Written By
Sheikh Hasib Ahmed
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Following bankruptcy proceedings, American investment firm Castlelake and Air France-KLM (AF.PA) (AFLYY) will join the Danish government as key shareholders in the Scandinavian airline SAS (SAS-DKK.CO), according to a statement released on Tuesday.
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According to SAS, Castlelake will own approximately 32% of the company, Air France-KLM will own roughly 20%, and the Danish government will own approximately 26%.
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With the value of existing shareholders' stakes being reduced to zero, shares of SAS fell 95% in the opening trade on Wednesday.
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Midway through 2022, the largest carrier in Scandinavia, which had been struggling for years with pandemic-related high costs and poor client demand, filed for bankruptcy protection in the United States.
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The business estimated that $1.16 billion in total investments will be made in the reformed SAS.
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Announcing an investment of $144.5 million, Air France-KLM said that $109.5 million would be put into common shares and $35 million would be put into secured convertible notes.
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According to Air France-KLM, subject to legal requirements and financial performance, its stake may be expanded to give it control after a minimum of two years.
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"Since the pandemic's conclusion until now, Air France has undergone an astounding comeback. SAS needs a similarly thorough reorganization, according to Bernstein's statement to clients.
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Bernstein noted that SAS was still losing money and that it had two "sub-scale" centers, Stockholm and Copenhagen, which were physically close to one another, and that one of them probably needed to be eliminated, though doing so may be politically challenging.
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The Stockholm, Copenhagen, and Oslo stock markets will delist SAS, which has historically had a sizable number of retail shareholders.
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Our current stockholders will regrettably not be able to get anything, according to Dilling, as our higher-priority creditors won't be fully reimbursed during this process.