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SAS AB announces terms for its 2010 rights issue of approximately SEK 5 billion

April 6, 2010 08:30

• Rights issue of approximately SEK 5 billion with preferential rights for the shareholders of SAS AB
• The subscription price is SEK 0.67 per share
• Each share held on the record date will entitle a shareholder to receive 3 subscription rights. Each subscription right entitles its holder to subscribe for one new share
• The record date is 12 April 2010 and the subscription period runs from and including 15 April 2010 up to and including 29 April 2010
• The Swedish, Danish and Norwegian governments have on or prior to 9 February 2010 separately expressed to the Board of Directors their support for the rights issue. Parliamentary decisions to authorize each government, or, with respect to Denmark, the Minister of Finance, to subscribe for each state’s respective pro rata share of the rights issue have been adopted, subject to certain conditions. The Knut and Alice Wallenberg Foundation (“KAW”), through Foundation Asset Management, has expressed its support for the rights issue and its willingness to participate in the rights issue on a pro rata basis, subject to certain conditions. J.P. Morgan, Nordea and SEB Enskilda, acting as Joint Global Coordinators, Joint Lead Managers and Joint Bookrunners, DnB NOR Markets and The Royal Bank of Scotland, acting as Joint Lead Managers and Joint Bookrunners, and Danske Markets, acting as Co-lead Manager, have agreed to underwrite the remaining shares offered in the rights issue, subject to customary terms and conditions
• The rights issue is subject to approval by the Annual General Meeting (the “AGM”) to be held tomorrow, Wednesday, 7 April 2010, at 09.00 CET

Background and rationale
In February 2009, SAS Group launched Core SAS, a renewed strategic approach in response to the weak macroeconomic environment and the internal challenges within SAS. At launch, Core SAS included, among other things, a cost savings program of SEK 4 billion which was gradually increased to SEK 5.3 billion during 2009. Although the implementation of the cost savings program has proceeded according to plan, the macroeconomic environment deteriorated considerably more during 2009 than anticipated by the market at the beginning of 2009 and as estimated in the original Core SAS strategy. The airline industry has been severely affected by the economic downturn, resulting in a substantial decrease in the number of passengers and passenger yields, leading to significantly lower revenues for the airline industry. As a consequence, SAS’ pre-tax profit for 2009 before non-recurring items was substantially lower than anticipated when Core SAS was launched in February 2009.

In response, the management and Board of Directors of SAS have expanded the Core SAS cost savings program to SEK 7.8 billion, which includes annual cost savings of MSEK 500 in relation to the recently announced agreement with the unions for pilots and cabin attendants. To strengthen SAS’ liquidity position and thereby provide support for the implementation of the remaining parts of Core SAS, the balance sheet has been strengthened through agreements with certain of SAS’ lenders to amend the terms of four credit facilities representing approximately SEK 5 billion, the refinancing of debt of approximately SEK 2 billion by the issuance of over SEK 3 billion of new debt and the rights issue of approximately SEK 5 billion.

Terms of the rights issue
The shareholders will receive 3 subscription rights for each share held on the record date, 12 April 2010. Each subscription right will carry an entitlement to subscribe for one new share. The maximum increase of the share capital is SEK 4,959,675,000 and the maximum number of new shares that may be issued is 7,402,500,000.

The subscription price is SEK 0.67 per share. Holders of subscription rights registered in Denmark or Norway will pay an amount in DKK or NOK corresponding to the subscription price of SEK 0.67 per share. Such amount will be calculated in close proximity to the end of the subscription period based on the European Central Bank’s fixing exchange rate in accordance with a formula described in more detail in the prospectus, which is expected to be published on or around 9 April 2010. A preliminary calculation in accordance with the formula as of 31 March 2010 would have resulted in an amount per share of approximately DKK 0.52 and approximately NOK 0.56. However, the actual amount to be paid per share in DKK and NOK will be determined and communicated by SAS in close proximity to the end of the subscription period.

The rights issue is expected to raise proceeds of approximately MSEK 4,960 before costs related to the rights issue.

Subscription for shares without subscription rights may also be made. The Board of Directors will allot any shares that are not subscribed by exercise of subscription rights to those who have subscribed for shares on the basis of subscription rights and have subscribed for additional new shares, regardless of whether or not the subscriber was a shareholder on the record date. Any remaining shares will primarily be allotted to shareholders and others who have indicated their interest to subscribe for shares without subscription rights, and finally, to the underwriters.

The record date for participation in the rights issue will be 12 April 2010. Subscription will take place during the subscription period from and including 15 April 2010 up to and including 29 April 2010, or such later date as decided by the Board of Directors. Trading in subscription rights will take place from and including 15 April 2010 up to and including 26 April 2010.

Amendments to the Articles of Association, reduction of share capital, bonus issue and reverse share split
To facilitate the implementation of the rights issue, the Board of Directors has resolved on the detailed terms of its proposal to the AGM, on a reduction of the share capital by MSEK 4,515, thereby changing the quota value of the shares from SEK 2.50 to SEK 0.67. The Board of Directors has also resolved to revoke its proposal that SAS, in conjunction with the rights issue, effect a bonus issue of MSEK 922 since such bonus issue will not be necessary to secure that the restricted equity, as well as the share capital, will be restored after completion of the rights issue.

The Board of Directors’ resolution on the rights issue requires amendments of the Articles of Association with respect to the share capital limits and the limits regarding the number of shares. Based on the subscription terms determined by the Board of Directors, the Board of Directors has proposed, in accordance with item 15 on the agenda for the notification to the AGM, that the share capital limits be changed to not less than MSEK 4,000 and not more than MSEK 16,000 and the limits regarding the number of shares be changed to no fewer than 6 billion shares and no more than 24 billion shares. The AGM notification in its entirety as well as the detailed terms of the rights issue etc. are available on the SAS website, www.sasgroup.net.

As a result of the new ordinary share issue, the number of shares in the Company will increase significantly. In order to obtain a more appropriate number of shares in the Company after the rights issue, the Board of Directors has proposed a reverse share split whereby 30 existing shares held in SAS will be consolidated into one (1) new share as well as the necessary amendments of the Articles of Association connected therewith. The Board of Directors will resolve separately on the record date for the reverse share split following the end of the subscription period for the rights issue, but before 30 June 2010.

Timetable 2010

7 April: AGM to decide on the resolution of the Board of Directors regarding the rights issue, the proposed share capital reduction, the reverse share split and amendments to the Articles of Association.
Last day of trading in the SAS share including the right to participate in the rights issue
8 April: First day of trading in the SAS share excluding the right to participate in the rights issue
9 April: Expected date of publication of prospectus for the rights issue
12 April: Record date for participating in the rights issue
15 April – 26 April: Trading in subscription rights
15 April – 29 April: Subscription period
5 May: Announcement of outcome of the rights issue

The subscription rights will be traded on NASDAQ OMX Stockholm, NASDAQ OMX Copenhagen and Oslo Børs. Subscription rights will not be transferable between Euroclear Sweden, VP Securities Services and VPS (Verdipapirsentralen). SAS will apply for listing of the new shares in Stockholm, Copenhagen and Oslo in connection with the completion of the rights issue.

Statements by principal shareholders and underwriting commitment
The Swedish, Danish and Norwegian governments have on or prior to 9 February 2010 separately expressed to the Board of Directors their support for the rights issue. Parliamentary decisions to authorize each government, or, with respect to Denmark, the Minister of Finance, to subscribe for each state’s respective pro rata share of the rights issue, subject to certain conditions, were adopted on 24 March 2010 in Denmark, and on 25 March 2010 in Norway and Sweden. KAW has expressed its support for the rights issue and its willingness, subject to certain conditions, to participate in the rights issue on a pro rata basis. Together, the above mentioned four shareholders represent 57.6 percent of all outstanding votes and shares in SAS.

J.P. Morgan, Nordea and SEB Enskilda, acting as Joint Global Coordinators, Joint Lead Managers and Joint Bookrunners, DnB NOR Markets and The Royal Bank of Scotland, acting as Joint Lead Managers and Joint Bookrunners, and Danske Markets, acting as Co-Lead Manager, have entered into an underwriting agreement in respect of the remaining 42.4 percent of the shares to be issued in the rights issue. The underwriting agreement is subject to customary terms and conditions.

For further information, please contact
Sture Stølen, Head of SAS Group Investor Relations, +46 8 797 14 51

SAS Group Investor Relations

SAS discloses this information pursuant to the Swedish Securities Market Act and/or the Swedish Financial Instruments Trading Act. The information was provided for publication on 6 April 2010, at 8:30 p.m. CET.

Disclaimer
This document is not being distributed to persons in any state or jurisdiction where the offer or sale of the Rights or Shares is not permitted.

These materials are not an offer for sale of securities in the United States. Securities may not be sold in the United States absent registration with the United States Securities and Exchange Commission or an exemption from registration under the U.S. Securities Act of 1933, as amended. The issuer of the securities does not intend to register any part of the offering in the United States or to conduct a public offering of the Rights or the Shares in the United States.

This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons in (i), (ii) and (iii) above together being referred to as “relevant persons”). The Rights and the Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

This document is an advertisement and is not a prospectus for the purposes of Directive 2003/71/EC (such Directive, together with any applicable implementing measures in the relevant home Member State under such Directive, the “Prospectus Directive”). A prospectus prepared pursuant to the Prospectus Directive will be published, which, when published, can be obtained from the SAS Group. Investors should not subscribe for any securities referred to in this document except on the basis of information contained in the prospectus.

In any EEA Member State that has implemented the Prospective Directive, this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive.

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