SAS Scandinavian Airlines (SK, Copenhagen Kastrup) has entered into an investment agreement for its Chapter 11 exit financing totalling USD1.2 billion after the winning consortium, whose bid for restructuring funds the airline chose, opted to raise the sum from its original offer of USD1.175 billion.

The Nordic carrier announced one month ago that it had chosen a consortium led by the lessor Castlelake, Air France-KLM, the Danish investment firm Lind Invest ApS, and the Danish state. Its loan is intended to replace the previous debtor-in-possession financing from US private equity firm Apollo Global Management.

“The winning bidder consortium has now increased its proposed investment by USD25 million to a total of USD1.2 billion, which includes USD475 million in new unlisted equity and USD725 million in secured convertible debt, as well as Castlelake providing a USD500 million facility to refinance SAS’s existing DIP financing,” the carrier said in a statement issued on the evening of Saturday, November 4.

SAS reiterated that Castlelake would take a stake of around 32%, the Danish state about 25.8%, Air France-KLM 19.9%, Lind Invest 8.6%, and the remaining approximately 13.6% would be distributed among creditors eligible for a debt-to-equity swap.

“The new DIP financing will refinance and replace SAS’s existing DIP financing credit agreement in the amount of USD700 million entered into with funds managed by Apollo Global Management, under which an initial tranche of USD350 million was drawn by SAS in September 2022,” the airline explained.

The company now seeks US court approval of the investment agreement and the new debtor-in-possession “as soon as possible in November 2023.” This will be followed by obtaining regulatory approvals and the implementation of a Swedish company restructuring (företagsrekonstruktion), to be filed by SAS AB next year.

“By entering into this investment agreement, SAS is taking the next step in its Chapter 11 process in the US,” declared SAS CEO Anko van der Werff. “It shows that our new investors believe in SAS and our potential to remain at the forefront of the airline industry for years to come.”