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CHR Aviation is in Play


rudder
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31 minutes ago, rudder said:

With the change of control provisions of the CHR/AC CPA there can be only one viable potential bidder.

AC already owns 10% of CHR. It is likely AC.

How about Onex looking to replace their regional wing with Jazz?  

Quote

NEWS PROVIDED BY

WESTJET, an Alberta Partnership 

Oct 20, 2020, 16:39 ET


CALGARY, AB, Oct. 20, 2020 /CNW/ - Next week media are invited to join WestJet in-person in Calgary or virtually via Teams Live for a major announcement on the airline's premium traveller strategy and commitment to its home hub in Calgary.

 

What: WestJet Announcement

When: Week of Oct. 26, 2020

 

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Like I said, AC can void CPA based on change of control.

Jazz is not a good fit for WJ. It’s fleet and route structure entirely constructed for lower gauge city pairs and hub feed to AC hubs.

AC is the logical potential acquirer. Any other party would have to know that the CPA revenue stream could be terminated if change of control not approved by AC.

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2 minutes ago, neverminds said:

The release said a “third party” is making the bid. Since AC already owns 10% of Chorus is it  still considered third party?

Perhaps not.

And perhaps that is why the CHR news release references “a number of significant conditions” attached to the unsolicited offer.

A non-AC offer would have several significant hurdles.

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50 minutes ago, neverminds said:

To Whom would they spin Encore off?

do they need to spin it off or just shut it down?///  :Pros and cons???  However, this is just supposition and likely nowhere even close to realitiy. ?

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4 hours ago, Malcolm said:

do they need to spin it off or just shut it down?///  :Pros and cons???  However, this is just supposition and likely nowhere even close to realitiy. ?

Yes Air Canada is just going to let Jazz shut down and have the entire regional feed vanish and not feed the hubs. You crack me up LoL.   I will say the buyer is from the United States. United Airlines or Skywest ?

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5 hours ago, wizard said:

I will say the buyer is from the United States. United Airlines or Skywest ?

Quote

In an attempt to attract foreign investors into the Canadian aviation industry, Bill C-49 increased the foreign ownership limit on Canadian airlines from 25 per cent to 49 per cent. Two “safeguards” accompany the increase in foreign ownership limit:

  1. No more than 25 per cent of the voting interests are owned directly or indirectly by any single non-Canadian
  2. No more than 25 per cent of the voting interests are owned by one or more non-Canadians authorized to provide air services in any jurisdiction.

Therefore, even though the foreign ownership limit has been raised to 49 per cent, individual foreign investors cannot own more than 25 per cent of a Canadian airline and foreign air carriers, collectively, cannot own more than 25 per cent of a Canadian airline.

 

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Yes neverminds I am just spit balling.  Everyone is.

Airband,

That is why I threw Onex / Encore out there.  

-If Encore was in play right now we would have no idea because they are currently private. Porter would be the same.  Even Sky is private.......I think.

- An undisclosed suiter sounds like Onex’s MO.

- Onex said when they bought Westjet they had partnerships in the works.  Yes this is my own bias but I took that comment as US.

- Valuations could make now a good time to make this play.  Before we start turning the corner on Covid.

- It is not uncommon in the US to have one regional operate for multiple mainline carriers.

- Could Onex be making a Canadian regional play in partnership with  XXX?

- Does the conditional approval of the WJ/Delta joint venture play into this?

I stress here if it wasn’t obvious.  Wild Azz Guess.  Odds 1000:1 against.

 

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18 minutes ago, Falken said:

Fairfax Financial.

Fairfax holds $200MM in debentures issued by CHR.

Fairfax holds exercisable warrants for 24,242,424 shares in CHR which would represent a 16.5% stake.

Fairfax has the option to convert the debentures in order to fund the warrants. However, the warrant price is $8.25 per share.

Considering the market cap for CHR is $500MM (including the 31% increase in trading price yesterday), I am not sure they converting the debentures to equity is a value proposition.

Having said that, Fairfax may in fact be looking at simply taking up CHR shares on a gross basis with CHR BOD support.

The 50 day average price of CHR was $2.38. A 30% premium would be $3.10

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  • 3 months later...

Chorus Aviation acquisition proposal talks end without deal, potential investment talks remain

Fri Feb 19, 2021 - The Globe and Mail

Halifax - Chorus Aviation Inc. says an acquisition proposal from an unnamed bidder that it received last fall is no longer being considered, but that it remains in talks regarding a potential investment.

The aviation company said in October that it had received a preliminary, non-binding acquisition proposal that was subject to a number of significant conditions.

The comments came as Chorus reported a fourth-quarter profit of $9.2 million, down from $36.6 million a year earlier, as travel restrictions due to the pandemic hurt demand.

The profit amounted to six cents per diluted share for the quarter, down from 23 cents per diluted share a year earlier.

Operating revenue totalled $218.2 million, down from $338.6 million.

On an adjusted basis, Chorus says it earned five cents per share for the quarter, down from 15 cents per share a year earlier.

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Well, this makes Chorus bigger, but also locks it in more than ever with AC, and with an ALPA vote required, it's likely a complicated package. Likely bad news for Sky Regional folks, although perhaps the pilots will follow the planes to Chorus.

https://www.newswire.ca/news-releases/air-canada-revises-the-terms-of-its-capacity-purchase-agreement-with-chorus-aviation-for-regional-flying-847805263.html

Edited by dagger
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23 minutes ago, dagger said:

Well, this makes Chorus bigger, but also locks it in more than ever with AC, and with an ALPA vote required, it's likely a complicated package. Likely bad news for Sky Regional folks, although perhaps the pilots will follow the planes to Chorus.

https://www.newswire.ca/news-releases/air-canada-revises-the-terms-of-its-capacity-purchase-agreement-with-chorus-aviation-for-regional-flying-847805263.html

CPA fleet guarantees have not changed. This is purely defensive on the part of CHR. AC wanted to shrink  the 50 seat fleet at Express (Jazz flying). Only way for CHR to preserve existing revenue stream was to consolidate all Express flying.

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5 hours ago, boestar said:

AC makes he calls not CHR

 

My guess is this agreement represents the end point of the negotiation to modify the CPA, not the start point.

AC had leverage, but it did not have the unilateral right to permanently modify the terms of the CHR CPA.

Mutually agreeable outcome. Not Force Majeure. Not early termination.

To see what that looks like, here is the outcome that Skyregional faced. The correspondence is attributed to the Chairman of Skyregional. Copied from another public web board. Excerpt only:

 

"Dear Colleagues, 

As you may know, two weeks ago, Air Canada reported an operating loss of nearly $3.8 billion for 2020, the largest loss in its history. Moreover, over the last year, it has announced successive workforce reductions, route cancellations, station closures and aircraft disposals in order to survive the enormity of the COVID-19 pandemic, in the face of the various travel restrictions imposed by governments, thus far without any sector-specific support. I know that this situation has worried all of us and this is why I am talking with you today. 

Sadly, we have some bad news to share. 

Despite a fruitful and mutually beneficial 10-year relationship, Air Canada has advised us that they have made the difficult decision to terminate our Capacity Purchase Agreement as of March 31 and after that, I expect the transfer of our 25 Embraer aircraft by Air Canada to Jazz. 



 

 

 

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