Sell ACE Aviation Shares Down to $3 - Canaccord

Now that the wind-up of ACE Aviation Holdings Inc. (ACEAF.PK) appears to be in serious jeopardy, the stock could be at the start of a long road down, says Canaccord Adams analyst Tom O. Varesh.

ACE shares are down over 6% on very slim volumes Monday morning as investors react negatively to results of ACE's offer to buy back all of its outstanding preferred shares announced last Thursday.

Mr. Varesh told clients in a note:

Only 1 million shares were tendered to the $20.00 per share offer, leaving 3.2 million shares outstanding.

We believe these outstanding shares are held by one shareholder and with preferred shares still outstanding, we do not believe ACE can move forward with its plans to 'wind up'.

As a result, Mr. Varesh advises selling the stock (both A and B class) right down to $3, the level it was trading at before wind-up announcement. While the bottom may not fall out of it just yet, we would sell it right down to the $3.

He said:

We continue to see too many risks that could once and for all kill the wind-up process, which would in turn drive the stock price much lower as shareholders would not be getting the cash distribution they otherwise would have if ACE were to have wound up.