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Air Canada has struck a CAD$250 million (USD$183.8 million) investment deal
with Cerberus Capital Management, clearing another hurdle in the airline's
attempt to emerge from bankruptcy protection, officials said on Wednesday.
The investment, provided in convertible preference shares, along with
CAD$850 million raised through a rescue package with Deutsche Bank, brings
the total equity raised by the airline to CAD$1.1 billion (USD$808.5
million).
"We are pleased at having reached a successful outcome to the equity
process," said Robert Milton, Air Canada's chief executive, calling it a
"concrete step" in the effort to emerge from court protection by the end of
September.
The deal marked the second time the private New York investment firm has
attempted to get a stake in Montreal-headquartered Air Canada.
Cerberus's first bid lost out to Hong Kong magnate Victor Li's Trinity Time
Investment, but Trinity's investment proposal was derailed in April when Air
Canada's unions refused to accept a demand for additional pension
concessions.
"Our investment reflects Cerberus's confidence that Air Canada will emerge
from this process as an airline industry leader with true potential for
profitability and growth," said Brett Ingersoll, Cerberus's managing
director.
The press release announcing the agreement also included a statement by
Deutsche Bank praising the deal.
Under the deal, the convertible preference shares can be converted to common
shares that would give Cerberus a stake of about 9.2 percent in Air Canada
Enterprises, the airline's newly created holding company.
In a separate announcement on Wednesday, Air Canada announced that an
Ontario judge has approved its plan for resolving a funding deficit in its
pension plan. The issue had to be resolved as part of the Deutsche Bank
deal.
(Reuters)
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