ACE Aviation Holdings Inc. (ACEAF.PK), the parent company of Air Canada (AIDIF.PK), announced its plans Wednesday to dissolve itself in the coming months after a favorable ruling that will allow it to avoid a 50% hit on its distributions to its preferred shareholders.
The company has offered to purchase the outstanding C$322.7 million of 4.25% convertible notes at 90% of face value and the 12.5 million preferred shares at C$20 per share before liquidating its remaining assets and distributing whatever is left and its 75% interest in Air Canada to its investors. Both tender offers expire as of January 19, 2009.
Investors reacted favorably to the news with ACE’s B-class shares jumping roughly 100% in early morning trading Thursday on the Toronto Stock Exchange to C$6.67 a share as of 10 a.m. ET.
“We estimate each ACE shareholder will receive approximately C$7.00 per share in cash and 2.15 Air Canada shares,” said Chris Murray, CIBC World Markets analyst, in a note to clients Thursday.