QUEBEC tour operator Transat has announced that it is looking for C$500 million (US$398 million) in federal government financing to recover if its purchase by Air Canada - still under European Union review - collapses.
One of the options is the government's Large Employer Emergency Financing Facility, known as LEEFF, which has been used by only one airline as the industry negotiates for a bailout programme including cheaper loans, reports Bloomberg.
A LEEFF agreement has been in the cards for a long time, but 'now we're pushing faster,' said Transat CEO Jean-Marc Eustache. 'And they are working with us faster, to be sure that we're going have the cash necessary to continue the organisation if the deal doesn't go through.'
The company is also in talks with other parties, including Quebec's provincial investment arm, he said.
Air Canada agreed to buy Transat, one of Canada's largest sellers of vacation packages, in June 2019 and later raised its bid to C$18 a share to win over recalcitrant shareholders and seal a friendly deal.
After the Covid crisis struck, they revised the deal down to C$5 a share in cash or 0.2862 Air Canada shares, valuing Transat at about C$200 million.
Transat suspended all regular flights on January 29 after the federal government asked carriers to halt travel to Mexico and the Caribbean and toughened quarantine rules. The company said it expects to resume flights in mid-June.
In an effort to preserve cash, Transat had previously cut its schedule, returned some leased planes early and negotiated better payment terms with suppliers, while using a government wage subsidy to help pay staff. It had C$302.8 million in cash at the end of January, less than half of what it had a year earlier.
A LEEFF agreement could replace a C$250 million short-term credit facility that expires on June 30.
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One of the options is the government's Large Employer Emergency Financing Facility, known as LEEFF, which has been used by only one airline as the industry negotiates for a bailout programme including cheaper loans, reports Bloomberg.
A LEEFF agreement has been in the cards for a long time, but 'now we're pushing faster,' said Transat CEO Jean-Marc Eustache. 'And they are working with us faster, to be sure that we're going have the cash necessary to continue the organisation if the deal doesn't go through.'
The company is also in talks with other parties, including Quebec's provincial investment arm, he said.
Air Canada agreed to buy Transat, one of Canada's largest sellers of vacation packages, in June 2019 and later raised its bid to C$18 a share to win over recalcitrant shareholders and seal a friendly deal.
After the Covid crisis struck, they revised the deal down to C$5 a share in cash or 0.2862 Air Canada shares, valuing Transat at about C$200 million.
Transat suspended all regular flights on January 29 after the federal government asked carriers to halt travel to Mexico and the Caribbean and toughened quarantine rules. The company said it expects to resume flights in mid-June.
In an effort to preserve cash, Transat had previously cut its schedule, returned some leased planes early and negotiated better payment terms with suppliers, while using a government wage subsidy to help pay staff. It had C$302.8 million in cash at the end of January, less than half of what it had a year earlier.
A LEEFF agreement could replace a C$250 million short-term credit facility that expires on June 30.
SeaNews Turkey