Transat AT is preparing to ask its shareholders to approve the new plan of arrangement with Air Canada concluded on Oct. 9 and announced on Oct. 10.
The new revised Arrangement Agreement repeals and replaces the previous Arrangement Agreement approved by shareholders on Aug. 23, 2019. It provides for the acquisition of all of the issued and outstanding shares of Transat at a price of $5 per share (rather than $ 18 in the previous agreement).
The extraordinary shareholders' meeting will be held at 10 a.m. on Dec. 15 (in virtual form only). Transat has therefore just sent the voting documents and its “solicitation circular” to shareholders .
In addition to detailing the ways in which shareholders can vote at the meeting, the solicitation circular sets out the background leading up to the Transaction.
"The realization of the 2019 Arrangement Agreement was no longer possible given all the circumstances with which the Company is confronted," it explains, obviously referring to the COVID-19 pandemic.
It was also pointed out that another key factor in Transat's decision to enter into the revised Arrangement Agreement was the low probability of obtaining the required regulatory approvals before the deadline of Dec. 27, 2020 provided for in the initial transaction.
It is explained that these and other considerations led the Board of Directors of Transat to unanimously conclude that “the transaction was in the best interest of Transat and its stakeholders, to approve the arrangement agreement, and to recommend that Transat shareholders vote in favour of the transaction."
"The board unanimously concluded that the arrangement is in the best interests of Transat AT Inv. and is fair to shareholders, and unaniously recommends that shareholders vote in favour of the resolution relating to the arrangement."
What if the shareholders say no?
The solicitation circular warns shareholders that a vote against the proposal could have a material adverse effect on Transat's ability to continue its operations.
"If the proposed transaction is not completed for any reason, there is a risk that the announcement of such transaction and the dedication of substantial resources of the Corporation to the completion thereof could have a negative impact on the Corporation's operating results and business generally, and could have a material adverse effect on the current and future operations, financial condition and prospects of the Corporation, including the loss of investor confidence in connection with the Corporation's ability to execute its strategic plan."
Shareholders of record at the close of books on Nov. 10 will be entitled to vote at the meeting according to the voting procedures attached to their shares.
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