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Commission approves €1 billion Danish and Swedish measure to recapitalise SAS

Christian Fernsby |
The European Commission has approved Danish and Swedish plans to contribute up to SEK 11 billion (approximately €1 billion) to the recapitalisation of SAS.

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Topics: DANISH    SWEDISH    SAS   

Denmark and Sweden notified to the Commission, under the Temporary Framework, a State recapitalisation of SAS of up to SEK 11 billion (approximately €1 billion), of which about SEK 6 billion (approximately €583 million) will be provided by Denmark and SEK 5 billion (approximately €486 million) by Sweden.

Following the recapitalisation, a revolving credit facility will be cancelled.

The measure will not exceed the minimum needed to ensure the viability of SAS and will not go beyond restoring its capital position before the coronavirus When assessing the proportionality of the recapitalisation measure, the Commission took also into account the other State aid measures in favour of the company in the context of the coronavirus outbreak.

The recapitalisation aid will prevent an insolvency of SAS, which would have serious consequences on Danish and Swedish employment, connectivity and foreign trade Denmark and Sweden will receive an appropriate remuneration for the investment, and there are additional mechanisms to incentivise SAS to redeem the States' equity participations and the new State hybrid notes obtained as a result of the recapitalisation.

Denmark and Sweden submitted a business plan prepared by SAS to redeem, by fiscal year 2025, the recapitalisation instruments.

They also committed to work out a credible exit strategy within 12 months after the aid is granted, unless the States' intervention is reduced below the level of 25% of equity by then.

If six years after receiving the recapitalisation aid the States' intervention is not reduced below 15% of SAS's overall equity, a restructuring plan for SAS will be notified to the Commission.

Until the States have exited in full, SAS and its subsidiaries are subject to bans on dividends and share buybacks, other than in relation to the Moreover, until at least 75% of the recapitalisation is redeemed, a strict limitation of the remuneration of SAS's management, including a ban on bonus payments, is applied.

These conditions aim at incentivising an exit of the two States as soon as the economic situation allows.

To ensure that SAS does not unduly benefit from the recapitalisation aid by the States to the detriment of fair competition in the Single Market, it cannot use the aid to support economic activities of integrated companies that were in economic difficulties already on 31 December Moreover, until at least 75% of the recapitalisation is redeemed, SAS is in principle prevented from acquiring a stake of more than 10% in competitors or other operators in the same line of business.

SAS will have to publish information on the use of the aid received, including on how the use of the aid received supports the company's activities in line with EU and national obligations linked to the green and digital transformations.


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