Transat warns of ‘abusive’ bid by Group Mach, files complaint with regulator

FILE: The headquarters of Transat A.T. Inc. (Photo By MontrealviewTransatAT.jpg: caribb from Montreal, Canadaderivative work: WhisperToMe (talk) – MontrealviewTransatAT.jpg, CC BY-SA 2.0)

MONTREAL — Transat A.T. Inc. is warning shareholders against an “abusive, coercive, misleading” move by Montreal real estate developer Group Mach to block the tour operator’s sale to Air Canada.

Transat filed a complaint Tuesday with Quebec’s securities tribunal concerning Group Mach’s effort last week to scoop up 19.5 per cent of Transat shares at $14 per share in a bid to derail the pending acquisition.

“The board, the special committee and their advisers categorically reject Mach’s scheme as highly abusive, coercive, misleading and conditional,” Transat said in a release, claiming the plan puts shareholders “at significant risk by unfairly disregarding their interests and subverting applicable securities rules.”

“Mach has made no commitment to acquire and pay for any of the shares deposited under its scheme 1/8which 3/8 disenfranchises shareholders without guarantee of compensation,” the company said.

The offer from Group Mach chief executive Vincent Chiara last Friday represents an eight per cent premium over Air Canada’s $13 per share offer, which Transat’s board approved in June.

Group Mach hopes to secure “at least” 6.9 million Class B shares at a cost of about $97 million. Chiara said he aims to then vote against Air Canada’s offer, which needs at least two-thirds support from shareholders.

Transat filed its complaint with the Tribunal administratif des marches financiers, which adjudicates complaints on alleged breaches of securities rules. The tribunal is slated to hear the case, which requests the authority bar any transactions stemming from Group Mach’s offer, on Thursday morning in Montreal.

Shareholders are slated to vote on the Air Canada offer on Aug. 23. It faces resistance from major Transat shareholders who feel the price is too low. It also needs to secure approval from regulators, including Transport Canada and the Competition Bureau.

Chiara stated last week he believes Air Canada under-values Transat, saying its sale process to the country’s largest airline was “unhealthy” and rife with uncertainty for Transat employees and its Montreal head office.

On Tuesday, Transat spokesman Christophe Hennebelle lobbed a similar accusation at Group Mach, saying its offer will create “the impression of making a better deal, and this is not the case.”

“What Mach gives itself here is the possibility of being able to vote a large number of shares without buying them all,” he said. “This is the first time we have seen this in Canada.”

Transat cautioned that “only a fraction” of the shares would be purchased at a premium, with shareholders left holding the rest “with no guarantee of any future liquidity.”

Group Mach’s head of mergers and acquisitions, Alfred Bugge, shot back that its interests were aligned with shareholders’. “We just put $100 million on the table,” he told The Canadian Press, adding that Transat should “stop creating fear in the marketplace.”

He repeated the Group Mach’s pledge not to submit a proposal superior to that of Air Canada “as long as Transat’s current board is in place.” Chiara declined to say Friday if he aims to replace the tour operator’s directors if he manages to block the Air Canada transaction.

In the proxy circular sent to its shareholders for the Aug. 23 vote, Transat raised doubts about the real estate group’s ability to meet its commitments, particularly in terms of financing.

Mach’s CEO has said his latest proposal is fully funded.