SAS enters into investment agreement with Castlelake and Air France-KLM to restructure

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Air France-KLM and the private equity firm Castlelake LP have increased their planned investment in bankrupt Scandinavian airline SAS by $25 million to $1.2 billion, SAS said in a statement Saturday.

The agreement was precisely concluded with a consortium which further includes the Danish investment company Lind Invest and the Danish state following its bankruptcy proceedings. SAS added that, as part of the structure of the transaction, it has entered into a new agreement with Castlelake financing credit debtor in possession for an amount of 5.5 billion Swedish crowns ($505.45 million) to refinance its loans, increase its liquidity and help the company emerge from its voluntary restructuring procedure.

SAS had announced on October 3 an investment of 1.175 billion dollars from the group of investors to help save the carrier, which filed an application for bankruptcy (chapter 11) in July in a context of headwinds linked to the Covid-19 pandemic, high prices of fuel and to a pilots strike. Until now, its main shareholders were the Danish and Swedish states.

Here is the shareholding distribution after the investment, according to the press release:

Castlelake will hold 32% of the capital, 55.2% of the convertible debt
The government Danish will hold 25.8% of the capital, 30% of the convertible debt
Air France-KLM holds 19.9% ​​of the capital, 4.8% of the convertible debt
Lind Invest holds 8.6% of the capital, 10% of the convertible debt
The remaining 13.6% of the equity will be distributed among the other creditors

The agreement promises to continue the post-Covid consolidation of the European aeronautical industry aroundAir France-KLM and two other large transport groups, the Lufthansa group and IAG (parent company of British Airways). IAG takes over the Spanish company Air Europawhile Lufthansa agreed to buy part of the Italian public company ITA Airwayssuccessor to Alitalia.

John Walker Avatar