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Globe and Mail
15-07-2025
- Business
- Globe and Mail
Transat shareholders deserved a vote in the federal government's bailout
Pierre Karl Péladeau deserved better when he tried to buy airline Transat A.T. Inc TRZ-T. We can debate whether the telecom and media billionaire and former Parti Québécois leader would be a good pilot at the debt-heavy carrier. But like a lot of people, I've learned to never underestimate PKP. There's no debate shareholders in Montreal-based Transat deserved an opportunity to vote on a restructuring that froze out Mr. Péladeau, one of the company's largest investors, and instead increased the federal government's stake in the airline. The recapitalization of Transat that closed on July 10 used loopholes in pandemic-era legislation to ride roughshod over basic shareholder rights. This month's reworking of Transat's finances has its roots in worst days of the COVID-19 pandemic, when the company tapped a federal loan program, the Large Enterprise Emergency Funding Facility or LEEFF. Rival Westjet Airlines never took government money, while Air Canada paid back their loans. At the start of this summer, Transat still owed $772-million under the federal loan program. Repaying the loan and other debt weighed heavy on the airline's stock price. Transat shares traded at $1.65 in early June, just before the recapitalization announcement. Mr. Péladeau, who owns 9 per cent of Transat through family holding company Financière Outremont, offered to buy the company numerous times, including an offer of $2.64 per share. Quebecor Inc.'s chief executive officer, an experienced hand at negotiating with government, clearly saw an opportunity to snap up the airline, then work with Ottawa to fix the balance sheet. He hired investment bank Canaccord Genuity Group Inc. to advise on the bid. Instead of falling into Mr. Péladeau arms, Transat and LEEFF's operator – the Canada Enterprise Emergency Funding Corp. or CEEFC – announced a sweeping recapitalization on June 4. The federal agency forgave almost half the money owed to taxpayers, cutting the LEEFF loan to $334-million and reducing the interest rate. In return, CEEFC received convertible preferred shares in Transat representing a 19.9-per-cent stake in the airline. 'CEEFC has worked closely with Transat to ensure it meets its obligations under the LEEFF program while supporting the company's continued commercial viability in a competitive market,' said Elizabeth Wademan, chief executive officer of CEEFC parent company Canada Development Investment Corp, in a June press release. Contra Guys: We'll wait till we see clearer skies for this airline The federal government also owns warrants in Transat that date back to the original LEEFF loan in 2021. Add the warrants to the preferred shares and the federal government has a 32.6-per-cent stake in Transat on a fully diluted basis. A stake that size effectively blocks a hostile Transat takeover. In late June, Mr. Péladeau went to the Quebec Superior Court, asking Transat to hold a shareholder vote on a transaction that he alleged transferred control of the airline to the federal government. He didn't ask to overturn the deal with CEEFC. He simply asked the owners be allowed to approve a recapitalization that massively diluted their stakes. Mr. Péladeau lost the court fight. Transat successfully argued it relied on exemptions to regulations protecting the rights of minority shareholders, which are loopholes reflecting pandemic financing rules. The airline also won court support for its argument that CEEFC cannot control the company. As part of the restructuring, CEEFC pledged it would cap its exercise of warrants and preferred shares so the federal government never owns more than 19.9 per cent of Transat's common shares at any time. In any normal transaction, shareholders get a vote on a debt-for-equity swap that sees a creditor get 19.9 per cent of their company, and an overall interest that amounts to nearly a third of the company. The company and the courts denied Transat shareholders this basic right. Would Transat's owners have spurned the CEEFC proposal for a takeover offer from Mr. Péladeau? That's now an academic question. The CEEFC refinancing failed to fix all that ails the airline. 'Transat no longer faces a potential liquidity issue,' said analyst Konark Gupta at Scotiabank in a recent report. 'That said, its absolute debt levels relative to its EBITDA profile, even after this refinancing, makes for a volatile equity.' In Quebec, where business battles frequently have political overtones, the federal government is now playing a kingmaker at a flagship airline co-founded by Premier François Legault. The courts denied Transat shareholders a voice in the transaction that created this situation. If Transat hits turbulence, Mr. Péladeau has every right to remind investors who could have been the pilot.
Montreal Gazette
14-07-2025
- Business
- Montreal Gazette
Pierre Karl Péladeau remains in hunt for Transat AT
By Bloomberg Quebec billionaire Pierre Karl Péladeau says he's not giving up his long pursuit of Transat AT Inc., arguing the travel company's latest balance-sheet manoeuvres still leave it with too much debt. 'It's not over until it's over,' Péladeau said in an interview with Bloomberg News. 'The company will require another restructuring. They cannot live with that, or if they live with that, they will be impaired in their capacity to develop the business.' Péladeau's interest in owning Transat goes back many years. He mulled a bid when the company was in play in 2019, but the board eventually agreed to an offer of $18 a share from Air Canada. The COVID-19 pandemic struck before the transaction closed, and it was scuttled altogether in 2021. Péladeau has made a number of attempts to buy the company since. Last month, he offered $2.64 a share, which was rejected. Transat, a Montreal-based company that owns Air Transat, has grappled with an overwhelming debt incurred during the pandemic, when it had to get emergency funding from the Canadian government. Last month, the government agreed to reduce that debt by around $440 million. The remaining debt was restructured into a credit facility, a 10-year debenture and convertible preferred shares, the latter of which would give Ottawa a 19.9 per cent voting stake if converted to common shares. The deal didn't sit well with Péladeau, who owns slightly more than 9 per cent of Transat. His family office, Financière Outremont, advised by Canaccord Genuity Group Inc., made its $2.64 per share offer, but it was conditional on reaching an agreement with the Canadian government on debt terms. Transat rejected it. 'I was taking the risk to negotiate,' said Péladeau, whose wealth mostly comes from his controlling stake in telecom and media company Québecor Inc. He tried to stop the deal with the Canadian government in court, arguing that Transat should have consulted shareholders. A judge sided with the company, which had argued the severity of the situation allowed it to bypass shareholders. As of the end of April, prior to the debt restructuring, Transat had a net $1.7 billion in debt and lease liabilities. Transat shares have soared by about 70 per cent since the debt restructuring was announced in June and were trading at $2.80 early Monday, raising the market capitalization to $116 million. Péladeau said the stock price should have risen by much more than that. 'The market is saying it doesn't work,' he said. Desjardins analyst Benoit Poirier wrote in a report last month that despite the debt swap, 'leverage is still elevated relative to industry norms.' He forecasts the company to have a ratio of 6.7 times net debt to adjusted earnings before interest, taxes, depreciation and amortization for the fiscal year that ends Oct. 31. Air Canada has a ratio of lower than two times. 'I need to reconsider the situation,' Péladeau said when asked about what will be his next move. Péladeau believes Transat's restructuring raises a fundamental issue. 'Should the Canadian government be the largest shareholder of an airline, which is regulated by the government? So if I'm an American and I look at this, I say: 'What's wrong here?' ' Transat said in a statement that the refinancing was 'the best outcome in the interest of all stakeholders' and 'paves the way for Transat to further implement its long-term sustainable strategic and optimization plan.' The company declined to comment on Péladeau's considerations. The court proceedings revealed that Transat had set up a special committee in September to look for available options to restructure the debt. In January, a solicitation process was launched and 49 potential investors were approached. Only two bidders, including Péladeau's family office, made it to the final phase, and they offered no equity value. The Canadian government ended up agreeing to the refinancing. The Caisse de dépôt et placement du Québec, one of the largest shareholders, said it was in favour of the debt swap. 'The restructuring of Transat's debt was an essential step and will be beneficial to the company's turnaround. We hope that this Quebec-based company will be able to return to growth, after the more difficult years of the pandemic,' the firm said in a statement emailed by a spokesperson.
Toronto Sun
14-07-2025
- Business
- Toronto Sun
Billionaire Peladeau still wants to take over travel company Transat
Published Jul 14, 2025 • 3 minute read Pierre Karl Peladeau Photo by Graham Hughes / Photographer: Graham Hughes/Bloo (Bloomberg) — Quebec billionaire Pierre Karl Peladeau says he's not giving up his long pursuit of Transat AT Inc., arguing the travel company's latest balance-sheet maneuvers still leave it with too much debt. This advertisement has not loaded yet, but your article continues below. THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY Subscribe now to read the latest news in your city and across Canada. Unlimited online access to articles from across Canada with one account. Get exclusive access to the Toronto Sun ePaper, an electronic replica of the print edition that you can share, download and comment on. Enjoy insights and behind-the-scenes analysis from our award-winning journalists. Support local journalists and the next generation of journalists. Daily puzzles including the New York Times Crossword. 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Access articles from across Canada with one account Share your thoughts and join the conversation in the comments Enjoy additional articles per month Get email updates from your favourite authors Don't have an account? Create Account 'It's not over until it's over,' Peladeau said in an interview with Bloomberg News. 'The company will require another restructuring. They cannot live with that, or if they live with that, they will be impaired in their capacity to develop the business.' Peladeau's interest in owning Transat goes back many years. He mulled a bid when the company was in play in 2019, but the board eventually agreed to an offer of C$18 a share from Air Canada. The Covid pandemic struck before the transaction closed, and it was scuttled altogether in 2021. Peladeau has made a number of attempts to buy the company since. Last month he offered C$2.64 a share, which was rejected. Transat, a Montreal-based company that owns Air Transat, has grappled with an overwhelming debt incurred during the pandemic, when it had to get emergency funding from the Canadian government. Last month, the government agreed to reduce that debt by around C$440 million ($322 million). The remaining debt was restructured into a credit facility, a 10-year debenture and convertible preferred shares, the latter of which would give Ottawa a 19.9% voting stake if converted to common shares. Your noon-hour look at what's happening in Toronto and beyond. By signing up you consent to receive the above newsletter from Postmedia Network Inc. Please try again This advertisement has not loaded yet, but your article continues below. The deal didn't sit well with Peladeau, who owns slightly more than 9% of Transat. His family office, Financiere Outremont, advised by Canaccord Genuity Group Inc., made its C$2.64 per share offer, but conditional on reaching an agreement with the Canadian government on debt terms. Transat rejected it. 'I was taking the risk to negotiate,' said Peladeau, whose wealth mostly comes from his controlling stake in telecom and media company Quebecor Inc. He tried to stop the deal with the Canadian government in court, arguing that Transat should have consulted shareholders. A judge sided with the company, which had argued the severity of the situation allowed it to bypass shareholders. As of the end of April, prior to the debt restructuring, Transat had a net C$1.7 billion in debt and lease liabilities. This advertisement has not loaded yet, but your article continues below. Transat shares have soared by about 70% since the debt restructuring was announced in June and were trading at C$2.80 early Monday, raising the market capitalization to C$116 million. Peladeau said the stock price should have risen by much more than that. 'The market is saying it doesn't work,' he said. Desjardins analyst Benoit Poirier wrote in a report last month that despite the debt swap, 'leverage is still elevated relative to industry norms.' He forecasts the company to have a ratio of 6.7 times net debt to adjusted earnings before interest, taxes, depreciation and amortization for the fiscal year that ends Oct. 31. Air Canada has a ratio of lower than 2 times. 'I need to reconsider the situation,' Peladeau said when asked about what will be his next move. This advertisement has not loaded yet, but your article continues below. Peladeau believes Transat's restructuring raises a fundamental issue. 'Should the Canadian government be the largest shareholder of an airline, which is regulated by the government? So if I'm an American and I look at this, I say: What's wrong here?' Transat said in a statement that the refinancing was 'the best outcome in the interest of all stakeholders' and 'paves the way for Transat to further implement its long-term sustainable strategic and optimization plan.' The company declined to comment on Peladeau's considerations. The court proceedings revealed that Transat had set up a special committee in September to look for available options to restructure the debt. In January, a solicitation process was launched and 49 potential investors were approached. Only two bidders, including Peladeau's family office, made it to the final phase, and they offered no equity value. The Canadian government ended up agreeing to the refinancing. The Caisse de Depot et Placement du Quebec, one of the largest shareholders, said it was in favor of the debt swap. 'The restructuring of Transat's debt was an essential step and will be beneficial to the company's turnaround. We hope that this Quebec-based company will be able to return to growth, after the more difficult years of the pandemic,' the firm said in a statement emailed by a spokesperson. Columnists Letters Golf Uncategorized Editorial Cartoons
Cision Canada
10-07-2025
- Business
- Cision Canada
Transat A.T. Inc. and CEEFC Announce Closing of the Restructuring of the LEEFF Debt Français
MONTREAL, July 10, 2025 /CNW/ - Transat A.T. Inc. ("Transat" or the "Corporation") announced today that it has closed the restructuring of the indebtedness incurred by Transat under the Large Enterprise Emergency Funding Facility (LEEFF) program managed by Canada Enterprise Emergency Funding Corporation ("CEEFC") as previously communicated on June 5, 2025 (the "Transaction"). Following the Transaction, the Corporation's outstanding debt with CEEFC is reduced to $334M from $772M as at March 31, 2025. The agreement deals with the entire indebtedness of the Corporation with CEEFC, and results in such indebtedness, in a principal amount of approximately $772M in the aggregate as at March 31, 2025, having been restructured as follows: Repayment of $41.4M in cash to CEEFC Credit facilities reduced to a single credit facility of $175M Issuance to CEEFC of a $158,735,045 debenture maturing in 10 years Issuance to CEEFC of $16,264,955 of preferred shares convertible into 9,934,617 Class B Voting Shares representing 19.9% of the issued and outstanding voting shares of Transat based on the 5-day VWAP on June 5, 2025) at any time after the earlier of the second anniversary of closing and the redemption of preferred shares for proceeds of $16,264,955 pursuant to mandatory prepayment events. (1) Please refer to the Corporation's press release of June 5, 2025 for a more detailed description of the Transaction and its main components. About Transat Founded in Montreal in 1987, Transat has achieved worldwide recognition as a provider of leisure travel particularly as an airline under the Air Transat brand. Voted World's Best Leisure Airline by passengers at the 2025 Skytrax World Airline Awards, it flies to international destinations. Air Transat's fleet includes some of the most energy-efficient aircraft in their category. Based in Montreal, Transat has 5,000 employees with a common purpose to bring people closer together. (TSX: TRZ) About CEEFC CEEFC is a federal Crown corporation, incorporated in May 2020 under the Canada Business Corporations Act and is a wholly owned subsidiary of Canada Development Investment Corporation. CEEFC currently manages the Large Employer Emergency Financing Facility (LEEFF) program and the Large Enterprise Tariff Loan (LETL) facility. (1) Note: Between the holding of share purchase warrants and convertible preferred shares, CEEFC will hold securities exercisable or convertible for an aggregate of 19,371,389 Class B voting shares, representing approximately 32.6% of the outstanding voting shares after giving effect to such exercise or conversion, provided that at no time will the exercise of warrants or conversion of Preferred Shares result in CEEFC beneficially owning or controlling in excess of 19.9% of the voting shares of Transat. CEEFC intends to hold the Preferred Shares for investment purposes. Depending on market conditions and other factors, including Transat's business and financial condition, CEEFC may dispose of some or all of the securities of Transat that it owns. CEEFC and its affiliates do not intend to acquire additional equity securities of Transat except through the possible exercise of the warrants and conversion of the Preferred Shares. An early warning report will be filed by CEEFC in accordance with applicable securities laws and will be available on SEDAR+ at or may be obtained directly from CEEFC upon request from Mr. Bruno Lemay at 416-966-0185. Financial analysts: Juliette Gauthier Senior Director, Investor Relations and Corporate Finance [email protected] 514 987-1616, ext. 104019 SOURCE Transat A.T. Inc.
Associated Press
28-06-2025
- Business
- Associated Press
Clarification by Transat A.T. Inc. following injunction application by Financière Outremont Inc.
MONTREAL, June 27, 2025 /CNW/ - Transat A.T. Inc. ('Transat' or the 'Corporation') announces that on June 27, 2025, it was served with an application for an interlocutory injunction and permanent injunction (the 'Injunction Application') from Financière Outremont Inc. ('Financière Outremont'), a company controlled by Mr. Pierre Karl Péladeau, in connection with the announcement of the agreement in principle published on June 5, 2025, with Canada Enterprise Emergency Funding Corporation ('CEEFC') regarding the restructuring of the debt incurred by Transat under the Large Employer Emergency Funding Facility (LEEFF) program managed by CEEFC during the COVID-19 pandemic (the 'Transaction'). Since the announcement of the agreement in principle, the Corporation's share price has increased from $1.64 at market close on June 4, 2025, to $2.83 at market close on June 27, 2025, representing a 72% increase. As a reminder, upon completion of the Transaction, the outstanding debt with CEEFC will be written-off by nearly 50%, from $772M as at March 31, 2025, to $334M as follows: At no time will the exercise of Warrants or conversion of Preferred Shares result in CEEFC beneficially owning more than 19.9% of the common shares, and therefore, CEEFC will not exert control over the Corporation. The Injunction Application by Financière Outremont aims in particular to prevent the closing of the Transaction, beneficial for the Corporation, unless the Corporation obtains shareholder approval, which the Corporation deems not required. In this regard, the Corporation reiterates that it has rightfully relied on the formal valuation and minority approval exemptions contained in sections 5.5(g) and 5.7(1)(e) of Regulation 61-101 respecting Protection of Minority Security Holders in Special Transactions, given that the Transaction significantly strengthens the financial position of the issuer, which was becoming extremely precarious due to the size of its debt, as repeatedly disclosed in the Corporation's public filings. The Corporation believes the allegations made by Financière Outremont are unfounded and intends to contest them vigorously and seek dismissal of the Injunction Application. This application does not affect the Corporation's operations. The Corporation recalls that the announced Transaction is the result of discussions initiated over 18 months ago with CEEFC and the review of a range of alternatives conducted through a robust process with the assistance of a special advisory committee of the Board of Directors composed solely of independent directors, with a view to establishing an optimal long-term capital structure for the Corporation. The Transaction was unanimously approved by the Board of Directors on the recommendation of the special committee, which completed its work with the assistance of external financial and legal advisors. The usual conditional approval of the Toronto Stock Exchange was obtained regarding the Preferred Shares component. The Transaction is subject to the finalization of definitive agreements. The Corporation does not intend to comment further on the Injunction Application out of respect for the ongoing judicial process unless circumstances warrant otherwise. For more details on the Transaction, please refer to the press release issued by the Corporation on June 5, 2025, available on SEDAR+ at Caution Regarding Forward-Looking Information This news release contains certain forward-looking statements with respect to the Corporation. These forward-looking statements are identified by the use of terms and phrases such as 'anticipate' 'believe' 'could' 'estimate' 'expect' 'intend' 'may' 'plan' 'potential' 'predict' 'project' 'will' 'would', the negative of these terms and similar terminology, including references to assumptions. All such statements are made pursuant to applicable Canadian securities legislation. Such statements may involve but are not limited to comments with respect to strategies, expectations, planned operations or future actions. Forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by these forward-looking statements. The forward-looking statements may differ materially from actual results for a number of reasons, including without limitation, economic conditions, changes in demand due to the seasonal nature of the business, extreme weather conditions, climatic or geological disasters, war, political instability, measures taken, planned or contemplated by governments regarding the imposition of tariffs on exports and imports, real or perceived terrorism, outbreaks of epidemics or disease, consumer preferences and consumer habits, consumers' perceptions of the safety of destination services and aviation safety, demographic trends, disruptions to the air traffic control system, the cost of protective, safety and environmental measures, competition, maintain and grow its reputation and brand, the availability of funding in the future, the Corporation's ability to repay its debt from internally generated funds or otherwise, the Corporation's ability to adequately mitigate the Pratt & Whitney GTF engine issues, fluctuations in fuel prices and exchange rates and interest rates, the Corporation's dependence on key suppliers, the availability and fluctuation of costs related to our aircraft, information technology and telecommunications, cybersecurity risks, changes in legislation, regulatory developments or procedures, pending litigation and third-party lawsuits, the ability to reduce operating costs through the Elevation program initiatives, among other things, the Corporation's ability to attract and retain skilled resources, labour relations, collective bargaining and labour disputes, pension issues, maintaining insurance coverage at favourable levels and conditions and at an acceptable cost, and other risks detailed in the Risks and Uncertainties section of the MD&A included in our 2024 Annual Report. The reader is cautioned that the foregoing list of factors is not exhaustive of the factors that may affect any of the Corporation's forward-looking statements. The reader is also cautioned to consider these and other factors carefully and not to place undue reliance on forward-looking statements. The Corporation considers that the assumptions on which these forward-looking statements are based are reasonable. These statements reflect current expectations regarding future events and operating performance, speak only as of the date this news release is issued, and represent the Corporation's expectations as of that date. For additional information with respect to these and other factors, see the MD&A for the quarter ended April 30, 2025 filed with the Canadian securities commissions and available on SEDAR+ at The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable securities legislation. About Transat A.T. Inc. Founded in Montreal 37 years ago, Transat has achieved worldwide recognition as a provider of leisure travel particularly as an airline under the Air Transat brand. Voted 2025 World's Best Leisure Airline by passengers at the Skytrax World Airline Awards, it flies to international destinations. Air Transat's fleet includes some of the most energy-efficient aircraft in their category. (TSX: TRZ) Media: Alex-Anne Carrier Senior Advisor, Communications and Public Affairs [email protected] Media site: Financial analysts: Jean-François Pruneau Chief Financial Officer [email protected] SOURCE Transat A.T. Inc.
