Scandinavia’s largest airline files for bankruptcy to cut debt

Bloomberg

Scandinavian airline SAS AB filed for Chapter 11 to tackle its debt burden for a second time in two years as the recovery from the disruption caused by the coronavirus pandemic has been slower than expected.
Scandinavia’s largest airline has been in talks with its creditors to convert 20 billion Swedish kronor ($1.9 billion) of outstanding debt and hybrid notes into shares, and to raise additional equity for about
$1 billion. The Stockholm-based company said it is in “well advanced” discussions with a number of lenders to secure additional debtor-in-possession financing for up to $700 million, according to a statement. Shares fell as much as 9.2% at market open in Stockholm to a record low of 0.56 kronor per share.
SAS and certain of its subsidiaries filed voluntary petitions in the US Bankruptcy Court for the Southern District of New York. The airline said it expects to complete the court-supervised process to take nine to 12 months.
“The chapter 11 process gives us legal tools to accelerate our transformation, while being able to continue to operate the business as usual,” SAS Chief Executive Officer Anko van der Werff said.
In the filing, the carrier listed assets worth between $10 billion and $50 billion, and liabilities between $1 billion and $10 billion. The debt pile includes 6 billion kronor of hybrid notes bought by the governments of Denmark and Sweden during the last bailout in 2020, as well as commercial hybrid notes, lease liabilities, Swiss-franc bonds and various term loans.
Sweden and Denmark each have a 21.8% stake. While Denmark said it’s open to adding to its stake, Sweden’s government flagged it will accept a conversion of debt it is owed into equity, but won’t participate in a new equity injection.