Advertisement

Transat warns of ‘abusive’ bid by Group Mach, files complaint with regulator

An Air Transat plane is seen as an Air Canada plane lands at Pierre Elliott Trudeau International Airport in Montreal on Thursday, May 16, 2019. THE CANADIAN PRESS/Ryan Remiorz

Transat AT Inc.  is warning shareholders against an “abusive, coercive, misleading” move by Montreal real estate developer Group Mach to block the tour operator’s sale to  Air Canada.

Transat filed a complaint Tuesday with Quebec’s securities tribunal concerning Group Mach’s effort last week to scoop up 19.5 per cent of Transat shares at $14 per share in a bid to derail the pending acquisition.

READ MORE: Blocking Air Transat sale to Air Canada: Group Mach offers $14 per share in bid

“The board, the special committee and their advisers categorically reject Mach’s scheme as highly abusive, coercive, misleading and conditional,” Transat said in a release, claiming the plan puts shareholders “at significant risk by unfairly disregarding their interests and subverting applicable securities rules.”

“Mach has made no commitment to acquire and pay for any of the shares deposited under its scheme 1/8which 3/8 disenfranchises shareholders without guarantee of compensation,” the company said.

Story continues below advertisement

WATCH BELOW: Air Canada in exclusive talks to takeover Air Transat

Click to play video: 'Air Canada in exclusive talks to takeover Air Transat' Air Canada in exclusive talks to takeover Air Transat
Air Canada in exclusive talks to takeover Air Transat – May 16, 2019

The offer from Group Mach chief executive Vincent Chiara last Friday represents an eight per cent premium over Air Canada’s $13 per share offer, which Transat’s board approved in June.

Group Mach hopes to secure “at least” 6.9 million Class B shares at a cost of about $97 million. Chiara said he aims to then vote against Air Canada’s offer, which needs at least two-thirds support from shareholders.

READ MORE: Transat co-founder could make more than $17 million from sale to Air Canada

Transat filed its complaint with the Tribunal administratif des marches financiers, which adjudicates complaints on alleged breaches of securities rules.

Shareholders are slated to vote on the Air Canada offer on Aug. 23. It faces resistance from major Transat shareholders who feel the price is too low. It also needs to secure approval from regulators, including Transport Canada and the Competition Bureau.

Story continues below advertisement

Chiara stated last week he believes Air Canada under-values Transat, saying its sale process to the country’s largest airline was “unhealthy” and rife with uncertainty for Transat employees and its Montreal head office.

WATCH BELOW: Canadian Transportation Agency gave notice to Air Transat before regulatory decision

Click to play video: 'Canadian Transportation Agency gave notice to Air Transat before regulatory decision' Canadian Transportation Agency gave notice to Air Transat before regulatory decision
Canadian Transportation Agency gave notice to Air Transat before regulatory decision – Feb 1, 2018

On Tuesday, Transat spokesman Christophe Hennebelle lobbed a similar accusation at Group Mach, saying its offer will create “the impression of making a better deal, and this is not the case.”

“What Mach gives itself here is the possibility of being able to vote a large number of shares without buying them all,” he said. “This is the first time we have seen this in Canada.”

READ MORE: Air Canada to buy Transat for $520 million

Transat cautioned that “only a fraction” of the shares would be purchased at a premium, with shareholders left holding the rest “with no guarantee of any future liquidity.”

Story continues below advertisement

Mach has pledged not to submit a proposal superior to that of Air Canada “as long as Transat’s current board is in place.” Chiara declined to say Friday if he aims to replace the tour operator’s directors if he manages to block the Air Canada transaction.

In the proxy circular sent to its shareholders for the Aug. 23 vote, Transat raised doubts about the real estate group’s ability to meet its commitments, particularly in terms of financing.

Mach’s CEO has said his latest proposal is fully funded.

Sponsored content