=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2004/06/23/f= inancial1938EDT0356.DTL --------------------------------------------------------------------- Wednesday, June 23, 2004 (AP) Air Canada accepts $183 million deal with Cerberus to leave bankruptcy prot= ection (06-23) 16:38 PDT TORONTO (AP) -- Air Canada accepted a $183 million investment proposal from New York-bas= ed investment firm Cerberus Capital Management LP on Wednesday for a 9.2 percent stake in the struggling airline. The Cerberus investment is in convertible preferred shares of Air Canada, which has been undergoing court supervised bankruptcy restructuring since April 2003. The investment, which comes atop a $621 million equity offering to be underwritten by Deutsche Bank, brings the total equity raised by Air Canada to $803 million. "We are pleased at having reached a successful outcome to the equity process which has the solid support of our major financial partners and creditors," Robert Milton, Air Canada's president and CEO, said in a statement. He said the deal was a "concrete step" toward emerging from bankruptcy protection Sept. 30. The deal was a redemption for Cerberus, which had initially lost out in the bidding to become Air Canada's partner. The airline had previously agreed to sell a controlling stake in the company to Trinity Time Investments for $475 million. "Our investment reflects Cerberus' 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' managing director. Ingersoll said a new business model, lowered costs and rationalized fleet would boost the airline. The convertible preference shares will be convertible into common shares. The Trinity deal fell apart in April after the company, controlled by Ho= ng Kong businessman Victor Li, insisted on changes to Air Canada's pension plans and its unions refused to approve Trinity's demands. Earlier Wednesday, the Ontario Superior Court overseeing Air Canada's restructuring approved a proposal to deal with its huge pension deficit. The proposal would allow the insolvent airline to make up an estimated $876 million deficit over 10 years -- rather than five years as required by Canadian law. The plan still requires approval by the federal finance minister, but the federal agency that oversees pensions supports it. Air Canada's two biggest financial backers, Deutsche Bank and General Electric Capital Aviation Services, had said the pension proposal must be resolved in order for them to provide further funding. ---------------------------------------------------------------------- Copyright 2004 AP