Latest news with #PierreKarlPeladeau


Globe and Mail
5 days ago
- Business
- Globe and Mail
Transat shareholders deserved a vote in the federal government's bailout
Pierre Karl Péladeau deserved better when he tried to buy airline Transat A.T. Inc TRZ-T. We can debate whether the telecom and media billionaire and former Parti Québécois leader would be a good pilot at the debt-heavy carrier. But like a lot of people, I've learned to never underestimate PKP. There's no debate shareholders in Montreal-based Transat deserved an opportunity to vote on a restructuring that froze out Mr. Péladeau, one of the company's largest investors, and instead increased the federal government's stake in the airline. The recapitalization of Transat that closed on July 10 used loopholes in pandemic-era legislation to ride roughshod over basic shareholder rights. This month's reworking of Transat's finances has its roots in worst days of the COVID-19 pandemic, when the company tapped a federal loan program, the Large Enterprise Emergency Funding Facility or LEEFF. Rival Westjet Airlines never took government money, while Air Canada paid back their loans. At the start of this summer, Transat still owed $772-million under the federal loan program. Repaying the loan and other debt weighed heavy on the airline's stock price. Transat shares traded at $1.65 in early June, just before the recapitalization announcement. Mr. Péladeau, who owns 9 per cent of Transat through family holding company Financière Outremont, offered to buy the company numerous times, including an offer of $2.64 per share. Quebecor Inc.'s chief executive officer, an experienced hand at negotiating with government, clearly saw an opportunity to snap up the airline, then work with Ottawa to fix the balance sheet. He hired investment bank Canaccord Genuity Group Inc. to advise on the bid. Instead of falling into Mr. Péladeau arms, Transat and LEEFF's operator – the Canada Enterprise Emergency Funding Corp. or CEEFC – announced a sweeping recapitalization on June 4. The federal agency forgave almost half the money owed to taxpayers, cutting the LEEFF loan to $334-million and reducing the interest rate. In return, CEEFC received convertible preferred shares in Transat representing a 19.9-per-cent stake in the airline. 'CEEFC has worked closely with Transat to ensure it meets its obligations under the LEEFF program while supporting the company's continued commercial viability in a competitive market,' said Elizabeth Wademan, chief executive officer of CEEFC parent company Canada Development Investment Corp, in a June press release. Contra Guys: We'll wait till we see clearer skies for this airline The federal government also owns warrants in Transat that date back to the original LEEFF loan in 2021. Add the warrants to the preferred shares and the federal government has a 32.6-per-cent stake in Transat on a fully diluted basis. A stake that size effectively blocks a hostile Transat takeover. In late June, Mr. Péladeau went to the Quebec Superior Court, asking Transat to hold a shareholder vote on a transaction that he alleged transferred control of the airline to the federal government. He didn't ask to overturn the deal with CEEFC. He simply asked the owners be allowed to approve a recapitalization that massively diluted their stakes. Mr. Péladeau lost the court fight. Transat successfully argued it relied on exemptions to regulations protecting the rights of minority shareholders, which are loopholes reflecting pandemic financing rules. The airline also won court support for its argument that CEEFC cannot control the company. As part of the restructuring, CEEFC pledged it would cap its exercise of warrants and preferred shares so the federal government never owns more than 19.9 per cent of Transat's common shares at any time. In any normal transaction, shareholders get a vote on a debt-for-equity swap that sees a creditor get 19.9 per cent of their company, and an overall interest that amounts to nearly a third of the company. The company and the courts denied Transat shareholders this basic right. Would Transat's owners have spurned the CEEFC proposal for a takeover offer from Mr. Péladeau? That's now an academic question. The CEEFC refinancing failed to fix all that ails the airline. 'Transat no longer faces a potential liquidity issue,' said analyst Konark Gupta at Scotiabank in a recent report. 'That said, its absolute debt levels relative to its EBITDA profile, even after this refinancing, makes for a volatile equity.' In Quebec, where business battles frequently have political overtones, the federal government is now playing a kingmaker at a flagship airline co-founded by Premier François Legault. The courts denied Transat shareholders a voice in the transaction that created this situation. If Transat hits turbulence, Mr. Péladeau has every right to remind investors who could have been the pilot.


Toronto Sun
6 days ago
- Business
- Toronto Sun
Billionaire Peladeau still wants to take over travel company Transat
Published Jul 14, 2025 • 3 minute read Pierre Karl Peladeau Photo by Graham Hughes / Photographer: Graham Hughes/Bloo (Bloomberg) — Quebec billionaire Pierre Karl Peladeau says he's not giving up his long pursuit of Transat AT Inc., arguing the travel company's latest balance-sheet maneuvers still leave it with too much debt. This advertisement has not loaded yet, but your article continues below. THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLY Subscribe now to read the latest news in your city and across Canada. Unlimited online access to articles from across Canada with one account. Get exclusive access to the Toronto Sun ePaper, an electronic replica of the print edition that you can share, download and comment on. Enjoy insights and behind-the-scenes analysis from our award-winning journalists. Support local journalists and the next generation of journalists. Daily puzzles including the New York Times Crossword. SUBSCRIBE TO UNLOCK MORE ARTICLES Subscribe now to read the latest news in your city and across Canada. Unlimited online access to articles from across Canada with one account. Get exclusive access to the Toronto Sun ePaper, an electronic replica of the print edition that you can share, download and comment on. Enjoy insights and behind-the-scenes analysis from our award-winning journalists. Support local journalists and the next generation of journalists. Daily puzzles including the New York Times Crossword. REGISTER / SIGN IN TO UNLOCK MORE ARTICLES Create an account or sign in to continue with your reading experience. Access articles from across Canada with one account. Share your thoughts and join the conversation in the comments. Enjoy additional articles per month. Get email updates from your favourite authors. THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK. Create an account or sign in to continue with your reading experience. Access articles from across Canada with one account Share your thoughts and join the conversation in the comments Enjoy additional articles per month Get email updates from your favourite authors Don't have an account? Create Account 'It's not over until it's over,' Peladeau said in an interview with Bloomberg News. 'The company will require another restructuring. They cannot live with that, or if they live with that, they will be impaired in their capacity to develop the business.' Peladeau's interest in owning Transat goes back many years. He mulled a bid when the company was in play in 2019, but the board eventually agreed to an offer of C$18 a share from Air Canada. The Covid pandemic struck before the transaction closed, and it was scuttled altogether in 2021. Peladeau has made a number of attempts to buy the company since. Last month he offered C$2.64 a share, which was rejected. Transat, a Montreal-based company that owns Air Transat, has grappled with an overwhelming debt incurred during the pandemic, when it had to get emergency funding from the Canadian government. Last month, the government agreed to reduce that debt by around C$440 million ($322 million). The remaining debt was restructured into a credit facility, a 10-year debenture and convertible preferred shares, the latter of which would give Ottawa a 19.9% voting stake if converted to common shares. Your noon-hour look at what's happening in Toronto and beyond. By signing up you consent to receive the above newsletter from Postmedia Network Inc. Please try again This advertisement has not loaded yet, but your article continues below. The deal didn't sit well with Peladeau, who owns slightly more than 9% of Transat. His family office, Financiere Outremont, advised by Canaccord Genuity Group Inc., made its C$2.64 per share offer, but conditional on reaching an agreement with the Canadian government on debt terms. Transat rejected it. 'I was taking the risk to negotiate,' said Peladeau, whose wealth mostly comes from his controlling stake in telecom and media company Quebecor Inc. He tried to stop the deal with the Canadian government in court, arguing that Transat should have consulted shareholders. A judge sided with the company, which had argued the severity of the situation allowed it to bypass shareholders. As of the end of April, prior to the debt restructuring, Transat had a net C$1.7 billion in debt and lease liabilities. This advertisement has not loaded yet, but your article continues below. Transat shares have soared by about 70% since the debt restructuring was announced in June and were trading at C$2.80 early Monday, raising the market capitalization to C$116 million. Peladeau said the stock price should have risen by much more than that. 'The market is saying it doesn't work,' he said. Desjardins analyst Benoit Poirier wrote in a report last month that despite the debt swap, 'leverage is still elevated relative to industry norms.' He forecasts the company to have a ratio of 6.7 times net debt to adjusted earnings before interest, taxes, depreciation and amortization for the fiscal year that ends Oct. 31. Air Canada has a ratio of lower than 2 times. 'I need to reconsider the situation,' Peladeau said when asked about what will be his next move. This advertisement has not loaded yet, but your article continues below. Peladeau believes Transat's restructuring raises a fundamental issue. 'Should the Canadian government be the largest shareholder of an airline, which is regulated by the government? So if I'm an American and I look at this, I say: What's wrong here?' Transat said in a statement that the refinancing was 'the best outcome in the interest of all stakeholders' and 'paves the way for Transat to further implement its long-term sustainable strategic and optimization plan.' The company declined to comment on Peladeau's considerations. The court proceedings revealed that Transat had set up a special committee in September to look for available options to restructure the debt. In January, a solicitation process was launched and 49 potential investors were approached. Only two bidders, including Peladeau's family office, made it to the final phase, and they offered no equity value. The Canadian government ended up agreeing to the refinancing. The Caisse de Depot et Placement du Quebec, one of the largest shareholders, said it was in favor of the debt swap. 'The restructuring of Transat's debt was an essential step and will be beneficial to the company's turnaround. We hope that this Quebec-based company will be able to return to growth, after the more difficult years of the pandemic,' the firm said in a statement emailed by a spokesperson. Columnists Letters Golf Uncategorized Editorial Cartoons


Bloomberg
6 days ago
- Business
- Bloomberg
Billionaire Peladeau Still Wants to Take Over Transat, Lambastes Debt Deal
Quebec billionaire Pierre Karl Peladeau says he's not giving up his long pursuit of Transat AT Inc., arguing the travel company's latest balance-sheet maneuvers still leave it with too much debt. 'It's not over until it's over,' Peladeau said in an interview with Bloomberg News. 'The company will require another restructuring. They cannot live with that, or if they live with that, they will be impaired in their capacity to develop the business.'