By Dominic Chopping

STOCKHOLM–Scandinavian airline SAS AB mentioned Sunday that it has entered right into a $700 million bridge financing settlement with Apollo International Administration Inc. because it continues working via the chapter 11 bankruptcy-protection course of.

The so-called debtor-in-possession, or DIP, financing credit score settlement is a specialised kind of bridge financing utilized by companies which can be restructuring via a chapter 11 course of. The DIP financing, together with money generated from the airline’s ongoing operations, allows SAS to proceed assembly its obligations all through the chapter 11 course of, it mentioned.
SAS earlier this 12 months launched a complete restructuring plan to chop annual prices by 7.5 billion Swedish kronor ($734.Eight million), convert round SEK20 billion of debt and hybrid notes into widespread fairness and lift not less than SEK9.5 billion in new capital.
It final month filed for chapter 11 chapter safety within the U.S., because it seeks to push via the plan to chop prices and lift capital.
As a part of the DIP financing deal, SAS mentioned that Apollo may convert its mortgage into new fairness in SAS. If it have been to do that, Apollo has agreed phrases with the Danish state that might see Denmark purchase as much as $250 million of Apollo’s fairness pursuits in SAS.
The Swedish and Danish states every personal 21.8% in SAS and have each confirmed assist for changing their debt into fairness, whereas Denmark mentioned it may doubtlessly make investments new capital.
Norway would not maintain an fairness stake in SAS, however has proven assist for the transformation plan with the federal government saying that it’d comply with convert its excellent debt into SAS shares.
SAS anticipates receiving courtroom approval for its DIP financing by mid-September.
The DIP facility matures 9 months after the time limit, however could also be prolonged for an extra three-month interval as much as 3 times, topic to the corporate paying an escalating extension charge.
Write to Dominic Chopping at dominic.chopping@wsj.com