SAS

Legal Proceedings Report • Feb 5, 2024

SAS provides update on expected recoveries for creditors in the chapter 11 process - obtains support of Official Committee of Unsecured Creditors

SAS provides update on expected recoveries for creditors in the chapter 11 process - obtains support of Official Committee of Unsecured Creditors

SAS announces that it will file a second amended chapter 11 plan of

reorganization (the "Chapter 11 Plan") and related disclosure statement (the

"Disclosure Statement") with the U.S. Bankruptcy Court for the Southern District

of New York (the "Court") today, which documents will include, among other

things, information on expected recoveries for general unsecured creditors,

including the holders of SAS AB's listed commercial hybrids. The Chapter 11 Plan

and the Disclosure Statement may be further amended, modified, or supplemented

and remain subject to Court approval.

Holders of SAS AB's listed commercial hybrid bonds are expected to receive an

initial cash recovery corresponding to up to 9.4% of the nominal value of such

claims upon emergence from the chapter 11 process, with the possibility of

receiving an additional cash distribution of up to 15.6% (up to 25.0%

cumulatively) of the nominal value of such claims at a later date under certain

conditions. The final recovery for holders of listed commercial hybrid bonds and

other allowed general unsecured claims, including the amount and timing of any

additional distributions, remains to be confirmed (as further described below

and in more detail in the Chapter 11 Plan and the Disclosure Statement).

The Official Committee of Unsecured Creditors appointed in the chapter 11 cases

supports the Chapter 11 Plan and is strongly urging all holders of general

unsecured claims to vote to accept the Chapter 11 Plan.

Expected recoveries

SAS reiterates its expectation that there will be only a modest recovery for

general unsecured creditors (as further described below), no recovery for

subordinated creditors and no value for SAS AB's existing shareholders, and that

all of SAS AB's common shares and listed commercial hybrid bonds will be

cancelled, redeemed and delisted in connection with emergence from the chapter

11 process.

In aggregate, up to approximately USD 325 million is expected to be allocated to

general unsecured creditors, consisting of up to approximately USD 250 million

in cash and approximately USD 75 million in new equity. As part of the agreement

with the new investors (as announced by SAS in the press release on November 4,

2023), the majority of the cash amount (approximately USD 213 million)[1] will

be reserved (the "Restricted Funds") and could be distributed to general

unsecured creditors at a later date under certain conditions. The Restricted

Funds are expected to be released upon a final resolution of certain potential

State non-tax claims (including potential interest owed arising from State aid

received in 2020 and deemed incompatible as further described in SAS' press

release dated November 29, 2023), or upon a definitive answer that no such

claims exist, and will be reduced by any payments made by SAS on account of such

potential claims (including certain related costs). A final confirmation on the

amount and timing of any additional distributions to general unsecured

creditors, if any, may take several years.

Based on the above, SAS' expectation is that holders of SAS AB's listed

commercial hybrid bonds will receive an initial cash recovery corresponding to

6.9-9.4% of the nominal value of such claims upon emergence from the chapter 11

process, with the possibility of receiving an additional cash distribution of up

to 13.1-15.6% (up to 20.0-25.0% cumulatively) of the nominal value upon a

potential release of the Restricted Funds. Other general unsecured creditors are

expected to receive the following recoveries in cash and/or equity in the

reorganized SAS, as set forth in more detail in the Chapter 11 Plan:

· For holders of allowed general unsecured claims at SAS AB an initial

recovery corresponding to 6.9-9.4% of the nominal value of such claims upon

emergence from the chapter 11 process, with the possibility of receiving an

additional cash distribution of up to 15.6% (up to 25.0% cumulatively) of their

claims upon a potential release of the Restricted Funds.

· For holders of allowed general unsecured claims at Scandinavian Airlines

System Denmark-Norway-Sweden (the "SAS Consortium") an initial recovery

corresponding to 1.7-2.7% of the nominal value of such claims upon emergence

from the chapter 11 process, with the possibility of receiving an additional

distribution of up to 5.0% (up to 7.7% cumulatively) of their claims upon a

potential release of the Restricted Funds, except for smaller creditors with

claims in an amount equal to or less than USD 1.499 million who are expected to

receive a recovery corresponding to 10% of their claims in cash upon emergence

from the chapter 11 process.

· For holders of allowed general unsecured claims at Gorm Dark Blue Limited,

Gorm Deep Blue Limited, Gorm Light Blue Limited, Gorm Ocean Blue Limited and

Gorm Sky Blue Limited an initial recovery corresponding to 0.8-1.2% of the

nominal value of such claims upon emergence from the chapter 11 process, with

the possibility of receiving an additional distribution of up to 2.5% (up to

3.7% cumulatively) of their claims upon a potential release of the Restricted

Funds.

· For holders of allowed general unsecured claims at Scandinavian Airlines of

North America Inc. a recovery corresponding to 0.5-1.5% of the nominal value of

such claims upon emergence from the chapter 11 process.

The recovery level depends on, among other things, the debtor against which each

creditor holds claims as well as potential guarantees of the claims. The final

recovery for general unsecured creditors (including holders of SAS AB's listed

commercial hybrid bonds), as well as the timing and amount of any additional

distributions, is further dependent on various factors outside of SAS' control,

including fluctuations in the SEK/USD exchange rate, changes to the creditor

base eligible for recovery and their claim amounts, and the final outcome with

respect to SAS' potential obligation to pay certain potential State non-tax

claims, as described above.

The approximately USD 75 million in new equity to be allocated to creditors

(corresponding to approximately 13.6% (based on total equity, excluding any

potential future conversion of the convertible debt) of the equity in the

reorganized SAS) will be distributed to specified classes of general unsecured

creditors, including to the Danish, Norwegian, and Swedish states, certain

creditors that are anticipated to have a continued relationship with SAS, such

as go-forward aircraft lessors, pilot unions, and key suppliers, and certain

other creditors with claims against the SAS Consortium. Other creditor classes,

including holders of the listed commercial hybrid bonds and certain creditors

holding smaller claims, are expected to receive a cash-only recovery.

Conditionality and expected timing of the chapter 11 process

The Chapter 11 Plan and the Disclosure Statement may be further amended,

supplemented, or modified and remain subject to Court approval. A hearing with

respect to the approval of the Disclosure Statement is currently scheduled to

occur on February 6, 2024 and SAS currently expects to receive Court approval of

the Chapter 11 Plan in the first quarter of 2024. The Official Committee of

Unsecured Creditors appointed in the chapter 11 cases supports the Chapter 11

Plan and is strongly urging all holders of general unsecured claims to vote to

accept the Chapter 11 Plan.  The effectiveness of the Chapter 11 Plan remains

subject to various conditions precedent, including approvals from the Court and

various regulatory authorities and the completion of a Swedish company

reorganization at the SAS AB level, as further set out in the press release

announced by SAS on October 3, 2023. SAS currently expects to emerge from the

chapter 11 process around the end of the first half 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, L.P. White & Case LLP, Paul

McGeown and Sheppard, Mullin, Richter & Hampton LLP are serving as co-legal

counsel to Air France-KLM S.A. Bech-Bruun Law Firm P/S is serving as legal

counsel and Latham & Watkins LLP is serving as US legal counsel to Lind Invest

ApS. Wilkie Farr & Gallagher LLP is serving as legal counsel, Jefferies LLC is

serving as investment banker, AlixPartners, LLP is serving as financial advisor,

Alton Aviation Consultancy LLC is serving as industry advisor, and DLA Piper LLP

is serving as Scandinavian counsel to the Official Committee of Unsecured

Creditors.

For further information, please contact:

SAS Press office, +46 8 797 29 44

Investor relations, +46 70 997 7070

This is information that SAS AB is obliged to make public pursuant to the EU

Market Abuse Regulation. The information was submitted for publication, through

the agency of Erno Hildén at 02.25 AM CET on February 5, 2024.

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 at https://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]]] Assuming a USD/SEK rate of 10.3538.