIP") term loan. As part of the transaction,SAS is intended to eventually join theSkyTeam Alliance ("SkyTeam"), of whichAir France-KLM is a founding member, and exit theStar Alliance , subject to any relevant approvals and emergence from the chapter 11 process. The details and final documentation for the agreed transaction structure remain to be finalized between the Investors andSAS . The transaction will also need to be approved as part ofSAS ' chapter 11 plan of reorganization (the "Chapter 11 Plan"). The confirmation and effectiveness of the Chapter 11 Plan remain subject to various conditions precedent, including approval by theU.S. Bankruptcy Court for the Southern District of New York (the "U.S. Court"), which will require the solicitation of votes on the Chapter 11 Plan from certain creditors, approvals from various regulatory authorities and the completion of a Swedish company reorganization (as described below). No approval is expected to be required from the existing shareholders ofSAS AB for the transaction.SAS will continue to operate and serve its customers as usual throughout the implementation of the transaction, which is likely to entail a filing bySAS AB (i.e., the listed parent company for theSAS group) for a company reorganization inSweden (Sw. företagsrekonstruktion) (the "Swedish Reorganization") in 2024. As a result of that process, all ofSAS AB's common shares and listed commercial hybrid bonds are expected to be cancelled, redeemed and delisted (currently expected to occur during the second quarter of 2024). Consequently, no value is expected for existing shareholders inSAS AB and only a modest recovery is expected for the holders of commercial hybrid bonds. In parallel to the transaction, and further to its joining of SkyTeam,SAS AB will seek to establish a commercial cooperation withAir France-KLM and its airlines (subject to customary approvals), to the benefit of Scandinavian customers through increased connectivity.Carsten Dilling , Chairman of the Board ofSAS , says: "This is a significant achievement of our transformation plan,SAS FORWARD. We have carried out a broad, competitive and thoroughly evaluated equity solicitation process, and we are confident that the selected bid is the most favourable forSAS , its creditors and other stakeholders. Securing new capital is one of the key pillars in theSAS FORWARD plan and will provide a strong financial foundation to help drive our airline forward and facilitate our emergence from theU.S. chapter 11 process. While there is still work remaining, I am pleased to see the great progress we are making to be a competitive and financially strong company." Anko van der Werff, President & Chief Executive Officer ofSAS , says: "The agreed investment is a key milestone in ourSAS FORWARD plan, and it shows that our new investors believe inSAS and our potential to remain at the forefront of the airline industry for years to come. Further, our move towards a partnership with SkyTeam determines a clear path forward for the company. Through the completion of this process and the opportunities presented by being part of SkyTeam, we will be able to further enhanceSAS ' offerings for the benefit of our colleagues, customers and communities. We look forward to building a bright future forSAS together."Joe McConnell , Partner and Deputy Co-Chief Investment Officer ofCastlelake , says: "Castlelake is pleased to lead this investment inSAS ' future through a tailored financing solution that demonstrates our 18 years of aviation experience, creative structuring capabilities and relationship-focused approach. With an iconic brand, great people and strong service offerings, we believeSAS is well -positioned as Scandinavia's leading airline. We look forward to being part ofSAS ' continued journey."Benjamin Smith , CEO ofAir France-KLM , says: "This is an important day forSAS and forAir France-KLM . We are pleased to be part of the winning bidding consortium selected by the board ofSAS .Air France -KLM looks forward to establishing strong commercial ties withSAS . With its well-established position in Scandinavia and strong brand,SAS offers tremendous potential toAir France-KLM . This cooperation will allowAir France-KLM to enhance its position in the Nordics and improve connectivity for Scandinavian and European travellers. We look forward to being a part of this new chapter inSAS ' history and thank the board ofSAS for their trust."Henrik Lind , CEO of Lind Invest, says: "SAS is making substantial progress with its transformation planSAS FORWARD and we see great opportunities for the company ahead. We are proud to be part of this new much needed transformative step forSAS , and look forward to support the company as owners going forward." Overview of key terms and conditionality of the transaction The transaction structure agreed bySAS and the Investors is expected to include, among other things and subject to final documentation, the following key features: · a total investment in the reorganizedSAS corresponding toUSD 1,175 million (SEK 12.925 billion ), includingUSD 475 million (SEK 5.225 billion ) in new unlisted equity andUSD 700 million (SEK 7.7 billion ) in secured convertible debt, which would result in a shareholder structure post-reorganization (based on total equity, but pre-conversion of the convertible debt) where: (i)Castlelake holds approximately 32.0% of the equity and 55.1% of the convertible debt; (ii) the Danish State holds approximately 25.8% of the equity and 29.9% of the convertible debt; (iii)Air France-KLM holds approximately 19.9% of the equity and 5.0% of the convertible debt; (iv) Lind Invest holds approximately 8.6% of the equity and 10.0% of the convertible debt; and (v) the remaining approximately 13.6% of the equity is most likely to be distributed among and held by certain creditors who may receive recovery in equity.[2] The convertible debt is expected to be secured and have a maturity of seven years and an interest of SOFR[3] + 650bps per year, and may be converted into common shares based upon certain terms and valuation metrics. The convertible debt is further expected to be subject to an upfront fee corresponding to 1.5% of the committed amount, payable to the Investors by the reorganizedSAS ; · refinancing of the existing DIP term loan with a newUSD 500 million (SEK 5.5 billion ) DIP loan provided byCastlelake , to be repaid in connection with emergence from the chapter 11 process; · implementation of the Chapter 11 Plan inSweden by way ofSAS AB (i.e., the listed parent company for theSAS group) filing for a Swedish Reorganization in 2024, but not in respect of any other entity in theSAS group or the airline as such; and · cancellation and redemption of all ofSAS AB's common shares (for zero consideration) and all listed commercial hybrid bonds (expected to receive only a modest recovery) and, consequently, a delisting from Nasdaq Stockholm, NasdaqCopenhagen and Oslo Børs following completion of the Swedish Reorganization (currently expected to occur during the second quarter of 2024). Following an agreement with the Investors on the final terms and conditions of the investment, including the future governance of the reorganizedSAS , the confirmation and effectiveness of the Chapter 11 Plan will remain subject to various conditions precedent, including obtaining certain approvals, including from theU.S. Court, antitrust authorities, civil aviation authorities, theEuropean Commission , andEFTA Surveillance Authority (as applicable),SAS leavingStar Alliance , the implementation of a Swedish Reorganization at theSAS AB level, and other customary conditions. There currently remains uncertainty in respect of satisfying such conditions and obtaining required approvals, as well as the terms and timing thereof (particularly in respect of the approval from theEuropean Commission related to State aid and the participation byDenmark andSweden in the restructuring process). The Investors' winning bid, which is pursuant to theU.S. Court approved equity raise process, is affirmatively supported by theOfficial Committee of Unsecured Creditors and indicates thatUSD 325 million (SEK 3.575 billion ) is expected to be allocated to general unsecured creditors in cash and equity. Based on initial estimates, which remain subject to material change, this indicates a recovery for the majority of the general unsecured creditors of approximately 5-20% of the nominal value of such claims; however, such recoveries will vary further depending upon (i) which entities such claims are asserted against, (ii) if such claims have any guarantee claims, and (iii) which entities the guarantee claims are to be asserted against. Additional details related to the transaction structure and expected recoveries for creditors, including to which extent (if any) the creditors will receive cash or equity consideration, will be announced separately and be included in the disclosure statement and the Chapter 11 Plan to be filed with theU.S. Court after finalization of the negotiations related to the transaction. Negotiations with stakeholders will continue until emergence from the chapter 11 process. In line with what has been previously communicated,SAS currently expects that there will be no recovery for subordinated unsecured creditors and no value forSAS AB's existing shareholders.SAS currently aims to receive approval from the U.S. Court of the Chapter 11 Plan in early 2024, to be followed by obtaining regulatory approvals and the implementation of a Swedish Reorganization at theSAS AB level during 2024. The effectiveness of the transaction will occur upon the fulfilment of the conditions precedent, including receipt of all relevant regulatory approvals. Effects onSAS AB's listed securities Holders ofSAS AB's listed commercial hybrid bonds are expected to receive only a modest recovery on account of such claims (as described above) and the instruments are expected to be delisted from Nasdaq Stockholm following the Swedish Reorganization. The expected dates for payment and last day of trading in the commercial hybrid bonds will be announced in due time before approval of the Swedish plan of reorganization (the "Swedish Plan") (currently expected to occur during the second quarter of 2024). Until then,SAS ' expectation is that the trading in the commercial hybrid bonds will continue in the ordinary course. Holders of common shares inSAS AB are expected to receive no value and, by operation of the Swedish Reorganization, all common shares are expected to be cancelled for zero consideration and delisted from Nasdaq Stockholm, NasdaqCopenhagen and Oslo Børs. This is intended to be carried out through a reduction ofSAS AB's share capital, combined with a redemption of all common shares inSAS AB as set out in a Swedish Plan to be approved by theDistrict Court of Stockholm (currently expected to occur during the second quarter of 2024), and will accordingly not require any approval from the general meeting of shareholders inSAS AB . The expected last day of trading in the common shares ofSAS AB on the respective exchanges, as well as the expected date of completion of the redemption, will be announced in due time before approval of the Swedish Plan. Until then,SAS ' expectation is that trading in the common shares will continue in the ordinary course. Continued operationsSAS will continue to operate the business and serve its customers as usual and with due care throughout this process.SAS ' operations and services, customer services, corporate benefits, etc., will all continue in the ordinary course. AboutCastlelake Castlelake is a global alternative investment manager focused on investments in aviation, specialty finance and real assets across the risk spectrum, from value -oriented to income and investment grade credit. Founded in 2005,Castlelake manages approximately$22 billion of assets. TheCastlelake team comprises more than 200 experienced professionals, including 90 investment professionals, across seven offices inNorth America ,Europe andAsia . For more information, please visit https://www.castlelake.com/. AboutAir France-KLM Group A global player with a strong European base, theAir France-KLM Group's main areas of business are passenger transport, cargo transport and aeronautical maintenance.Air France-KLM is a leading airline Group in terms of international traffic on departure fromEurope . It offers its customers access to a worldwide network, covering over 300 destinations thanks to Air France,KLM Royal Dutch Airlines andTransavia , mainly from its hubs atParis -Charles de Gaulle and Amsterdam-Schiphol. Its Flying Blue frequent flyer programme is one of the leaders inEurope with over 20 million members.Air France-KLM is a member of the SkyTeam, the alliance dedicated to providing passengers with a more seamless travel experience at every step of their journey 19 member airlines working together across an extensive global network. About Lind Invest Lind Invest is a single family office and acts as an independent long-term investor and business owner. Lind Invest was founded byHenrik Lind in 2002, and the company today has$1,2 billion of equity. Part of the investment strategy is to be opportunistic with a strong ability to execute as an active owner and add value in company transformations and in complex company matters. Information Regarding Chapter 11 Cases Additional information regardingSAS ' voluntary chapter 11 cases is available onSAS ' dedicated restructuring website, https://sasgroup.net/transformation.U.S. Court filings and other documents related to the chapter 11 cases in theU.S. are available on a separate website administered bySAS ' claims agent,Kroll Restructuring Administration LLC , at https://cases.ra.kroll.com/SAS . Information is also available by calling (844) 242-7491 (U.S. /Canada ) or +1 (347) 338-6450 (International), as well as by email at SASInfo@ra.kroll.com. AdvisorsWeil, Gotshal & Manges LLP is serving as global legal counsel and Mannheimer Swartling Advokatbyrå AB is serving as Swedish legal counsel toSAS .Seabury Securities LLC andSkandinaviska Enskilda Banken AB are serving as investment bankers, andSeabury Securities LLC is also serving as restructuring advisor toSAS . Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel,Rothschild & Co is serving as investment banker, andSkyWorks Holdings LLC is serving as aviation consultants toCastlelake .White & Case LLP is serving as legal counsel toAir France-KLM . Bech-Bruun is serving as legal counsel to Lind Invest. For further information, please contact:SAS Press office, +46 8 797 29 44 Investor relations, +46 70 997 7070 This is information thatSAS AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency ofErno Hildén , at 17:55 CEST onOctober 3, 2023 .SAS , Scandinavia's leading airline, with main hubs inCopenhagen ,Oslo andStockholm , flies to destinations inEurope, USA andAsia . Spurred by a Scandinavian heritage and sustainable values,SAS aims to be the driving force in sustainable aviation and in the transition toward net zero emissions. We are continuously reducing our carbon emissions through using more sustainable aviation fuel, investing in new fuel-efficient aircraft and technology innovation together with partners - thereby contributing towards the industry target of net zero CO2 emissions by 2050. In addition to flight operations,SAS offers ground handling services, technical maintenance and air cargo services. Learn more at https://www.sasgroup.net ADDITIONAL INFORMATION The press release does not constitute an offer to sell or issue, or the solicitation of an offer to buy or acquire, or subscribe for, shares or any other financial instruments inSAS . This press release contains forward-looking statements that reflectSAS ' current view of future events as well as financial and operational development. These statements may include, without limitation, any statements preceded by, followed by or including words such as "intend", "assess", "expect", "may", "plan", "estimate" and other expressions involving indications or predictions regarding future developments or trends and other words and terms of similar meaning or the negative thereof. These forward-looking statements have been prepared for illustrative purposes only, are not based on historical facts, are not guarantees of future performance, reflectSAS ' beliefs and expectations, and are subject to known and unknown risks, uncertainties and assumptions and other factors that could cause actual events and performance to differ materially from any expected future events or performance expressed or implied by such forward -looking statements. As a result of these risks, uncertainties, assumptions and other factors, you should not place undue reliance on these forward-looking statements as a prediction of actual future events or otherwise. The information contained in this press release is subject to change without notice and, except as required by applicable law,SAS does not assume any responsibility or obligation to update publicly or review any of the forward-looking statements contained in it, whether as a result of new information, future events or otherwise. [1] All amounts cited are based upon a USD/SEK exchange rate of 11.00. [2] Percentage of equity to be distributed to general unsecured creditors as part of the expected total USD 325 million recovery is subject to change, which may lead to minor adjustments on the equity percentage holdings for all Investors. [3] Secured Overnight Financing Rate.
Click here for more information
© Oslo Bors ASA, source