WTF??? Anyone...Bueller???

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crj_705
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WTF??? Anyone...Bueller???

#1 Post by crj_705 » Wed Feb 13, 2013 9:55 am

February 13, 2013

Chorus Aviation Inc. update

As some of you may be aware, our largest shareholder Fairfax Financial Holdings Ltd. sold off its entire holdings in Chorus Aviation Inc. yesterday to a syndicate of investment dealers. The shares will likely be sold to a wide range of investors through the dealers’ network. This transaction has no impact on our day-to-day operations – it is business as usual...



In a few days Fairfax Financial Holdings will receive the proceeds from the sale of its holdings of almost 20 million shares in Chorus Aviation Inc., the relatively new name for the former Jazz Air Income Fund.

In a block trade Tuesday, Fairfax sold its entire holdings of 8.533 million Class A Chorus shares and its 10.6 million Class B Chorus shares. Fairfax, which has owned the two blocks for about five years, sold the shares to CIBC World Markets at $4.50 a share. (On Tuesday the Class A shares closed at $4.60 while the Class B’s closed at $4.68.) Fairfax will receive a discount to the $4.50 a share price that was used to cross the block.

In turn CIBC formed a syndicate of investment dealers to sell the two blocks of shares. Chances are that they will mostly sold to institutional investors. On a normal day about 20,000 Class A shares and about 460,000 Class B shares are traded.


Since this is not a sale from a control block, Chorus, which pays a quarterly $0.15 a share dividend, is not required to file a prospectus indicating that the Fairfax block has been sold.

Tuesday’s sale is the second large block trade done by Fairfax in the past six months. Last September Fairfax disposed of a $65-million stake of 10% convertible debentures issued by Mullen Group Ltd. in March 2009. Fairfax converted the stake to 6.058 million Mullen common shares and whern they were sold it ended up with $135.7-million in gross proceeds. The deal was a double bagger for Fairfax which also received 10% a year for the three years that it owned the block.

This is either really GOOD or really BAD. I guess CIBC will want to make some money on these shares so hopefully we may see some rise in the share price in the coming months...?
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jazzbeat
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Re: WTF??? Anyone...Bueller???

#2 Post by jazzbeat » Wed Feb 13, 2013 12:14 pm

From what I read CIBC is not investing in Jazz but only there for the resale of the shares...

Maybe I'm wrong
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rudder
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Re: WTF??? Anyone...Bueller???

#3 Post by rudder » Wed Feb 13, 2013 1:03 pm

CIBC clearly mitigated its exposure (risk) by setting up a syndicate. The syndicate likely lined up Institutional orders in advance at a fixed price (akin to a 'bought deal'). And while it has 'booked' the purchase from Fairfax at $4.50, it states that the final price will in fact be discounted by an unspecified amount.

CIBC will make its money on the buy/sell and will not get stuck holding the bag. Investment banks make money as brokers, not owners.
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FrontEnd
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Re: WTF??? Anyone...Bueller???

#4 Post by FrontEnd » Thu Feb 14, 2013 1:58 pm

Its really bad from what I hear. 2015 is going to be a trying year for everyone at Chorus.


crj_705 wrote:February 13, 2013

Chorus Aviation Inc. update

As some of you may be aware, our largest shareholder Fairfax Financial Holdings Ltd. sold off its entire holdings in Chorus Aviation Inc. yesterday to a syndicate of investment dealers. The shares will likely be sold to a wide range of investors through the dealers’ network. This transaction has no impact on our day-to-day operations – it is business as usual...



In a few days Fairfax Financial Holdings will receive the proceeds from the sale of its holdings of almost 20 million shares in Chorus Aviation Inc., the relatively new name for the former Jazz Air Income Fund.

In a block trade Tuesday, Fairfax sold its entire holdings of 8.533 million Class A Chorus shares and its 10.6 million Class B Chorus shares. Fairfax, which has owned the two blocks for about five years, sold the shares to CIBC World Markets at $4.50 a share. (On Tuesday the Class A shares closed at $4.60 while the Class B’s closed at $4.68.) Fairfax will receive a discount to the $4.50 a share price that was used to cross the block.

In turn CIBC formed a syndicate of investment dealers to sell the two blocks of shares. Chances are that they will mostly sold to institutional investors. On a normal day about 20,000 Class A shares and about 460,000 Class B shares are traded.


Since this is not a sale from a control block, Chorus, which pays a quarterly $0.15 a share dividend, is not required to file a prospectus indicating that the Fairfax block has been sold.

Tuesday’s sale is the second large block trade done by Fairfax in the past six months. Last September Fairfax disposed of a $65-million stake of 10% convertible debentures issued by Mullen Group Ltd. in March 2009. Fairfax converted the stake to 6.058 million Mullen common shares and whern they were sold it ended up with $135.7-million in gross proceeds. The deal was a double bagger for Fairfax which also received 10% a year for the three years that it owned the block.

This is either really GOOD or really BAD. I guess CIBC will want to make some money on these shares so hopefully we may see some rise in the share price in the coming months...?
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teacher
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Re: WTF??? Anyone...Bueller???

#5 Post by teacher » Fri Feb 15, 2013 7:06 am

Either that or they took advantage of the run up in the stock price to sell and move onto something else, I did.
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Beach 200
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Re: WTF??? Anyone...Bueller???

#6 Post by Beach 200 » Fri Feb 15, 2013 4:05 pm

Well CHR wasn't the only stock Fairfax sold off. They sold off a shit load of RIM as well. They also just posted a profit for year end in terms of all investments. These guys are in it for the business not to sit on a company and not make a cent.
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Bede
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Re: WTF??? Anyone...Bueller???

#7 Post by Bede » Fri Feb 15, 2013 5:48 pm

FrontEnd wrote:Its really bad from what I hear. 2015 is going to be a trying year for everyone at Chorus.
Why? I thought the CPA got extended to 2020? Wasn't that the deal to save AC from bankrupcy? AC get lower rates and Jazz gets a longer CPA?
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countryhick
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Re: WTF??? Anyone...Bueller???

#8 Post by countryhick » Fri Feb 15, 2013 6:28 pm

2015=Contract Time
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Fanblade
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Re: WTF??? Anyone...Bueller???

#9 Post by Fanblade » Mon Feb 18, 2013 4:47 pm

Bede wrote:
FrontEnd wrote:Its really bad from what I hear. 2015 is going to be a trying year for everyonewhChorus.
Why? I thought the CPA got extended to 2020? Wasn't that the deal to save AC from bankrupcy? AC get lower rates and Jazz gets a longer CPA?
Yeah. The CPA was to be up in 2015 and was extended to 2020. However there was a clause inserted for Jan 2016 which brings into question how many block hours the CPA will contain after that date.

When asking about this clause everyone seems to be clueless wrt possible ramifications if the conditions within the clause are met. In fact the percentage within the benchmarking exersise isn't even published.

I think we are completely in the dark about post 2016.
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