SAS — Capital/Financing Update 2020

Aug 7, 2020

SAS reaches agreement in principle with certain holders of bonds and hybrid notes - work on revised recapitalization plan continues

SAS reaches agreement in principle with certain holders of bonds and hybrid notes - work on revised recapitalization plan continues

Not for release, publication or distribution, directly or indirectly, in or into

the United States, Canada, Japan, Australia or any other jurisdiction where such

action would be unlawful.

SAS AB ("SAS" or the "Company") announced on 30 June 2020 a recapitalization

plan to tackle the expected effects of the COVID-19 pandemic. Following the

announcement on 10 July 2020 regarding the cancellation of the noteholders'

meetings for holders of the existing hybrid notes and bonds, SAS has continued

to work intensively on a revised recapitalization plan and has, after

discussions and negotiations with certain major holders of hybrid notes and

bonds, reached an agreement in principle which has been approved by the Board of

Directors.

Discussions are currently ongoing with the governments of Sweden and Denmark

(jointly the "Major Shareholders") as regards the revised recapitalization plan.

An additional component to the revised recapitalization plan will be an increase

of the interest rate by 90 bps per annum for the new MSEK 6,000 state hybrid

notes that SAS, in accordance with the Company's press release on 30 June 2020,

proposes to issue to the Major Shareholders. SAS will announce further

information about the revised recapitalization plan and the time plan for the

implementation thereof as soon as possible. The implementation of the revised

recapitalization plan will also be subject to approval by the European

Commission under applicable State aid rules and the approval by an extraordinary

shareholders' meeting.

SAS has conducted negotiations with certain major holders of the SAS MSEK 1,500

subordinated perpetual floating rate capital securities (the "Existing Hybrid

Notes") and the SAS MSEK 2,250 senior unsecured fixed rate bond due November

2022 (the "Bonds"), led by Spiltan Fonder (the "Noteholders' Committee" or the

"NHC"). These negotiations have resulted in an agreement in principle that

mainly includes (a) revised conversion terms for the Existing Hybrid Notes into

common shares and (b) an amendment regarding the conversion of the Bonds, now

intended to be converted into new commercial hybrid notes or common shares at

the option of the Bondholders pursuant to a separate offer to the holders of the

Bonds (the "Bondholder Offer"). The Board of Directors of SAS has approved the

agreement in principle, subject to approval by an extraordinary shareholders'

meeting.

The Existing Hybrid Notes are proposed to be exchanged for common shares in the

Company at 90% of par value and at a subscription price of SEK 1.16 per share.

As announced on 22 July 2020, the Company will pay the deferred interest on the

Existing Hybrid Notes in connection with the conversion into common shares of

the Existing Hybrid Notes.

The Bonds are proposed to be exchanged for perpetual unsubordinated, unsecured,

unguaranteed floating rate callable capital securities (the "New Commercial

Hybrid Notes") in the Company at 100% of par value. The New Commercial Hybrid

Notes will have a floating interest rate of 6M STIBOR plus an initial margin of

340 bps per annum. The margin of the New Commercial Hybrid Notes will thereafter

increase to the following: during the 2nd and 3rd year 440 bps per annum, during

the 4th and 5th year 590 bps per annum, during the 6th and 7th year 1,090 bps

per annum, during the 8th up to and including the 10th year 1,440 bps per annum,

and during 11th year and thereafter 1,590 bps per annum.

Alternatively, and subject to approval by an extraordinary shareholders'

meeting, eligible holders of the Bonds are prior to the implementation of the

proposed conversion to be presented with an offer, allowing holders of Bonds to

subscribe for newly issued common shares in the Company at 100% of par value at

a subscription price of SEK 1.16 per share by setting off the claim under their

Bonds as consideration. However, the aggregate number of new common shares to be

issued to holders of the Bonds under the Bondholder Offer will be limited to a

number corresponding to 50% of the adjusted nominal amount of the Bonds and, in

case of oversubscription, the allotment will be scaled down on a pro rata basis

whereby any remaining claim under the Bonds not converted into common shares

will be converted into New Commercial Hybrid Notes as described above.

The New Commercial Hybrid Notes will be treated as equity in SAS' accounts, will

rank senior to the new state hybrid notes, will be freely transferable and will

be callable by SAS at any time at par value.

The above described agreement in principle is subject to approvals by

noteholders' meetings. Noteholders have to the NHC expressed their support for

the agreement in principle in accordance with the following: holders of 51.42%

of the Existing Hybrid Notes (including all of the major holders in the NHC that

SAS has negotiated with, representing 21.17% of the Existing Hybrid Notes), as

well as holders of 39.56% of the Bonds (including all of the major holders in

the NHC that SAS has negotiated with, representing 27.11% of the Bonds).

The NHC strongly encourages all bond and hybrid holders to support and to vote

in favor of the proposals at the coming noteholders' meetings. The NHC believes

that the current proposal preserves maximum value for the holders of the Bonds

and the Existing Hybrid Notes whilst providing support to SAS at a difficult

time for the industry due to COVID-19. Both SAS and the NHC welcome any bond or

hybrid holders outside of the NHC who want to reach out to discuss the result of

the negotiations and why the representatives of the NHC believe the result to be

appropriate (see contact details below).

Discussions are currently ongoing with the Major Shareholders as regards the

revised recapitalization plan. An additional component to the revised

recapitalization plan will be an increase of the interest rate by 90 bps per

annum for the new MSEK 6,000 state hybrid notes that SAS, in accordance with the

Company's press release on 30 June 2020, proposes to issue to the Major

Shareholders. SAS will announce further information about the revised

recapitalization plan and the time plan for the implementation thereof as soon

as possible. The implementation of the revised recapitalization plan will also

be subject to approval by the European Commission under applicable State aid

rules and the approval by an extraordinary shareholders' meeting. The Board of

Directors intends to summon new meetings with the holders of the Existing Hybrid

Notes and the Bonds as soon as possible for the purpose of approving the

aforementioned proposals, as well as to convene an extraordinary shareholders'

meeting.

If the revised recapitalization plan is not implemented and fails, SAS will not

be able to remedy the liquidity shortage and the negative equity caused by the

COVID-19 outbreak, which could have a material adverse effect on the Company's

financial condition. Should SAS as a result of such material adverse effect on

its financial condition be forced to file for bankruptcy, it is likely that the

holders of the Existing Hybrid Notes and the Bonds will not be able to recover

any of their claims under the notes.

For further information, please contact:

SAS press office, +46 8 797 2944

Michel Fischier, VP Investor Relations, +46 70 997 0673

For more information about the agreement in principle between SAS and certain

major noteholders led by Spiltan Fonder and about the exchange proposals, please

contact:

Lars Lönnquist, Spiltan Fonder, e-mail: lars.lonnquist@spiltanfonder.se

Skandinaviska Enskilda Banken AB (publ), e-mail: SEBLiabilityManagement@seb.se

Danske Bank A/S, Danmark, Sverige filial, e-mail: dcm_admin@danskebank.se

Swedbank AB (publ), e-mail: syndicate@swedbank.se

Advisors to the Company

Skandinaviska Enskilda Banken AB is financial advisor to SAS, Global Coordinator

and Bookrunner in connection with the recapitalization plan.

Mannheimer Swartling Advokatbyrå AB and Davis Polk & Wardwell London LLP are

legal advisors to SAS.

Skandinaviska Enskilda Banken AB (publ), Danske Bank A/S, Danmark, Sverige

Filial and Swedbank AB (publ) have been appointed Solicitation Agents. Danske

Bank A/S, Danmark, Sverige Filial and Swedbank AB (publ) are Joint Bookrunners

in the Rights Issue.

This is information that SAS AB is obliged to disclose pursuant to the EU Market

Abuse Regulation. The information was submitted by Michel Fischier for

publication on 7 August 2020 at 08:00 a.m. CEST.

IMPORTANT INFORMATION

This press release and the information herein is not for publication, release or

distribution, in whole or in part, directly or indirectly, in or into the United

States, Australia, Canada, Japan or South Africa or any other state or

jurisdiction in which publication, release or distribution would be unlawful or

where such action would require additional prospectuses, filings or other

measures in addition to those required under Swedish law.

The press release is for informational purposes only and does not constitute an

offer to sell or issue, or the solicitation of an offer to buy or acquire, or

subscribe for, any of the securities mentioned herein (collectively, the

"Securities") or any other financial instruments in SAS. Any offer in respect of

any securities in connection with the rights issue will only be made through the

prospectus that SAS expects to publish prior to the first day of the

subscription period. The offers under the revised recapitalization plan are not

made to, and application forms will not be approved from, subscribers (including

shareholders), or persons acting on behalf of subscribers, in any jurisdiction

where applications for such subscription would contravene applicable laws or

regulations, or would require additional prospectuses, filings, or other

measures in addition to those required under Swedish law. Measures in violation

of the restrictions may constitute a breach of relevant securities laws.

None of the Securities have been or will be registered under the United States

Securities Act of 1933, as amended (the "Securities Act"), or the securities

laws of any state or other jurisdiction in the United States, and may not be

offered, pledged, sold, delivered or otherwise transferred, directly or

indirectly, except pursuant to an exemption from, or in a transaction not

subject to, the registration requirements of the Securities Act and in

compliance with applicable other securities laws. There will not be any public

offering of any of the Securities in the United States.

In the United Kingdom, this press release is directed only at, and communicated

only to, persons who are qualified investors within the meaning of article 2(e)

of the Prospectus Regulation (2017/1129) who are (i) persons who fall within the

definition of "investment professional" in article 19(5) of the Financial

Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the

"Order"), or (ii) persons who fall within article 49(2)(a) to (d) of the Order,

or (iii) persons to whom it may otherwise be lawfully communicated (all such

persons referred to in (i), (ii) and (iii) above together being referred to as

"Relevant Persons"). This press release must not be acted on or relied on by

persons in the UK who are not Relevant Persons.

This press release contains forward-looking statements that reflect SAS' current

view of future events as well as financial and operational development. Words

such as "intend", "assess", "expect", "may", "plan", "estimate" and other

expressions involving indications or predictions regarding future development or

trends, not based on historical facts, identify forward-looking statements and

reflect SAS' beliefs and expectations and involve a number of risks,

uncertainties and assumptions which could cause actual events and performance to

differ materially from any expected future events or performance expressed or

implied by the forward-looking statement. The information contained in this

press release is subject to change without notice and, except as required by

applicable law, SAS does not assume any responsibility or obligation to update

publicly or review any of the forward-looking statements contained in it and nor

does it intend to. You should not place undue reliance on forward-looking

statements, which speak only as of the date of this press release. As a result

of these risks, uncertainties and assumptions, you should not place undue

reliance on these forward-looking statements as a prediction of actual future

events or otherwise.