The shareholder has lost almost everything in SAS – E24
Analysts estimate that up to 97 percent of earnings can go into a rescue of the airline SAS, which continues to price 5.8 billion on the Stockholm Stock Exchange. In other words, equity investors have not fully perceived that their values are gone.
The crisis-stricken airline is working on sewing together a rescue package that will cut debt and add fresh money.
The package must be implemented for SAS to survive, concludes aviation analyst Jacob Pedersen at Danish Sydbank.
He expects the state owners Denmark and Sweden to be central to the rescue operation when the current one is to be converted into shares. But for today’s shareholders, most of it has been lost, Pedersen writes in a recent analysis.
– Their values are gone
According to analysts, SAS owes the state owners six billion Swedish kroner in so-called hybrid debt, plus three billion in other loans.
Recently, SAS presented a sketch of what the company needs help with. The debt will be cut by converting 20 billion Swedish kroner from debt to shares, while 9.5 billion will be raised in new capital.
SAS had an interest-bearing debt of DKK 40.5 billion at the end of the last quarter, the company has stated.
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Pedersen writes that the state may write off the nine billion in debt.
What conditions new investors and today’s creditors will get is uncertain, but Pedersen has made a calculation based on the condition for SAS’s refinanced company in the autumn of 2020.
– This results in an extraction of approximately 96–97 percent of the existing shareholders, he writes.
In other words, such a scenario would mean that the shareholders, as today, one hundred percent of SAS will be left with between three and four percent of the new SAS.
SAS CEO Anko van der Werff has also warned shareholders that the contingency plan involves significant recovery.
The SAS shares are currently worth around SEK 5.8 billion on the Stockholm Stock Exchange.
– In other words, the actions have not fully perceived that their values are gone and that their ownership share is largely rejected when the recapitalization is carried out, Pedersen writes.
Think SAS will struggle to get new investors on board
Pedersen also reckons that the states of Denmark and Sweden will have to shell out billions of Swedish kroner, each if they were to be able to own shares.
SAS expects that a “significant portion” of the fresh capital will come from new investors, according to the latest quarterly report.
The Swedish newspaper Dagens Industri has speculated that a group of foreign investors may be interested in taking over SAS.
Pedersen believes that it will be difficult to get new investors on board, and that the probability of other airlines buying SAS is low.
However, he still believes that the door can be opened if new investors can get the majority of the shares in SAS.
– We have many times in the last 15 years seen investors put money in the airline to get moving in, he writes.
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However, such an investor group may end up on a collision course with the Danish state in particular, Pedersen emphasizes.
He points out that new investors will not necessarily keep Kastrup as the central airport for SAS, something that has been important for Denmark.
This in turn may mean that the states must increase their ownership share in order to retain control, Pedersen points out. Today, Denmark and Sweden hold 21.8 percent of each share in the company.
– No matter how we twist and turn it, the story that it may be a potential major shareholder on its way into the SAS states forces us to re-evaluate its involvement in SAS, Pedersen writes.