More movements in the European airline sector. Following Portugal’s announcement last week that it will sell a majority stake in TAP, of which it now controls 100%, it was announced today that a consortium formed by the Franco-Dutch airline Air France-KLM, the Castlelake and Lind funds Invest and the Danish State will invest 1,175 million dollars (1,116 million euros) in the reconstruction process of Scandinavian Airlines Systems (SAS).
Castlelake will control 32% of the capital of SAS and more than half of the convertible debt, the Danish State will increase its participation from 21.8% to 25.8%, Air France-KLM will have 19.9%, Lind Invest 8.6%, and the remaining 13.6% will “probably” be distributed among some of the airline’s creditors.
SAS will cease trading in the second quarter of 2024 on the Stockholm, Copenhagen and Oslo stock exchanges and its shares will cease to have value, the chairman of the board of directors, Carsten Dilling, explained in a press conference.
The Scandinavian airline will leave Star Alliance and become part of SkyTeam Alliance, of which Air France-KLM is a founding member, according to an agreement that must be approved by regulatory authorities in the United States and Sweden, where SAS also plans to start a reorganization process.
In July 2022, SAS filed for Chapter 11 of the Bankruptcy Law in the United States, a bankruptcy filing procedure that would allow it to reorganize to solve its economic problems, exacerbated by the coronavirus pandemic and a pilot strike. The airline also then closed an agreement with the American fund Apollo in the form of a DIP (debtor-in-possession) financing of 700 million dollars (702 million euros). Months earlier, he had presented a plan to reduce more than 700 million euros ($737 million) annually in costs, convert 1.9 billion euros ($2 billion) in debt and promissory notes into shares, in addition to raising at least 900 million euros ($948 million) 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. “Securing new capital is one of the pillars of SAS’ plan and will provide a strong financial foundation to help the company move forward and facilitate its exit from the bankruptcy process in the United States,” said Dilling.
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