IS IT AN EARLY WARNING: Is something up at Transat 24 JAN 2014: Transat A.T. Inc. announced that it applied for, and has received, a conditional exemption from a takeover bid and related early warning reporting requirements. Subject to certain exceptions, the shareholder rights plan currently in place would be triggered in the event of an offer to acquire 20 percent or more of outstanding voting shares. Transat said in a release, ”This decision would effectively treat Transats Class A variable voting and Class B voting shares as a single class for the purposes of applicable takeover bid requirements and early warning reporting requirements contained under Canadian securities laws. The exemption is conditional on shareholder approval of the renewal of Transats shareholder rights plan, including the proposed amendments resulting from the decision (the 2014 Rights Plan), which approval Transat will seek at its annual and special meeting of shareholders to be held on March 13. Because Transat has a flexible capital structure that is designed to permit non-Canadian (as defined under the Canada Transportation Act) investors to become shareholders of Transat, the company says, the relatively small number of outstanding Class A Variable Voting Shares (the share class for non-Canadians) may limit the ability of non-Canadians to acquired shares of Transat. In an effort to facilitate the acquisition of Class A Variable Voting Shares, Transat applied to the Autorité des marchés financiers, as principal regulator, and the Ontario Securities Commission in order to seek the decision. Though applicable takeover bid rules and early warning requirements apply to the acquisition of securities of a class, it was acknowledged in the decision that aggregating Class A Variable Voting Shares and Class B Voting Shares for the purpose of the takeover bid rules and early warning requirements may facilitate the acquisition of Class A Variable Voting Shares. Because of the relatively small public float of Class A Variable Voting Shares (compared to the public float of Class B Voting Shares), without the decision, it could be more difficult for non-Canadians to acquire shares in the ordinary course without the apprehension of inadvertently triggering the takeovers rules or early warning requirements. The decision considered the fact that the Class A Variable Voting Shares and Class B Voting Shares have identical terms except for the foreign ownership limitations applicable in the case of the Class A Variable Voting Shares. The decision also takes into account the fact that Transats dual class shareholding structure was implemented solely to ensure compliance with the requirements of the Canada Transportation Act. An investor does not control or choose which class of Transat shares it acquires and holds. The class of shares ultimately available to an investor is only a function of the investors status as a Canadian (holders of Class B Voting Shares) or non-Canadian (holders of Class A Variable Voting Shares). The 2014 Rights Plan is designed to provide Transats shareholders and the Board of Directors additional time to assess an unsolicited takeover bid for the company and, where appropriate, to give the Board of Directors additional time to pursue alternatives for maximizing shareholder value. It also encourages fair treatment of all shareholders by providing them with an equal opportunity to participate in a takeover bid. So what does this all mean? Is Transat being primed for a takeover bid? The answer to the first question is that the two classes of stocks (those for Canadians and non-Canadians) are being treated the same allowing the company to recognize and react to any potential takeover bid. For anyone unfamiliar with the term, a takeover is essentially a corporate action in which one company looking to acquire another makes an offer to the target companys shareholders to buy the target companys shares in order to gain control of the business. Takeover bids can either be friendly or hostile. The answer to the second is, who knows? The release certainly doesnt identify any entity (foreign or domestic) lurking about ready to snatch up shares (though of course there could be -and its interesting to speculate who, if anyone, that might be). Nor does it suggest Transat is about to go shopping. However, Bloomberg reported late last year that Transat could consider a merger or acquisitions as early as the end of 2014 as a two-year-old turnaround plan starts paying off. All very intriguing. Call 1-888-286-8789 or visit JustTravelDeals.ca
Posted on: Fri, 24 Jan 2014 14:12:52 +0000
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