HALIFAX — As the airline industry continues to struggle with plummeting passenger volumes and no government bailout plan, Halifax-based Chorus Aviation Inc. announced Tuesday a pair of transactions to provide the company with cash it needs during pandemic-related challenges.
The company says it will receive gross proceeds of up to $130 million from a secondary offering and a private placement.
RBC Capital Markets will lead a syndicate of underwriters to purchase and sell $50 million units of Chorus at $4.60 per unit and $50 million of convertible senior unsecured debentures at $1,000 each with interest of six per cent per year.
Gross proceeds could be as high as $115 million if an over-allotment option is exercised.
Chorus also entered into agreements with Alberta Investment Management Corp. and Torstar owner NordStar Capital to purchase $15 million of units and $15 million of debentures.
Net proceeds will be used to purchase additional aircraft to expand its regional aircraft leasing business and contracted flying operations, provide financial flexibility and repay debt, the company said in a news release.
“We are very pleased to be launching this capital raise enabling us to bolster the balance sheet and prudently move ahead with restarting our growth initiatives,” stated Chorus CEO Joe Randell.
“It has been a challenging year; however, I am proud of the way we are managing through this pandemic, and with the finalization of the revised capacity purchase agreement and this financing, we are now ready to turn our attention to the future.”
Air Canada recently reached a deal to make Chorus’s Jazz Aviation subsidiary the exclusive operator of Air Canada Express flights.
The change means Air Canada will transfer operation of its 25 Embraer E175 fleet to Jazz from Sky Regional where they have operated for a decade.
Each Chorus unit will include a common share and a half a common share purchase warrant. Each full warrant can be used to buy a share for $6.20 over 12 months after the deal closes, expected around April 6.
Chorus shares closed down 21 cents of four per cent to $5.01 on Tuesday.