Scandinavian operator SAS is expecting around $325 million to be allocated to general unsecured creditors – including holders of commercial hybrid bonds in parent company SAS AB – through its US Chapter 11 restructuring process.
But it reiterates that these unsecured creditors will still only receive a “modest” recovery, and that the prospects of returns for other parties are dismal.
SAS states that the return for holders of SAS AB’s hybrid bonds would be up to 20-25% of the nominal value of claims.
Around 6.9-9.4% of this would be obtained through an initial cash recovery upon emergence from Chapter 11. The remaining 13.1-15.6% is a possible additional cash distribution which could be granted “under certain conditions” at a later date, says SAS.
It states that the timing of any final recovery for holders of hybrid bonds and other general unsecured claims “remains to be confirmed”.
SAS says the expected recoveries will be detailed in its latest amendment to the Chapter 11 restructuring plan, which is being filed with the US bankruptcy court overseeing the process.
It adds that the official committee of unsecured creditors associated with the Chapter 11 case “supports” the plan and is “strongly urging” holders of general unsecured claims to vote in favour of it.
The $325 million allocation to unsecured creditors will comprise around $250 million in cash and $75 million in new equity.
Some $213 million of the cash is reserved, and would be released if certain potential governmental claims are resolved, but SAS says the final amount and timing of any distribution “may take several years”.
SAS says holders of allowed general unsecured claims at its associated companies are likely to receive smaller recoveries.
The company stresses that there will be “no recovery” for subordinated creditors and “no value” for shareholders of parent SAS AB. All of SAS AB’s common shares and listed commercial hybrid bonds will be cancelled, redeemed and delisted as part of the emergence from Chapter 11.
SAS is expecting to receive court approval of its Chapter 11 plan in the first quarter of this year, but says it could still be further modified.
