Chorus to be sold ?

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Fanblade
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Re: Chorus to be sold ?

Post by Fanblade »

timeflies wrote: Sat Oct 24, 2020 9:54 am
hithere wrote: Sat Oct 24, 2020 8:35 am AC already owns 10% of Chorus and Mr. Rousseau who currently sits on the Chorus Board of Directors and will be Rovinescu’s successor at AC when he retires in February. AC also did not try to settle the ACPA CPA scope grievance in the latest ACPA MOA and was content(it appeared) to allow it to go to arbitration. Seems to be a lot of things going on between AC and CHR for it to be anyone other than AC who is interested
what you are saying makes sense.

Air Canada buying Chorus, so the ACPA will stop making noise when the company gives more flying to Jazz because they will technically become AC pilots ?

interesting times for sure.
How did this subject get turned into scope? Never ever ends.

Being owned by AC does not allow that company to operate aircraft above a specific gauge. Jazz was wholly owned by AC in the past. You must be on the AC pilot seniority list to operate above that specific gauge.

There would need to be a corporate merge. An integration of seniority lists.
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47north
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Re: Chorus to be sold ?

Post by 47north »

Think Endeavour, PSA, Horizon. All regionals that were taken over by the major. Makes sense for AC now too if they have the capital. Brings control in-house and reduces the cost of feed even further. A transaction is a bargain at these prices.

We seem to lag the US industry by a few years. Purchasing their feed would be just another example of aligning with the business model of other NA carriers.
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Fanblade
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Re: Chorus to be sold ?

Post by Fanblade »

47north wrote: Sat Oct 24, 2020 10:28 am Think Endeavour, PSA, Horizon. All regionals that were taken over by the major. Makes sense for AC now too if they have the capital. Brings control in-house and reduces the cost of feed even further. A transaction is a bargain at these prices.

We seem to lag the US industry by a few years. Purchasing their feed would be just another example of aligning with the business model of other NA carriers.
The press release said third party. AC owns 10% of Chorus and they have a long term working relationship.

My take on “third party” meant it was an outsider to the AC/Chorus relationship.

But who knows.
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TheStig
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Re: Chorus to be sold ?

Post by TheStig »

I would think there are plenty of private equity firms on Bay St bargain hunting right now. I'm a pilot so I only know the names of two; ONEX, which would have to deal with anti-competitive scrutiny and Canaccord Genuity.
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Splash
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Re: Chorus to be sold ?

Post by Splash »

I wonder if a purchaser would have to enter into a new CPA agreement with AC. That could be in AC interest and be to their benefit.
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rudder
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Re: Chorus to be sold ?

Post by rudder »

Splash wrote: Sat Oct 24, 2020 12:01 pm I wonder if a purchaser would have to enter into a new CPA agreement with AC. That could be in AC interest and be to their benefit.

The short answer is NO.

There is change of control language in the CPA (referred to above). There is a redacted copy of the CPA on SEDAR.

AC may terminate the CPA under the change of control language only if the prohibited terms specified therein are met. There is no unilateral opportunity to reopen the CPA as a result of change in control. The parties can always consensually agree to renegotiate the terms of the CPA.

If AC is the purchaser, then it will likely void the CPA and revert to CHR (and Jazz) as a wholly owned subsidiary as it was in 2006 prior to the Jazz Air IPO. The only value to AC of maintaining a CPA with CHR (or Jazz) is to establish earnings for the subsidiary in order to spin it off (again).

If AC were to acquire CHR, there is nothing stopping it from divesting of CHR assets or non-core businesses in order to recoup a portion of or all of the acquisition expense. Same scenario applies to the TRZ acquisition.
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spinaxis
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Re: Chorus to be sold ?

Post by spinaxis »

rudder wrote: Sat Oct 24, 2020 12:16 pm
Splash wrote: Sat Oct 24, 2020 12:01 pm I wonder if a purchaser would have to enter into a new CPA agreement with AC. That could be in AC interest and be to their benefit.

The short answer is NO.

There is change of control language in the CPA (referred to above). There is a redacted copy of the CPA on SEDAR.

AC may terminate the CPA under the change of control language only if the prohibited terms specified therein are met. There is no unilateral opportunity to reopen the CPA as a result of change in control. The parties can always consensually agree to renegotiate the terms of the CPA.

If AC is the purchaser, then it will likely void the CPA and revert to CHR (and Jazz) as a wholly owned subsidiary as it was in 2006 prior to the Jazz Air IPO. The only value to AC of maintaining a CPA with CHR (or Jazz) is to establish earnings for the subsidiary in order to spin it off (again).

If AC were to acquire CHR, there is nothing stopping it from divesting of CHR assets or non-core businesses in order to recoup a portion of or all of the acquisition expense. Same scenario applies to the TRZ acquisition.
Buy Chorus.. sell off Voyageur, the leasing company and all other parts that are non-Jazz. Then run Jazz for 5-10 years and rebuild. Then sell it off again.
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Gulfstream5
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Re: Chorus to be sold ?

Post by Gulfstream5 »

spinaxis wrote: Sat Oct 24, 2020 1:18 pm
rudder wrote: Sat Oct 24, 2020 12:16 pm
Splash wrote: Sat Oct 24, 2020 12:01 pm I wonder if a purchaser would have to enter into a new CPA agreement with AC. That could be in AC interest and be to their benefit.

The short answer is NO.

There is change of control language in the CPA (referred to above). There is a redacted copy of the CPA on SEDAR.

AC may terminate the CPA under the change of control language only if the prohibited terms specified therein are met. There is no unilateral opportunity to reopen the CPA as a result of change in control. The parties can always consensually agree to renegotiate the terms of the CPA.

If AC is the purchaser, then it will likely void the CPA and revert to CHR (and Jazz) as a wholly owned subsidiary as it was in 2006 prior to the Jazz Air IPO. The only value to AC of maintaining a CPA with CHR (or Jazz) is to establish earnings for the subsidiary in order to spin it off (again).

If AC were to acquire CHR, there is nothing stopping it from divesting of CHR assets or non-core businesses in order to recoup a portion of or all of the acquisition expense. Same scenario applies to the TRZ acquisition.
Buy Chorus.. sell off Voyageur, the leasing company and all other parts that are non-Jazz. Then run Jazz for 5-10 years and rebuild. Then sell it off again.

This is clearly CRs retirement gig, swooping in to purchase CHR and remaining on as ACs consultant in the background giving way to cancel the 10 year pilot contract jazz has with the company to reduce costs and ultimately pave the way to axe the rest of the CPA carriers i.e. sky. Those 175s unfortunately can't even cross the Rockies and serve of no interest to AC post pandemic.

Never let a crisis go to waste.
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flyer 1492
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Re: Chorus to be sold ?

Post by flyer 1492 »

TheStig wrote: Sat Oct 24, 2020 11:20 am I would think there are plenty of private equity firms on Bay St bargain hunting right now. I'm a pilot so I only know the names of two; ONEX, which would have to deal with anti-competitive scrutiny and Canaccord Genuity.
Perhaps Fairfax?
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kiaszceski
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Re: Chorus to be sold ?

Post by kiaszceski »

KenoraPilot wrote: Sat Oct 24, 2020 8:51 am Onex and EIC have been making some large gains on stock lately. Onex has over 10Billion in liquid assets currently, not sure how liquid EIC is.
As of June 2020 Onex had $716M of cash and cash equivalents. However Free cash flow is only $80M

As of June 2020 EIC had $66M of cash and cash equivalent. However, Free cash flow was $-38M
flyer 1492 wrote: Sat Oct 24, 2020 5:34 pm
TheStig wrote: Sat Oct 24, 2020 11:20 am I would think there are plenty of private equity firms on Bay St bargain hunting right now. I'm a pilot so I only know the names of two; ONEX, which would have to deal with anti-competitive scrutiny and Canaccord Genuity.
Perhaps Fairfax?
You seem to have some good info ... they have more than 1B of free cash flow as of June 2020, however the stock didn't move at all when CHR got halted...
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AA123455
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Re: Chorus to be sold ?

Post by AA123455 »

They said a “third party”, so that rules out AC as the buyer.

My guess is A random hedge fund or a SPAC.

Chorus is trading at an embarrassingly low price, so there must be some bottom feeding group looking to slash and burn Chorus.

This is why employees NEED to own shares in the company they work for, because any potential takeover may come down to a shareholder vote.

What is the total ownership Chorus employees by its employees? .5% maybe 1%? Imagine if Chorus was a %10 employees owned business, that could effect any vote. ESOP is important!
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McKinley
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Re: Chorus to be sold ?

Post by McKinley »

CHR has introduced the poison pill earlier this year..

https://www.wingsmagazine.com/chorus-av ... ison-pill/
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spinaxis
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Re: Chorus to be sold ?

Post by spinaxis »

AA123455 wrote: Sun Oct 25, 2020 12:41 pm They said a “third party”, so that rules out AC as the buyer.

My guess is A random hedge fund or a SPAC.

Chorus is trading at an embarrassingly low price, so there must be some bottom feeding group looking to slash and burn Chorus.

This is why employees NEED to own shares in the company they work for, because any potential takeover may come down to a shareholder vote.

What is the total ownership Chorus employees by its employees? .5% maybe 1%? Imagine if Chorus was a %10 employees owned business, that could effect any vote. ESOP is important!
I'm sure it's much higher than 1%... Chorus' ESOP program is one of the most generous around and pretty much everyone I knew took part in it and kept their shares because of the dividend.
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truedude
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Re: Chorus to be sold ?

Post by truedude »

AA123455 wrote: Sun Oct 25, 2020 12:41 pm They said a “third party”, so that rules out AC as the buyer.

My guess is A random hedge fund or a SPAC.

Chorus is trading at an embarrassingly low price, so there must be some bottom feeding group looking to slash and burn Chorus.

This is why employees NEED to own shares in the company they work for, because any potential takeover may come down to a shareholder vote.

What is the total ownership Chorus employees by its employees? .5% maybe 1%? Imagine if Chorus was a %10 employees owned business, that could effect any vote. ESOP is important!
"Third party" can carry different meanings. It does not rule out Air Canada. Look up the legal definition of the term. Does not exclude current business relationships.
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AA123455
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Re: Chorus to be sold ?

Post by AA123455 »

truedude wrote: Sun Oct 25, 2020 1:20 pm
AA123455 wrote: Sun Oct 25, 2020 12:41 pm They said a “third party”, so that rules out AC as the buyer.

My guess is A random hedge fund or a SPAC.

Chorus is trading at an embarrassingly low price, so there must be some bottom feeding group looking to slash and burn Chorus.

This is why employees NEED to own shares in the company they work for, because any potential takeover may come down to a shareholder vote.

What is the total ownership Chorus employees by its employees? .5% maybe 1%? Imagine if Chorus was a %10 employees owned business, that could effect any vote. ESOP is important!
"Third party" can carry different meanings. It does not rule out Air Canada. Look up the legal definition of the term. Does not exclude current business relationships.

AC already sits on the board of Chorus. Board members usually arnt referred to as “third party.”
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truedude
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Re: Chorus to be sold ?

Post by truedude »

AA123455 wrote: Sun Oct 25, 2020 2:52 pm
truedude wrote: Sun Oct 25, 2020 1:20 pm
AA123455 wrote: Sun Oct 25, 2020 12:41 pm They said a “third party”, so that rules out AC as the buyer.

My guess is A random hedge fund or a SPAC.

Chorus is trading at an embarrassingly low price, so there must be some bottom feeding group looking to slash and burn Chorus.

This is why employees NEED to own shares in the company they work for, because any potential takeover may come down to a shareholder vote.

What is the total ownership Chorus employees by its employees? .5% maybe 1%? Imagine if Chorus was a %10 employees owned business, that could effect any vote. ESOP is important!
"Third party" can carry different meanings. It does not rule out Air Canada. Look up the legal definition of the term. Does not exclude current business relationships.

AC already sits on the board of Chorus. Board members usually arnt referred to as “third party.”
Yes, but there is no way Air Canada would want to tip their hand either if it is them. Whatever happened on Friday, was obviously not planned.
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dhc#
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Re: Chorus to be sold ?

Post by dhc# »

Well the proverbial "cats outta the bag" comes to mind, with this news coming out last Friday, I think the Chorus stock is going to continue to climb Monday on the TSX, so maybe whoever thought they were planning on buying Chorus at a discount, may not be now. :lol:
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truedude
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Re: Chorus to be sold ?

Post by truedude »

dhc# wrote: Sun Oct 25, 2020 4:13 pm Well the proverbial "cats outta the bag" comes to mind, with this news coming out last Friday, I think the Chorus stock is going to continue to climb Monday on the TSX, so maybe whoever thought they were planning on buying Chorus at a discount, may not be now. :lol:
But that is the problem, Chorus was never really going to be purchased for a discount. It is still a strong company, just undervalued. And most would recognize that it is undervalued, and unlikely accept anything under $6. Which still puts the valuation at a billion. And in early April, they adopted the poison pill option as "Share Holder Rights" or whatever they called it, making a hostile takeover all but impossible.

Whomever is looking to buy Chorus, would need access to an equivalent of a billion in capital or equivalents at a minimum, and also see some form of additional value over that in the future, which would give them a better payday than simply buying shares and holding.
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GATRKGA
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Re: Chorus to be sold ?

Post by GATRKGA »

Jazz and Transat integration into the Acpa list at the same time will be a cluster fukk like we have never seen before. :D

Strap on boys and girls. It's going to be one hell of a ride. :mrgreen:

Didn't the last integration between AC/CDN result in fist-fights in the flight deck? I guess bazookas will be utilized on this one.
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Re: Chorus to be sold ?

Post by Localizer »

I don’t think that would happen, that road was taken the last time AC owned the regionals and a judge decided they were not “common employer”. In the US, mainline carriers own regionals with separate seniority list, just a better flow through agreement.

This is 2020 so who knows what will happen.
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