11.24
On November 23, ACE Aviation provided additional details of the $20 million substantial issuer bid (SIB) announced as part of the company’s Q3/09 quarterly earnings release. The offer will expire at 5:00 pm ET on January 6, 2010.
The offer will be conducted as a “modified Dutch auction”, similar to
previous issuer bids at a bid range between $5.80 to $6.50 per share, in increments of $0.10 per share. An issuer bid circular containing further details is expected to be released on November 27.
If the bid is taken up at $6.10, we estimate ACE would redeem 3.28 million shares, increasing the Air Canada shares per ACE share ratio to 2.39 from 2.17 and increasing our undiscounted NAV estimate by 3.5%. The effectiveness of the SIB is reduced as the bid tender price is increased.
We also expect that, similar to recent bids, proceeds from tendering will be treated as a deemed dividend, subjecting investors to certain tax consequences.
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