Ottawa Regime Will Sell All Its Shares in Air Canada at $12 Each
The Canadian government will sell all its shares in Air Canada for $12 Canadian each, John McDermid, minister of privatization, announced today. (A Canadian dollar is currently worth 84 cents in U.S. currency.)
The government plans to release a prospectus outlining the sale of 41.1 million shares of the state-owned airline, or about 57% of the outstanding shares.
The government began its sale of Air Canada last October when it sold 30.8 million shares, or about 43% of the company, for $8 a share.
The sale will raise about $490 million, which is expected to go to the government rather than the airline. The $240 million in proceeds from the October sale went to paying Air Canada’s debt.
McDermid said in an interview the $12-a-share offering price represents a good return to the government, although he had hinted in May that the price could be as high as $16.
Air Canada stock had been trading on the Montreal and Toronto exchanges at about $13 a share but closed Wednesday--before McDermid’s announcement--at $12.25.
The price began to rise shortly after the stock was issued in October but it soared in January after PWA Corp. announced that it was buying Wardair. That meant that the number of Canadian airline companies dropped from three to two, and the reduced competition made Air Canada a darling of the financial community.