SAS Scandinavian Unveils Restructuring Plan to Allocate $325 Million to Creditors Amid Bankruptcy
SAS Scandinavian Airlines, the flagship carrier headquartered in Copenhagen, Denmark, recently announced a significant development in its ongoing financial restructuring amidst Chapter 11 bankruptcy proceedings in the United States. In a strategic move aimed at addressing its financial challenges, SAS disclosed a revised restructuring plan, highlighting a commitment to allocate up to $325 million to its general unsecured creditors. This revised plan, filed with the U.S. Bankruptcy Court for the Southern District of New York, marks a pivotal step in SAS’s ambitious roadmap to financial recovery and operational revitalization.
Under the terms of the amended restructuring proposal, SAS outlined a comprehensive distribution framework designed to compensate its unsecured creditors. The allocation comprises up to $250 million in cash alongside an additional $75 million in new equity. This equity redistribution targets a broad spectrum of stakeholders, including key governmental shareholders from Denmark, Sweden, and Norway, alongside essential operational partners such as aircraft lessors, pilot unions, and major suppliers. This strategic distribution underscores SAS’s commitment to maintaining strong partnerships and acknowledging the significant contributions of its creditors to the airline’s ongoing operations.
The restructuring plan delineates specific recovery rates for holders of commercial hybrid bonds, projecting a maximum return of 25% on their claims. This return is structured to unfold in phases, initially offering between 6.9% and 9.4% of the nominal claim value as SAS concludes its bankruptcy proceedings, potentially by June. Additionally, a subsequent cash distribution, ranging from 13.1% to 15.6%, is anticipated, cumulatively aiming to achieve a recovery rate of up to 25%.
However, the plan also brings sobering news for SAS’s subordinated creditors and existing shareholders, signaling no anticipated recovery or value retention for these groups. In a decisive move, all common shares and listed commercial hybrid bonds will be subject to cancellation, redemption, and delisting, effectively erasing their existing market presence.
This restructuring initiative follows SAS’s bankruptcy filing in July 2022, a decision precipitated by Sweden’s government’s refusal to inject new capital into the struggling airline. Nonetheless, SAS demonstrated resilience by securing a $1.2 billion refinancing agreement in October 2023 with a consortium of investors, marking a significant step towards its financial stabilization.
The financial outlook for SAS, as detailed in a January regulatory filing, anticipates a net debt reduction from approximately SEK36-39 billion ($3.4-3.7 billion) to SEK22-24 billion ($2.1-2.3 billion) following the completion of the Chapter 11 process. This projected debt restructuring is crucial for SAS’s long-term viability and operational efficiency.
The restructuring plan also reopens the possibility for Norway to re-establish its stake in SAS, despite divesting its shares in 2018. Norway’s potential re-entry as a co-owner reflects the complex financial and political dynamics surrounding SAS’s restructuring efforts, highlighting the airline’s strategic importance to the Scandinavian region.
As SAS navigates through its Chapter 11 process, the airline’s restructuring plan represents a critical juncture in its efforts to rebuild its financial foundation and secure a sustainable future. Stakeholders, including governmental entities, operational partners, and creditors, will closely monitor the implementation of this plan, which aims to balance financial recovery with operational resilience.