EXPLAINED: Will Denmark and Sweden retain SAS stakes after bidding war?

TT/Ritzau/The Local
TT/Ritzau/The Local
EXPLAINED: Will Denmark and Sweden retain SAS stakes after bidding war?
An SAS plane flies over clouds at sunset. Photo: SAS

With reports of a bidding war heating up over the ruins of the troubled airline SAS, it's uncertain how much a stake the Danish and Swedish states will retain. Here's what we know ahead of Tuesday's press conference.


What's happening this Tuesday? 

The company was set to hold a press conference in Stockholm on Tuesday evening in order to give a "status update" on its efforts to raise roughly 9.5 billion kroner in new capital and reduce its heavy debt by some 20 billion kroner. 

The press conference could mean bad news for existing shareholders, with chief executive Anko van der Werff warning in an interview with the Swedish Dagens Industri that, after the reconstruction, there would "only be a little value left for current shareholders and lenders, if anything at all". 

Who is likely to put more money into the airline? 

According to Reuters and the Norwegian newspaper Aftenposten, a bidding war is now looming between the private equity giant Apollo Management, which made a $700 million loan to the company when it filed for bankruptcy protection in the US last year, and an unnamed second bidder. 

Possible bidders suggested by Reuters include the Wallenberg Foundation, one the investment vehicles of Sweden's powerful Wallenberg family, which currently holds a 3.4 percent stake in the airline, and the Danish pension fund ATP, which has a stake in Copenhagen Airport.

Private Swedish investor Gerald Engström holds a 0.8 percent stake.


What will happen to the stakes held by the Swedish and Danish governments? 

The Danish state, which currently owns around 22 percent of the airline, has indicated that it is ready to increase its shareholding to up to 29.9 percent to get the airline back on track, meaning it may team up with Apollo or the unnamed rival bidder. 

The Swedish state, which also holds a 22 percent stake, has so far been unwilling to inject more money into the company, meaning it is likely to see its shareholding reduced. 

"The Swedish state's share is going to be significantly less, as Sweden is not willing to buy new shares," Jacob Pedersen, chief equity analyst at Denmark's Sydbank, told the TT newswire. "It might have some of its debt converted into new shares though."

Pedersen said he expected the Danish state to put in additional funds, partly to safeguard the position of Copenhagen as a major airport. 

"My best bet is that the Danish state will take somewhere between 22 and 30 percent of the ownership," he said. "I also think that it is most likely that it will be together with the large capital fund Apollo."  

He said he also suspected that ATP, Denmark's pension giant, might also get involved, as it is a major investor in Copenhagen Airport. 


What will happen to other shareholders and lenders? 

Small retail shareholders are likely to see their holdings heavily diluted.

Sverre Linton, chief legal officer at Aktiespararna, a retail investor lobby group, warned that any investment in the airline was fraught with risk. 

"SAS is and has been for many years one of the riskiest investments you can make in the main index of the Stockholm Stock Exchange," he said. "If you are an existing share holder in the current situation, you should probably not count on getting anything at all out of this reconstruction." 

SAS's shares rose 20 percent today after the broadcaster TV2 reported that the Danish state was ready to inject additional cash into the company to maintain its share. 


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