SAS — AGM Information 2014

Jan 16, 2014

SAS proposes that the annual general meeting authorises the Board to resolve on the issuance of preference shares and convertible debt

SAS proposes that the annual general meeting authorises the Board to resolve on the issuance of preference shares and convertible debt

SAS AB ("SAS") announced, in connection with the year-end report for the

fiscal year ending 2012/2013, that the company is investigating the

possibilities of issuing preference shares and/or convertible debt to

strengthen the capital base. In order to facilitate the issuance of such

financial instruments, the Board of Directors proposes, in accordance

with the notice to the annual general meeting ("AGM") on 18 February

2014, that the AGM authorises the Board of Directors to resolve on the

issuance of preference shares, with or without preferential rights for

SAS' shareholders, as well as the issuance of convertible debt without

preferential rights for SAS' shareholders, and to resolve on related

amendments to the articles of association of SAS.

Background and reason for the Board's proposal

SAS' change programme, 4Excellence Next Generation (4XNG), is focused on

addressing three main areas - costs, flexibility and liquidity/equity -

which includes the ambition to raise capital, through traditional

financing sources as well as more novel financial solutions such as

convertible debt or preference shares, to finance a renewal of the

aircraft fleet, address upcoming debt maturities as well as reduce the

negative effect on the group's equity from the change in accounting

standards for pensions (IAS 19).

In order to address investment requirements and upcoming debt

maturities, the Board of Directors proposes that the AGM authorises the

Board of Directors to resolve on the issuance of convertible debt and/or

issuance of preference shares. By issuing preference shares SAS would

strengthen its capital base, which leads to reduced net debt and an

improved equity ratio as well as improved financial preparedness. An

issuance of convertible debt would mainly be intended to replace the

company's existing convertible debt which falls due in 2015.

The preference shares and key proposed changes to the article of

association

In accordance with the proposed changes to SAS' articles of association

which the AGM has to consider, the preference shares will have a

preferred right, before ordinary as well as subordinated shares, to an

annual dividend of SEK 50 per preference share from the time of the

issuance. The dividend is subject to an annual increase after five years

corresponding to (1) percent of the subscription price until the

dividend amounts to SEK 50 plus five (5) percent of the subscription

price. The annual dividend is paid out in quarterly instalments. The

dividend is conditional on approval by the AGM and that the parent

company has sufficient distributable funds available. The dividend is

accumulating and subject to a certain penalty interest rate should the

dividend be less than the preferred right that the preference shares are

entitled to. The preference shares do not carry any other right to

dividends. Each preference share carry 1/10 of a vote of an ordinary

share in SAS.

The Board of Directors can resolve to redeem the preference shares,

partially or in full, for an amount corresponding to 120 percent of the

subscription price up to and including the dividend payment date which

occurs closest to the record date on 5 February 2018 and at 105 percent

of the subscription price in the period thereafter, in every case with

the addition of any accrued amount per preference share and accrued

preference share dividend.

Convertible debt

The proposed authorisation relating to convertible debt relates to the

issuance of bonds with accompanying rights enabling conversion into new

ordinary shares in the company. SAS today has a SEK 1.6 billion

convertible bond outstanding which falls due in 2015.

The Board of Directors' proposals for authorisation

The Board of Directors proposes that the AGM authorises the Board of

Directors to resolve on the issuance of up to 7,000,000 preference

shares, with or without preferential rights for SAS' shareholders. The

reason for a possible deviation from the preferential rights of

shareholders is to enable SAS to raise preference share capital at

attractive terms in order to strengthen the capital base and attract

institutional investors, for whom in particular preference shares should

be suitable for.

The Board of Directors also proposes that the AGM authorises the Board

of Directors to resolve on the issuance of convertible debt, without

preferential rights for SAS' shareholders, for an amount up to SEK 2,000

million which, following conversion, shall not amount to more than 130

million ordinary shares. The reason for deviating from the preferential

rights of shareholders is to create flexibility to strengthen the

capital base and financial preparedness when market conditions on the

international convertible debt market are favourable.

The authorisations may be utilised on one or several occasions, however

only until the next AGM. The Board of Directors' proposals for

authorisation and proposed changes to the articles of association can be

found in full on the company's website not later than three weeks prior

to the AGM. The resolutions require consent from shareholders

representing at least two thirds (2/3) of votes cast as well as votes

represented at the AGM.

Advisors

Carnegie Investment Bank AB (publ), Nordea Bank AB (publ), Markets -

Investment Banking and SEB Corporate Finance, Skandinaviska Enskilda

Banken AB have been appointed as financial advisors to evaluate the

possibility of issuing preference shares.

JP Morgan has been appointed as financial advisor to evaluate the

possibility of issuing convertible debt.

Mannheimer Swartling has been appointed as legal advisor.

For additional information:

Press Office telephone: +46 8 797 2944

SAS Investor Relations