The proposed debt restructuring of Transat A.T. inc. through CEEFC is contrary to the interests of the Corporation's shareholders and must be put to them for approval Français
MONTRÉAL, June 27, 2025 /CNW/ - While Transat A.T. inc. announced on June 5, 2025 that it had reached an agreement in principle with the Canada Enterprise Emergency Funding Corporation (CEEFC), a federal government agency, for the restructuring of the debt incurred by Transat A.T. inc. (the Corporation) under the Large Employer Emergency Financing Facility (LEEFF) program managed by CEEFC in the context of the COVID-19 pandemic, no official announcement has been sent to the Corporation's shareholders to inform them of the agreement. This constitutes a violation of their rights and the Corporation's obligations.
As one of Transat A.T. inc.'s largest shareholders, Pierre Karl Péladeau believes that this agreement should not only be presented to shareholders, as it is of decisive importance to the Corporation's financial viability and future, but most importantly approved by a shareholder vote in accordance with basic principles of corporate governance and shareholders' ownership rights.
For this reason, Pierre Karl Péladeau, on behalf of Financière Outremont inc. is compelled to ask the Superior Court to intervene before it is too late and order the Corporation not to finalize and not to close the agreement in principle before it has been approved by a shareholder vote.
It is unjust and unwarranted for the Corporation to dilute its shareholders' equity without shareholder approval through a restructuring operation that ultimately does not ensure the Corporation's long-term viability, when other options are not only available but have been presented to the Corporation's Board of Directors, in accordance with the process initiated several months ago.
To justify its decision to disregard its regulatory obligation to submit to its shareholders a financial transaction that is so dramatically detrimental to them, the Board of Directors of Transat A.T. Inc. states that " the transaction improves the financial position of the Corporation, which was becoming extremely precarious due to the size of its debt and maturity" and that it is "the result of discussions initiated by the Corporation over 18 months ago with CEEFC" (Corporation press release, June 5, 2025).
No publicly disclosed market information suggests that the Corporation is currently insolvent or in serious financial difficulty, or that its continued operation is in doubt. The Corporation's last release was on June 12 and considerations of such import were not disclosed to the markets or shareholders in any way.
Transat A. T. inc. therefore appears to be structuring the transaction in such a way as to take undue advantage of a regulatory exemption to the detriment of its shareholders' rights, when no emergency has been disclosed to the public or to shareholders that would justify flouting their rights in this way, and when it would have been easy to respect those rights by holding a proper vote.
The result of the unilateral restructuring of the Corporation's debt will be to transfer control of the Corporation to the federal government, which is the Corporation's principal creditor, as well as its largest potential shareholder and the regulator of its operations. This is not in the best interests of the citizens and taxpayers of Canada and Québec.
Based on the limited information available about the agreements between the Corporation and the government, the government would be able to lay its hands on any cash available or raised as it sees fit. These terms and conditions therefore grant the government de facto control of the Corporation and are not in the interests of the other shareholders.
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