The EU Commission has given the thumbs up to Denmark and Sweden’s plan to provide up to 11 billion Swedish kroner in support of the airline SAS, it was announced on Monday.
On Friday, it was announced that the board of SAS had approved a revised recapitalization plan in connection with the corona crisis, a plan that also has the support of the Swedish and Danish states, the company’s two largest owners.
Their participation in SAS ‘recapitalization has now been given the green light by the EU authorities, as this is compatible with EU rules on state aid.
The approval means that SAS cannot adopt dividends, invest aggressively in commercial growth or execute M&A transactions (mergers and acquisitions) that exceed certain values. It also entails restrictions on SAS ‘remuneration to senior executives, it is stated in a statement from SAS on Monday night. These premises will apply until the Danish and Swedish state’s support has been repaid, it is emphasized.
The state support is part of a larger refinancing for the airline, where private investors will also contribute, among other things through the conversion of debt into shares.
EU Commissioner Margrethe Vestager says in a comment to the clearance that SAS plays an important role among the Scandinavian countries, and points out that SAS has been hit hard by the corona crisis.
“With this measure, Denmark and Sweden will contribute up to 1 billion euros to SAS ‘recapitalization and help the airline to withstand the current crisis,” says Vestager.
Of the up to 11 billion the support includes, Denmark will contribute 6 billion Swedish kroner and Sweden 5 billion.
The recapitalization consists of approximately NOK 2 billion in fresh equity through the issue of new shares and up to NOK 3 billion through a rights issue. The amounts are divided between Denmark and Sweden.
There will also be an issue of NOK 6 billion in hybrid bonds, which cannot be converted into shares. 2.5 billion has been allocated to Sweden, while 3.5 billion has been allocated to Denmark.
Further details on the terms of SAS ‘recapitalization and the European Commission’s approval on Monday will be included in the prospectus for the plan, which is expected around 1 October.
So far this year, the SAS share has fallen 48.4 per cent, while it fell another 2.0 per cent to NOK 7.45 on Monday.
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