SAS — Capital/Financing Update 2023

Nov 4, 2023

SAS enters into investment agreement and replacement facility for existing debtor-in-possession financing

SAS enters into investment agreement and replacement facility for existing debtor-in-possession financing

SAS announces that it has entered into an investment agreement with the winning

bidder consortium in its exit financing solicitation process, consisting of

Castlelake, L.P., on behalf of certain funds or affiliates ("Castlelake"), Air

France-KLM S.A. ("Air France-KLM") and Lind Invest ApS ("Lind Invest"), together

with the Danish state (collectively, the "Investors"). As part of the agreed

transaction structure, SAS has also entered into a new debtor-in-possession

("DIP") financing credit agreement for USD 500 million (SEK 5.5 billion)[1] with

Castlelake (the "New DIP Financing") to, among other things, refinance SAS'

existing DIP term loan, increase liquidity, and support SAS' path to exit from

its voluntary restructuring proceedings. The agreements are subject to review

and approval by the U.S. Bankruptcy Court for the Southern District of New York

(the "U.S. Court").

On October 3, 2023, SAS announced that it had selected the Investors as the

winning bidder consortium in its exit financing solicitation process, and that

the parties were in agreement on a transaction structure including a total

investment in the reorganized SAS corresponding to USD 1,175 million (SEK 12.925

billion). The winning bidder consortium has now increased its proposed

investment by USD 25 million (SEK 275 million) to a total of USD 1,200 million

(SEK 13.2 billion), which includes USD 475 million (SEK 5.225 billion) in new

unlisted equity and USD 725 million (SEK 7.975 billion) in secured convertible

debt, as well as Castlelake providing a USD 500 million (SEK 5.5 billion)

facility to refinance SAS' Existing DIP Financing (as defined below).

The investment agreement entered into by SAS and the Investors includes the

final terms of the Investors' equity investment, as well as the key terms for

the secured convertible debt and SAS' chapter 11 plan of reorganization (the

"Chapter 11 Plan"). The agreed investment structure, which (save for the

increased convertible debt amount) is consistent with the key terms set out in

the press release announced by SAS on October 3, 2023, will result in a

shareholder structure post-reorganization (based on total equity, but pre

-conversion of the convertible debt) where:

(i) Castlelake holds approximately 32.0% of the equity and 55.2% of the

convertible debt;

(ii) the Danish State holds approximately 25.8% of the equity and 30.0% of the

convertible debt;

(iii) Air France-KLM holds approximately 19.9% of the equity and 4.8% of the

convertible debt;

(iv) Lind Invest holds approximately 8.6% of the equity and 10.0% of the

convertible debt; and

(v) the remaining approximately 13.6% of the equity will be distributed among

and held by certain creditors who may receive recovery in equity.

The New DIP Financing will be provided under a term loan agreement by way of a

non-amortizing senior secured super-priority debtor-in-possession term loan

facility in an aggregate principal amount of USD 500 million, entered into by

Scandinavian Airlines System Denmark-Norway-Sweden (the SAS Consortium), as

borrower, SAS AB and all wholly-owned subsidiaries of SAS AB that are debtors in

the chapter 11 cases as guarantors, and Castlelake as lender. The New DIP

Financing will refinance and replace SAS' existing DIP financing credit

agreement in the amount of USD 700 million (SEK 7.7 billion) entered into with

funds managed by Apollo Global Management (the "Existing DIP Financing"), under

which an initial tranche of USD 350 million (SEK 3.85 billion) was drawn by SAS

in September 2022. The terms of the New DIP Financing are substantially similar

to the Existing DIP Financing (the principal terms of which are described in the

press release announced by SAS on August 14, 2022), with some key differences,

including a lower interest rate and the removal of certain fees and equity

-linked features. The New DIP Financing has an initial term of nine months,

subject to two additional three-month extensions at the election of SAS (as well

as payment of certain escalating extension fees), and will be repaid in

connection with emergence from the chapter 11 process. The New DIP Financing

will be available to SAS subject to approval by the U.S. Court and following the

satisfaction of certain conditions precedent.

SAS will seek U.S. Court approval of the investment agreement and the New DIP

Financing as soon as possible in November 2023.

Anko van der Werff, President & Chief Executive Officer of SAS, says:

"By entering into this investment agreement, SAS is taking the next step in its

chapter 11 process in the US. The investment is a key milestone in our SAS

FORWARD plan, and 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."

Conditionality of the transaction and expected recoveries in the chapter 11

process

The agreed transaction will need to be approved in connection with the

confirmation of the Chapter 11 Plan. SAS currently aims to receive approval from

the U.S. Court of the Chapter 11 Plan in early 2024, to be followed by obtaining

regulatory approvals and the implementation of a Swedish company reorganization

(Sw. företagsrekonstruktion) at the SAS AB level (likely to be filed by SAS AB

during 2024). The effectiveness of the transaction will occur upon the

fulfilment of certain conditions precedent, including receipt of all relevant

regulatory approvals, as further set out in the press release announced by SAS

on October 3, 2023. No approval is expected to be required from the existing

shareholders of SAS AB for the transaction.

SAS reiterates its expectation set out in the press release announced by SAS on

October 3, 2023, that there will be only a modest recovery for general unsecured

creditors, no recovery for subordinated unsecured creditors and no value for SAS

AB's existing shareholders upon emergence from the chapter 11 process. Any

payment of recoveries to creditors will be made only after the completion of the

transaction and the fulfilment of any conditions for payment to creditors. All

of SAS AB's common shares and listed commercial hybrid bonds are further

expected to be cancelled, redeemed and delisted (currently expected to occur

during the second quarter of 2024).

Information regarding chapter 11 cases

Additional information regarding SAS' voluntary chapter 11 cases is available on

SAS' dedicated restructuring website, https://sasgroup.net/transformation. U.S.

Court filings and other documents related to the chapter 11 cases in the U.S.

are available on a separate website administered by SAS' claims agent, Kroll

Restructuring Administration LLC, at https://cases.ra.kroll.com/SAS. Information

is also available by calling (844) 242-7491 (U.S./Canada) or +1 (347) 338-6450

(International), as well as by email at SASInfo@ra.kroll.com.

Advisors

Weil, Gotshal & Manges LLP is serving as global legal counsel and Mannheimer

Swartling Advokatbyrå AB is serving as Swedish legal counsel to SAS. Seabury

Securities LLC and Skandinaviska Enskilda Banken AB are serving as investment

bankers, and Seabury Securities LLC is also serving as restructuring advisor to

SAS. Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel,

Rothschild & Co is serving as investment banker, and SkyWorks Holdings LLC is

serving as aviation consultant to Castlelake. White & Case LLP, Paul McGeown and

Sheppard, Mullin, Richter & Hampton LLP are serving as co-legal counsel to Air

France-KLM. Bech-Bruun Law Firm P/S is serving as legal counsel and Latham &

Watkins LLP is serving as US legal counsel to Lind Invest.

For further information, please contact:

SAS Press office, +46 8 797 29 44

Investor relations, +46 70 997 7070

SAS, Scandinavia's leading airline, with main hubs in Copenhagen, Oslo and

Stockholm, flies to destinations in Europe, USA and Asia. Spurred by a

Scandinavian heritage and sustainable values, SAS aims to be the driving force

in sustainable aviation and in the transition toward net zero emissions. We are

continuously reducing our carbon emissions through using more sustainable

aviation fuel, investing in new fuel-efficient aircraft and technology

innovation together with partners - thereby contributing towards the industry

target of net zero CO2 emissions by 2050. In addition to flight operations, SAS

offers ground handling services, technical maintenance and air cargo services.

Learn more athttps://www.sasgroup.net

ADDITIONAL INFORMATION

The press release does not constitute an offer to sell or issue, or the

solicitation of an offer to buy or acquire, or subscribe for, shares or any

other financial instruments in SAS.

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

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

statements may include, without limitation, any statements preceded by, followed

by or including words such as "intend", "assess", "expect", "may", "plan",

"estimate" and other expressions involving indications or predictions regarding

future developments or trends and other words and terms of similar meaning or

the negative thereof. These forward-looking statements have been prepared for

illustrative purposes only, are not based on historical facts, are not

guarantees of future performance, reflect SAS' beliefs and expectations, and are

subject to known and unknown risks, uncertainties and assumptions and other

factors that could cause actual events and performance to differ materially from

any expected future events or performance expressed or implied by such forward

-looking statements. As a result of these risks, uncertainties, assumptions and

other factors, you should not place undue reliance on these forward-looking

statements as a prediction of actual future events or otherwise. 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, whether as a result of new information, future events or

otherwise.

[1] All amounts cited are based upon a USD/SEK exchange rate of 11.00