Airline SAS says Castlelake, Air France-KLM to become new shareholders

Scandinavia's biggest carrier filed for bankruptcy protection in the United States in mid-2022 after years of struggling with high costs coupled with low customer demand brought on by the pandemic. The company said total investments in the reorganized SAS would amount to 12.9 billion Swedish crowns ($1.16 billion).

Scandinavian airline SAS said on Tuesday that investment firm Castlelake and Air France-KLM would become new major shareholders in the airline alongside the Danish state following bankruptcy proceedings.

Castlelake will take a stake of about 32%, Air France-KLM's will be around 20%, while the Danish state will hold about 26%, SAS said. Scandinavia's biggest carrier filed for bankruptcy protection in the United States in mid-2022 after years of struggling with high costs coupled with low customer demand brought on by the pandemic.

The company said total investments in the reorganized SAS would amount to 12.9 billion Swedish crowns ($1.16 billion). The airline said earlier it had hoped to raise 9.5 billion Swedish crowns in new equity and convert 20 billion crowns of debt into equity.

"This is a significant achievement of our transformation plan," SAS Chairman Carsten Dilling said in a statement. "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 for SAS, its creditors and other stakeholders," he said.

Sources had told Reuters that U.S. private equity giant Apollo Global Management hoped to take a majority stake in the Nordic airline. Dilling said the decision was taken at a board meeting half an hour before it was announced.

Lind Invest, a Danish investment firm, will hold 8.6% of equity, SAS said. SAS will be delisted from the Stockholm stock exchange, Dilling said. SAS has historically had a large amount of retail investors holding the stock, which soon will become worthless.

U.S.-based Castlelake manages approximately $22 billion of assets. It has $18 billion invested in aviation opportunities, according to its website. In addition to the Chapter 11 process, SAS also launched a cost-cutting program in early 2022, in a bid to try and become profitable.

The airline initiated the equity rise in February and the deadline to submit final bids was on September 25, after having being postponed twice, the last time due to one or more of the bidders requiring additional time. Dilling said SAS expects to formally emerge from Chapter 11 proceedings during the second quarter of 2024. ($1 = 11.1283 Swedish crowns)

 

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