=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/2004/08/17/f= inancial1259EDT0113.DTL --------------------------------------------------------------------- Tuesday, August 17, 2004 (AP) Air Canada's creditors overwhelmingly approve restructuring plan (08-17) 11:07 PDT MONTREAL (AP) -- Air Canada's creditors voted overwhelmingly on Tuesday to approve a restructuring plan, paving the way for the airline's emergence from bankruptcy-court shelter after more than a year. The vote was 99.6 percent in favor, the Montreal-based airline announced after a special meeting. "The strong support for Air Canada's restructuring plan received from creditors today is appreciated," chief executive Robert Milton said. "This positive response from creditors represents by far the most critic= al vote of confidence in the strength of our business plan and the airline's prospects going forward," Milton said. The airline plans to emerge from creditor protection on Sept. 30, after approval by the court overseeing its restructuring at a hearing scheduled for Aug. 23 in Toronto. In June, Air Canada accepted an approximately $183 million investment proposal from New York firm Cerberus Capital Management for a 9.2 percent stake in the airline. The investment came atop an equity offering of about $621 million to be underwritten by Deutsche Bank. The plan will see creditors receive just pennies on the dollar for their debts. Air Canada, which has been operating under creditor protection since April 1, 2003, has said potential claims were whittled down from $78 billion to as little as $6.1 billion. The airline estimated that if total claims were $7.5 billion, creditors would recover about 9.25 cents for every dollar owed. But the main value for the creditors will be in the equity they will receive in the restructured airline. That may be worth plenty if Air Canada's business plan succeeds. As part of its restructuring plan, the new Air Canada holding company plans to establish several of its units as stand-alone businesses. In addition to regional subsidiary Jazz and online travel business Destina, which are already established as on their own, Air Canada plans to spin off its technical services, cargo and ground handling operations into separate businesses or limited partnerships. The company is forecasting operating profits of $823 million on revenue = of $6.6 billion for 2004, and $1.2 billion on $6.8 billion in revenue in 2005. But it now has to deal with soaring fuel prices. In reporting the second-quarter results this month, Air Canada said fuel costs rose 28 percent from a year earlier to $281 million. ---------------------------------------------------------------------- Copyright 2004 AP