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Air Canada Receives Conditional Exemption From Applicable Take-Over Bid And Related Early Warning Reporting Requirements

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Transmitted by CNW Group on : May 4, 2012 17:25

Air Canada Receives Conditional Exemption from Applicable Take-Over Bid and Related Early Warning Reporting Requirements

MONTREAL, May 4, 2012 /CNW Telbec/ - Air Canada (TSX: AC.B AC.A) announced today that it has received a conditional exemption which would effectively treat Air Canada's Class A variable voting and Class B voting shares as a single class for the purposes of applicable take-over bid requirements and early warning reporting requirements contained under Canadian securities laws. The exemption, however, will become effective immediately (but only) upon shareholder approval of proposed related amendments to Air Canada's shareholder rights plan agreement, which Air Canada will seek at its annual and special meeting of Air Canada shareholders to be held on June 4, 2012. Additional details of the exemption and the proposed amendments to Air Canada's shareholder rights plan agreement are provided below.

Exemption from Applicable Take-Over Bid Requirements and Proposed Amendments to Air Canada's Shareholder Rights Plan

On May 4, 2012, pursuant to an application by Air Canada, the Autorité des marchés financiers, as principal regulator, the Ontario Securities Commission and the securities regulatory authorities in the other provinces of Canada granted exemptive relief (the "Decision") from (i) applicable formal take-over bid requirements, as contained under Canadian securities laws, such that those requirements would only apply to an offer to acquire 20% or more of the outstanding Class A variable voting shares and Class B voting shares of Air Canada on a combined basis, and (ii) applicable early warning reporting requirements, as contained under Canadian securities laws, such that those requirements would only apply to an acquirer who acquires or holds beneficial ownership of, or control or direction over 10% or more of the outstanding Class A variable voting shares and Class B voting shares of Air Canada on a combined basis (or 5% in the case of acquisitions during a take-over bid). A copy of the Decision is available on SEDAR at www.sedar.com.

The Decision, however, will become effective immediately (but only) upon shareholder approval of the proposed amendments to the shareholder rights plan agreement (the "Rights Plan") dated as of March 30, 2011 between Air Canada and CIBC Mellon Trust Company described in the management proxy circular. The proposed amendments are subject to approval by a majority of the holders of Class A variable voting shares and Class B voting shares of Air Canada (voting together as a single class), voting in person or by proxy at Air Canada's June 4, 2012 meeting. Subject to certain exceptions identified in the Rights Plan, the Rights Plan currently would be triggered in the event of an offer to acquire 20% or more (on a per class basis) of the outstanding Class A variable voting shares or Class B voting shares. The proposed amendments would modify the Rights Plan to be consistent with the Decision so that it would only be triggered by an offer to acquire 20% or more of the outstanding Class A variable voting shares and Class B voting shares of Air Canada on a combined basis. A copy of the management proxy circular is available on Air Canada's website at aircanada.com or on SEDAR at www.sedar.com.

Objective of the Decision

While having increased its public float significantly over recent years, and having a flexible capital structure that is designed to permit non-Canadian (as defined under the Canada Transportation Act) investors to become shareholders of Air Canada, the relatively small number of outstanding Class A variable voting shares (the share class for non-Canadians) may limit the ability of non-Canadians to acquire shares of Air Canada. In an effort to facilitate the acquisition of Class A variable voting shares, Air Canada applied to the Autorité des marchés financiers, as principal regulator, and the Ontario Securities Commission in order to seek the Decision. Though applicable take-over bid rules and early warning requirements apply to the acquisition of securities of a class, it was acknowledged in the Decision that aggregating Class A variable voting shares and Class B voting shares for the purpose of the take-over bid rules and early warning requirements may facilitate the acquisition of Class A variable voting shares. Because of the relatively small public float of Class A variable voting shares (compared to the public float of Class B voting shares), absent the Decision, it may be more difficult for non-Canadians to acquire shares in the ordinary course without the apprehension of inadvertently triggering the take-over bid rules or early warning requirements. The Decision considered the fact that the Class A variable voting shares and Class B voting shares have identical terms except for the foreign ownership voting limitations applicable in the case of the Class A variable voting shares.

The Decision also takes into account the fact that Air Canada's dual class shareholding structure was implemented solely to ensure compliance with the requirements of the Air Canada Public Participation Act and the Canada Transportation Act. An investor does not control or choose which class of Air Canada shares it acquires and holds. The class of shares ultimately available to an investor is only a function of the investor's status as a Canadian (holders of Class B voting shares) or non-Canadian (holders of Class A variable voting shares).

Shareholders of Air Canada will be asked at the meeting to consider and, if thought advisable, adopt a resolution approving the proposed amendments to the Rights Plan.

The Rights Plan, approved at Air Canada's 2011 annual and special shareholders meeting, is designed to provide the Air Canada's shareholders and the Board of Directors additional time to assess an unsolicited take-over bid for the company and, where appropriate, to give the Board of Directors additional time to pursue alternatives for maximizing shareholder value. It also encourages fair treatment of all shareholders by providing them with an equal opportunity to participate in a take-over bid.

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Krikey!? En Englais SVP?

Air Canada, the penny stock airline managed by the 5 million dollar man and a group of opportunist happy to skim their salaries (board of directors), wants to give itself protection in case a hostile takeover bid comes up. If one does come up, the board of director could be removed by the new "owner". In cases like these, the board puts in provisions so that it requires more effort to remove them. In this case, they want to treat voting shares as one group and somehow get advance warnings of takeover bids to be able to react to maximize share holder value. This from the group that took the share from 21$ to 0.92 cents. Maximizing shareholder value... an interesting concept.

Usually, the two share groups (A & B) are divided and get to vote separately on any large changes that would affect their share class. I am unsure why they want to treat both classes as one but regardless, both groups get to vote independently for the resolution at the next shareholder meeting. The board can not just push it through. Why are they doing this now? Who knows? Maybe someone wants to buy AC. Maybe Dagger can bring us up to speed.

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As a WestJet guy I fully endorse the present board!

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All 23000 Air Canada employees should get together and pitch in for a hostile takeover themselves. To get 51% control what's that roughly $5000 each at AC's present market cap ?

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If that were to happen, Air Canada would be in the same playing field as WestJet as they would be 'Air Canada owners' !!

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All 23000 Air Canada employees should get together and pitch in for a hostile takeover themselves. To get 51% control what's that roughly $5000 each at AC's present market cap ?

Very interesting concept, I'm surprised the union leaders have not already entertained this idea, or have they?!

On another note, what happens if Westjet spends a fraction of its cash for a hostile take-over; can it then do with it what it wants?!!

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The worst thing that could happen to WestJet is losing AC as a competitor on the NA domestic market. This coming from an Air Canada 'owner' :Grin-Nod:

(I did buy the shares. For less than a buck they are more fun than the Casino)

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As a WestJet guy I fully endorse the present board!

Really ???? AC is a great competitor for you. Could you grow to handle it's collapse? Not likely. Review your income statement history, the only quarters you weren't profitable coincided with a new player to the market ie Jetsgo

If you were in a race who would you want to compete against, the mentally handicapped (AC mgmt), obese (AC labour costs), shackled (AC unions) competitor or Mr. Unknown? The next "Usain Bolt" could be right around the corner.

WJ did the "unimaginable" in 1996 but it is not unrepeatable.

You need an AC mgmt team that keeps AC bumbling around long enough (without taxpayer money) for you establish the capacity and overseas capability. The current group isn't doing that.

Edited by Bobcaygeon
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Krikey!? En Englais SVP?

This whole thing is very fishy and makes no sense. The Class A and Class B shares are supposed to be interchangeable. If a foreign registrant buys Class B shares it is converted into Class A shares before delivery and vice versa. This is my understanding of the dual class share structure. It makes no difference that there is very few Class shares outstanding becauise any buyer could buy Class B shares and those would convert into Class A. There may be more behind this news release. Time will tell.

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Really ???? AC is a great competitor for you. Could you grow to handle it's collapse? Not likely. Review your income statement history, the only quarters you weren't profitable coincided with a new player to the market ie Jetsgo

Actually it was the accelerated write-down of the B732 fleet which drove the loss, if I recall, it was three years earlier than the original plan.

AC has always played silly bugger with WJ although of late they seem more reluctant to do so. The launch of WJX will be interesting to watch, reaction wise...

Jetsgo hurt for sure but how long did they last? Porter is kind of in the same boat they're just not doing the kamikaze runs like SG did.

I do agree with you though that a healthy (er) AC is good for everyone in Canada. WJ's historic best returns have been when AC has done well too.

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My guess is you need to speak German to understand this latest move. As far as being owners,... the employees have been owned...or owed..no money for pensions just money for well..the elite.

Jetstar Canada is not required...the wages are for 2 pilots not 3 on the Trans Atlantic or for 3 not 4 on the Pacific. It is time to fill the coffers of Raiders and not the ones from Oakland. We are all napping to pay for bonuses..

Trying to keep this light....the bulb is about to come on for many more Canadians who have seen an inkling of the Govt plans ahead.

As Sully would say...the airline workers have lead the way in austerity for years...now it's the public's turn.

Mergers and Demolition will have their way...the public is napping.

Westjet I wish you well...the Raiders will come to kick their version of a field goal later. Enjoy your efforts for now..the holiday will be over when the new and improved........management come to visit and they are finished gutting a pension plan of folks who have 35 years in the business. It's the latest synergy to be realised.

What do you have that they want? Time will tell. Probably they will borrow on your credit and youthfull vision. They hammer you for it later and profit handsomely.

Back to the salt mines...I only put my head up for a moment.

Dork

Corporate Vision...May The Theft Be With You.

http://www.pbs.org/wgbh/pages/frontline/flying-cheaper/

Edited by Dork

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Transmitted by CNW Group on : June 4, 2012 11:38

Air Canada Receives Shareholder Approval of Proposed Amendments to Shareholder Rights Plan

MONTREAL, June 4, 2012 /CNW Telbec/ - Air Canada (TSX: AC.B AC.A) announced today that it has received approval from its shareholders voting in favour of the proposed amendments to Air Canada's shareholder rights plan agreement (the "Rights Plan") at the annual and special meeting of its shareholders held earlier today. The proposed amendments were previously announced on May 4 and are described in the management proxy circular sent to Air Canada's shareholders prior to the meeting.

Subject to certain exceptions identified in the Rights Plan, the Rights Plan, as currently amended, would be triggered in the event of an offer to acquire 20% or more of the outstanding Class A variable voting shares and Class B voting shares of Air Canada calculated on a combined basis, instead of 20% or more of the outstanding Class A variable voting shares or Class B voting shares calculated on a per class basis as was the case under the Rights Plan prior to the amendments that came into effect today. A copy of the amended Rights Plan is available on SEDAR at www.sedar.com.

As announced in Air Canada's news release of May 4, 2012, the amendments to the Rights Plan were proposed in order to render effective a decision (the "Decision") issued by Canadian securities regulatory authorities (pursuant to an application of Air Canada) that effectively treats Air Canada's Class A variable voting shares and Class B voting shares as a single class for the purposes of applicable take-over bid requirements and early warning reporting requirements contained under Canadian securities laws.

The Decision grants exemptive relief from: (i) applicable take-over bid requirements, as contained under Canadian securities laws, such that those requirements would only apply to an offer to acquire 20% or more of the outstanding Class A variable voting shares and Class B voting shares of Air Canada on a combined basis, and (ii) applicable early warning reporting requirements, as contained under Canadian securities laws, such that those requirements would only apply to an acquirer who acquires or holds beneficial ownership of, or control or direction over 10% or more of the outstanding Class A variable voting shares and Class B voting shares of Air Canada on a combined basis (or 5% in the case of acquisitions during a take-over bid). A copy of the Decision is available on SEDAR at www.sedar.com. The Decision was conditional upon shareholder approval of the proposed amendments to the Rights Plan, which modified the Rights Plan to render it consistent with the Decision.

The Rights Plan, originally approved at Air Canada's 2011 annual and special shareholders meeting, is designed to provide Air Canada's shareholders and the Board of Directors additional time to assess an unsolicited take-over bid for the company and, where appropriate, to give the Board of Directors additional time to pursue alternatives for maximizing shareholder value. It also encourages fair treatment of all shareholders by providing them with an equal opportunity to participate in a take-over bid.

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