Transat A.T. (Transat) has released that the contemplated arrangement with Air Canada under the revised Arrangement Agreement between Transat and Air Canada dated October 9, 2020 (the Arrangement Agreement) has been terminated by mutual agreement of Transat and Air Canada, effective immediately. The parties have reached this agreement after having been advised by the European Commission that it would not approve the transaction.
In connection with the termination of the Arrangement Agreement, Air Canada has agreed to pay a CA$12.5 million termination payment to the corporation and to waive its entitlement to a US$10 million termination fee in the event of an acquisition of Transat by a third party in the twelve months following termination of the Arrangement Agreement.
As previously stated, the corporation requires new financing totalling at least of CA$500 million in 2021. The Corporation has been taking and will continue to take all measures available to it to preserve cash and, as previously announced, it has put in place a CA$250 million short-term subordinated credit facility, which matures on June 30 and will need to be replaced or extended before that date.
The Corporation is actively pursuing negotiations to secure long-term financing, including under the Large Employer Emergency Financing Facility (LEEFF) and via prospective support from the Canadian government for businesses in the travel and tourism sector. Discussions on both topics are at an advanced stage and Transat’s management is confident that a satisfactory financing will be secured in the coming weeks.
