07
Jul

Sas Initiates Court Proceedings in the United States by Applying for a Chapter 11 Procedure for Implementing Important Parts of the Sas Forward Plan and Will Continue Serving Its Customers Through the Process

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SAS AB (“SAS”) announces that the Company is taking the next step in the comprehensive transformation plan SAS FORWARD. To continue the implementation of key parts of the plan, SAS and some of its subsidiaries have filed a voluntary application to initiate a Chapter 11 proceeding in the United States, a financial restructuring process conducted under the supervision of a US federal court.

SAS’s operations and scheduled flights are not affected by the chapter 11 application and SAS will continue to provide its services to customers as usual. Scheduled flights, however, will be affected by the strike initiated by SAS Scandina via pilot associations. The company is expected to fulfill its continued business obligations in the short term. SAS had cash and cash

equivalents of SEK 7.8 billion as of June 30, 2022. The strike has a negative effect on the Company’s liquidity and financial position and this effect may be significant if the strike is prolonged. The company is in extensive discussions with a number of potential lenders regarding additional so-called debtor-in- possession financing ("DIP financing") of up to USD 700 million (equivalent to approximately SEK 7.0 billion) to support the business during the court

process. DIP financing is a specialized type of bridge financing for businesses that are undergoing reconstruction in a chapter 11 process. debtor-in-possession financing (“DIP financing”) of up to USD 700 million (equivalent to approximately SEK 7.0 billion) to support the activities during the court process. DIP financing is a specialized type of bridge financing for businesses that are undergoing

reconstruction in a chapter 11 process. debtor-in-possession financing (“DIP financing”) of up to USD 700 million (equivalent to approximately SEK 7.0 billion) to support the activities during the court process. DIP financing is a specialized type of bridge financing for businesses that are undergoing reconstruction in a chapter 11 process.

SAS and some of its subsidiaries today filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code before the U.S. Bankruptcy Court for New York's Southern District. The purpose of the application is to accelerate SAS transformation by implementing important parts of SAS FORWARD. These measures are in line with SAS's communication on 31 May 2022 that SAS FORWARD involves complex multi-party negotiations and that the Company may use one or more reorganization procedures designed to facilitate the management of the Company's financial difficulties and help accelerate the implementation of SAS FORWARD.

Chapter 11 is a well-established and flexible legal framework for restructuring companies with operations in several jurisdictions and has been used by several large international airlines for restructuring. Through this process, SAS strives to reach agreements with key stakeholders, reconstruct the Company's liabilities, reconfigure the aircraft fleet and obtain a significant capital injection. SAS expects the court process in the United States to be completed within 9-12 months.

“We have worked closely with SAS's management team to take SAS FORWARD forward. As part of that process, SAS has also prepared for the alternative of using a reorganization procedure in court to remedy the Company's financial situation. The ongoing strike poses significant challenges to our ability to succeed in our transformation. The Board has concluded that legal measures are necessary to make progress in our ongoing negotiations with key stakeholders and ultimately to succeed in making SAS a competitive and financially strong company.. The process we have begun will enable SAS to continue its 75-year-long legacy of being an integral part of Scandinavian infrastructure and Scandinavian societies. We are convinced that the measures we take will strengthen SAS's ability to take advantage of the great opportunities that exist in the future when the industry continues to recover from the pandemic, ”says Carsten Dilling, Chairman of the Board of SAS.

Anko van der Werff, President and CEO of SAS, says: “In recent months, we have worked hard to improve our cost structure and our financial position. We are making progress, but a lot of work remains and the ongoing strike has made an already challenging situation even more difficult. The Chapter 11 process gives us legal tools to accelerate our transformation, while we can continue our business as usual. We will continue to build the network of routes, products and services that customers expect, both during this process and thereafter. I am convinced that this process will give us the opportunity to become a stronger business partner and an even better airline for our customers for many years to come. Becoming a more competitive airline will require a joint effort and distribution of the cost burden among all stakeholders.

We urge SAS Scandinavia's pilot associations to end their strike and participate constructively in this process. ”Strengthens SAS's ability to deliver on SAS FORWARD SAS FORWARD was launched to ensure SAS's long-term competitiveness in the global aviation industry through a complete transformation of its operations.

The purpose of the plan is to strengthen SAS's financial position and to achieve a sustainable improvement in the cost structure, with a reduction in annual costs of approximately SEK 7.5 billion. The plan also includes the acquisition of at least SEK 9.5 billion in new equity and to reduce or convert more than SEK 20 billion in debt into share capital (the majority of which are liabilities on the balance sheet), including government hybrid bonds, commercial hybrid bonds, Swiss bonds, government bonds loans, leasing liabilities for aircraft and commitments under maintenance contracts and other contracts.

SAS has made progress in this work. The company has identified a vast majority of the SEK 7.5 billion in reduced annual costs, continued to invest in its digital capacity and its sustainability work, and received support from Sweden, Denmark and Norway. The company has also met potential investors and conducted an active dialogue with several stakeholders to improve its financial strength. The intention is that the chapter 11 process will accelerate the transformation process.

The reduction or conversion of sovereign debt requires the approval of the European Commission and the EFTA Surveillance Authority under the applicable state aid rules. As previously announced, a large part of the new capital is expected to be sought from new investors. The intended reductions or conversions of debt to share capital and new issue of shares are expected to result in significant dilution for existing shareholders. Any new share issue will be subject to approval by the Annual General Meeting and regulatory approvals.

Business unaffected – continues to provide our services to customers SAS's operations and scheduled flights are not affected by the chapter 11 application and SAS's board and management continue to be responsible for the Company's operations. SAS bookings, customer service, SAS EuroBonus and all other services and systems for our customers will work as usual. In addition to the chapter 11 process, however, the strike that SAS Scandinavia's pilot associations have initiated will affect scheduled flights.

SAS will continue to make refunds of tickets and fulfill commitments regarding travel vouchers and payments or credits attributable to baggage or service claims in accordance with its current guidelines.

Fulfill business commitments SAS's assessment is that the Company has sufficient liquidity, including SEK 7.8 billion in cash and cash equivalents as of June 30, 2022, to meet its business obligations in the short term. The strike has a negative effect on the Company's liquidity and financial position and this effect may be significant if the strike is prolonged. To enure that the

Company has sufficient funds to complete its reconstruction, the Company is in extensive iscussions with a number of potential lenders regarding additional so-called debtor-in-possession financing (DIP financing) of up to USD 700 million (equivalent to approximately 7.0 billion) to support the business. DIP financing is a specialized type of bridge financing for businesses that are undergoing reconstruction in a chapter 11 process.

In the usual manner in Chapter 11 proceedings, the Company has submitted a number of standardized motions (Eng. Motions ) according to which the Company requests permission from the court to continue its activities during the court process, which includes continued payment of employees' salaries and benefits without interruption. As part of these claims, the Company has requested permission from the court to continue to fulfill commitments in accordance with its customer programs in the day-to-day operations.

SAS has also requested permission to fulfill a number of commitments that arose before the Chapter 11 application .) in relation to some of the Company's business – critical travel agency partners and suppliers. The company will, in accordance with applicable conditions, pay suppliers in full for goods and services delivered from the date of application for chapter 11.

The company expects that these claims will be tried at a "First Day hearing" which is expected to be held in the next few days. SAS expects to receive court approval for all its claims.

Information about the chapter 11 process and further information The reorganization process under Chapter 11 in the United States differs from bankruptcy or administrative proceedings in other parts of the world. The process gives the Company time and flexibility to reorganize its capital structure, reduce costs and complete a financial restructuring under the supervision of the US court system. The Board of Directors and Group Management continue to be responsible for the

Company's operations and the reorganization process is carried out under the supervision of a US federal court. Many companies, including a number of large international airlines based outside the United States, have used the Chapter 11 process to reorganize their financial commitments and become stronger organizations.

Further information about the process is available on the Company's special website for the reconstruction, https://sasgroup.net/transformation . Court documents and other documents related to the Chapter 11 process in the United States are available on a separate website administered by SAS's claims agent, Kroll Restructuring Administration LLC, at https://cases.ra.kroll.com/SAS . Information is also available by

phone (844) 242-7491 (USA / Canada) or +1 (347) 338-6450 (international), and via

email at SASInfo@ra.kroll.com.

Invitation to press conference with webcast

A press conference with webcast will be held at 08.45 ( CEST), July 5, 2022. No pre-registration required.

The following spoke: Carsten Dilling, Chairman of the Board of SAS and Anko van der

Werff, President and CEO of SAS

Language English

 

Place for physical presence: SAS head office, Frösundaviks allé 1, 169 70 Solna

Link to webcast: https://live.sasgroup.net

( for broadcasters, please contact studio@sas.se to request access to the video and

audio stream )

Conference call phone number:

DK: +45 354 455 77

FI: +358 981 710 310

NO: +47 235 002 43

SE: +46 8 566 426 51

UK: +44 3333 0008 04

PIN: 11653156#

Advisor

Weil, Gotshal & Manges LLP is a global legal advisor and Mannheimer Swartling

Advokatbyrå AB is a Swedish legal advisor to SAS. Seabury Securities LLC and

Skandinaviska Enskilda Banken AB are investment bankers. Seabury is also a

reorganization consultant. FTI Consulting is a financial advisor.

For further information, please contact:

SAS press office, +46 8 797 29 44

Louise Bergström, VP Investor Relations, +46 70 997 0493

This information is such information that SAS AB is obliged to publish in accordance

with the EU Market Abuse Regulation. The information was submitted for publication on

July 5, 2022, at 07:45 CEST.

 

About SAS

SAS, Scandinavia's leading airline, with hubs in Copenhagen, Oslo and Stockholm, flies to destinations in Europe, the USA and Asia. Inspired by our Scandinavian heritage and sustainability, SAS strives to be a world leader in sustainable aviation. We will reduce total carbon dioxide emissions by 25 percent by 2025, by using more sustainable aviation fuel and our modern fleet of fuel-efficient aircraft. In addition to aviation operations, SAS offers groundhandling services, technical maintenance and freight services. SAS is one of the founders of Star Alliance ™ and together with the partner companies is offered a large number of destinations around the world. For further

information visit  https://www.sasgroup.net

IMPORTANT INFORMATION

The press release does not constitute an offer to sell or issue, buy or subscribe for shares or any other financial instrument in SAS.

This press release contains certain information that reflects SAS's current views on future events as well as financial and operational developments. Such information may include statements that are preceded by, followed by or include words such as "intended", "assessed", "expected", "may", "planning", "appreciated" and other expressions that indicate indications or predictions regarding future development or trends and other similar words and expressions. Such information has been prepared for illustrative purposes only and is not based on historical facts, does not constitute a guarantee of future results, reflects SAS's perceptions and expectations and is subject to known and unknown uncertainties. assumptions and other factors that may cause actual events and results to differ materially from any expected future events or performance expressed or implied by the forward-looking statement. As a result of these risks, uncertainties, assumptions and other factors, the recipient should not rely on the forward-looking statements as a forecast of future events. The information in this press release is subject to change without any prior notice and apart from what is required by applicable law, SAS does not assume any responsibility or obligation to publicly update or review any of the forward-looking statements, whether as a result of new information, future events or otherwise. . Nothing in this press release includes or should be construed as a earnings forecast.

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