APO Apollo Global Management Inc

By Dominic Chopping

STOCKHOLM--Scandinavian airline SAS AB said Sunday that it has entered into a $700 million bridge financing agreement with Apollo Global Management Inc. as it continues working through the chapter 11 bankruptcy-protection process.

The so-called debtor-in-possession, or DIP, financing credit agreement is a specialized type of bridge financing used by businesses that are restructuring through a chapter 11 process. The DIP financing, along with cash generated from the airline's ongoing operations, enables SAS to continue meeting its obligations throughout the chapter 11 process, it said.

SAS earlier this year launched a comprehensive restructuring plan to cut annual costs by 7.5 billion Swedish kronor ($734.8 million), convert around SEK20 billion of debt and hybrid notes into common equity and raise at least SEK9.5 billion in new capital.

It last month filed for chapter 11 bankruptcy protection in the U.S., as it seeks to push through the plan to cut costs and raise capital.

As part of the DIP financing deal, SAS said that Apollo could convert its loan into new equity in SAS. If it were to do this, Apollo has agreed terms with the Danish state that could see Denmark acquire up to $250 million of Apollo's equity interests in SAS.

The Swedish and Danish states each own 21.8% in SAS and have both showed support for converting their debt into equity, while Denmark said it could potentially invest new capital.

Norway doesn't hold an equity stake in SAS, but has shown support for the transformation plan with the government saying that it might agree to convert its outstanding debt into SAS shares.

SAS anticipates receiving court approval for its DIP financing by mid-September.

The DIP facility matures nine months after the closing date, but may be extended for an additional three-month period up to three times, subject to the company paying an escalating extension fee.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

August 15, 2022 02:35 ET (06:35 GMT)

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