ACE Aviation Holdings Incorporated, which owns a 75% stake in Air Canada, the largest airline in Canada and the counry’s flag carrier, has dedicdded to wind up its operations.
The company announced that it would spend over $500 million to buy back its debt and preferred shares and distribute its stake in Air Canada to shareholders.
ACE Aviation Holdings, which provides commercial airline service and technical support and is the parent company of Air Canada, was created as Air Canada emerged from bankruptcy in 2004. One of the more significant changes was the merging of its 6 small airlines into Air Canada and Air Canada Jazz. ACE Aviation holds a 6.1% stake in US Airways Group and its principal interests included Air Canada (750%) and ACTS (27.8%).
Air Canada, founded in 1937, has its corporate headquarters in Montreal, Quebec, Canada, since it moved from Winnipeg, Manitoba, in 1949. Air Canada provides scheduled and charter air transportation for passengers and cargo to about 170 destinations. With its largest hub at Toronto Pearson International Airport, Air Canada offers vacation packages to over 90 destinations via Air Canada Vacations.. Air Canada is a founding member of the Star Alliance.
ACE Aviation Holdings, which has been evaluating the best way to wind up operations for over a year now, said in a statement that it would ask a court to approve the transaction and appoint a liquidator to distribute its cash and holdings.
A report in the website thestar.com said that Robert Milton, chief executive of ACE Aviation Holdings, “had been evaluating the best way for the company to part with the Air Canada stake as a way to end the holding company structure it set up in 2004 as part of the airline’s bankruptcy protection proceedings.”
Shareholders must approve the plan at a meeting expected to be held in February 2009. The company is also looking to buy back its preferred shares and convertible notes before liquidating, offering Canadian $20 per preferred share and 90 Canadian cents per dollar of face value on the notes.
The company statement said that Aviation Holdings planned to buy back and cancel the convertible notes and preferred shares before seeking liquidation.
The company has Canadian $322.7 million (US $256.4 million) in notes outstanding and 12.5 million preferred shares worth Canadian $307.6 million it also plans to repurchase
Aviation Holdings said its assets at present include Canadian $811 million in cash, its 75% stake in Air Canada, and a 27.8% interest in an aircraft maintenance and repair business.
However, the Aviation Holdings statement made no mention of any plan to buy the remaining shares of Air Canada.
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