Fate of Scandinavian Airlines: A Pending Capital Raise and Possible Outcomes

Fate of Scandinavian Airlines: A Pending Capital Raise and Possible Outcomes

A Race Against Time: The Capital Raise Deadline

The future of Scandinavian Airlines (SAS) is hanging in the balance as the clock ticks down to the deadline for their capital raise, set for Tuesday morning Norwegian time. The airline is seeking to secure 9.5 billion Swedish Krona in fresh capital with the deadline for bidding on new SAS shares set for Monday, 25th September, 23:59 American time. This capital raise, if successful, could significantly improve the airline’s financial situation. However, contingency plans are being discussed should the capital raise not go as planned.

What to Expect on the Horizon?

The outcome of the capital raise will likely be announced on Tuesday, 26th September, unless there is a last-minute extension. If investor interest is not high, the identities of those allocated shares will be revealed on Thursday, 28th September. However, in the case of high investor interest, an auction will be held, with the allocation of shares not known until Thursday, 5th October.

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The Ramifications for Current Shareholders

If the capital raise is successful, the current shareholders, who number over 250,000, may lose all their investments as their shares become nullified. However, if the capital raise does not go well, and SAS needs the funds current shareholders can provide, these shares may retain some value in the form of a right to subscribe for new shares.

Implications for SAS’s Stock Exchange Listing

Should the capital raise prove successful, it is expected that SAS will be delisted from the stock exchange. Alternatively, if current shareholders can provide the needed capital, SAS will remain listed. A solution involving a listed loan that could be converted into shares has also been discussed by SAS lawyers, but the specifics of how this would work if SAS shares were not listed remains unclear.

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The New Major Owner: Apollo Capital

The American investment company, Apollo Capital, is projected to become the new major owner of SAS, with speculations indicating an ownership stake between 40-50%. Apollo has already lent SAS $350 million, equivalent to 3.7 billion Krona. This loan, along with accrued interest, will be converted into shares if Apollo becomes a major owner. The Danish state is also expected to own between 22-30% of the new SAS.

The Fate of Unsecured Creditors

The fate of unsecured creditors hinges on the interest in new SAS shares. The higher the bids, the higher the perceived value in SAS, and thus the higher the dividend, meaning the creditors recover a higher percentage of their claims. SAS has warned of a relatively small dividend for unsecured creditors, however.

Legal Proceedings and Future Investments

Once Chapter 11 in the U.S. is concluded, SAS may have to undergo another round of bankruptcy proceedings under Swedish law, specifically a reconstruction for SAS AB, as many creditors are not bound by American law. The investors injecting money into the new SAS will likely do so after all legal proceedings are concluded, which is expected to be sometime in 2024.

EU Approval and Concessions

In order to attain EU approval, SAS will have to make some concessions. One of the most prominent speculations is that SAS will sell its subsidiary SAS Ground Handling, which handles ground services for SAS at the three major airports Gardermoen, Kastrup, and Arlanda.

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