STOCKHOLM (Reuters) – Airline SAS <SAS.ST> said on Friday it had secured the support of more of its debt holders after revising conversion terms for a key part of the rescue plan it is negotiating with the Swedish and Danish governments.
The airline in June agreed a 14 billion Swedish crown ($1.60 billion) plan with top shareholders including Sweden and Denmark to shore up its finances amid the air travel collapse caused by the pandemic.
But in July it returned to the drawing board as not enough debt holders supported the terms for proposed bond and hybrid note conversions – a part of the recapitalisation plan upon which Sweden and Denmark conditioned their capital injections.
SAS said on Friday it had now reached an agreement in principle with holders of 51% of existing hybrid notes and holders of 40% of bonds after conversion terms were revised.
It said a noteholders’ committee strongly encouraged all debt holders to vote in favour of the proposals at an upcoming noteholders’ meeting. The revised deal is also subject to approval by an extraordinary shareholders’ meeting.
“Discussions are currently ongoing with the major shareholders as regards the revised recapitalisation plan,” the airline said in a statement. “SAS will announce further information about the revised recapitalisation plan and the time plan for the implementation thereof as soon as possible.”
Its shares were down 1.7% at 1000 GMT, taking a year-to-date fall to 49%.
The new agreement in principle sees revised terms for the conversion of 1.5 billion crowns ($172 million) in existing hybrid notes into common shares, and an option for holders of a 2.25 billion bond to convert their holdings either into new commercial hybrid notes or into new shares, SAS said.
It also includes an increase in the interest rate on 6 billion crowns of state hybrid notes that SAS will issue to major shareholders.
SAS, in a separate statement, said that demand slowly recovered in July for domestic flights as travel restrictions were eased, while demand for intercontinental and European travel remained weak. The total number of passengers were down 75% year-on-year with capacity, down 76%.
(Reporting by Simon Johnson and Anna Ringstrom; Editing by Alexander Smith and Susan Fenton)