Firm's shares jump 18% as Quebec investor's family office aims for control of the board
by Mathieu Dion
Shares of Canadian airline and vacation provider Transat AT Inc. rose more than 18% after Quebec billionaire Pierre Karl Péladeau pressured for partial control of the board, saying the company needs major changes to fix its balance sheet.
Péladeau’s family office, Financière Outremont Inc., said it has requisitioned an investor meeting and is proposing to cut the board to six directors, including three of its own nominees. The firm said it’s the second-largest shareholder in Transat with a 9.5% stake.
Montreal-based Transat AT owns Air Transat and sells domestic flights within Canada, as well as vacation packages to the Caribbean, Europe and other destinations. It has grappled with an overwhelming debt incurred during the Covid pandemic, when it had to get emergency funding from the Canadian government. Earlier this year, the government agreed to reduce that debt by around C$440 million ($315 million).
The Caisse de Depot et Placement du Quebec, which owns about 5% of the company according to data compiled by Bloomberg, will be meeting with Péladeau and his team “so that they can take us through the details of their plan,” it said in an emailed statement.
The largest shareholder, Fonds de solidarité des travailleurs du Québec, declined to comment.
Transat shares soared 18.6% to C$2.61 in Toronto, but are down about 84% since the beginning of 2020. The company has a market capitalization of C$110 million.
Péladeau, whose wealth mostly comes from a controlling stake in telecom and media company Quebecor Inc., has made multiple attempts to gain control of Transat. He mulled a bid when the company was in play in 2019, but the board agreed to an offer of C$18 a share from Air Canada. The pandemic struck before the transaction closed, and it was scuttled altogether in 2021.
He then made further takeover attempts as the company sought to restructure its debt. In June, he offered C$2.64 a share, which was rejected. “It’s not over until it’s over,” he told Bloomberg News in an interview a month later.
“Under the stewardship of the incumbent board, Transat has delivered a consistent track record of operational and financial underperformance, resulting in shareholder-value destruction and a broken balance sheet,” Péladeau’s firm said.
Transat confirmed in a statement that it received a requisition for a special meeting from a “dissenting shareholder.”
“Multiple directors have recently met with Mr. Péladeau and his team to explore constructive solutions, including potential changes to the company’s board composition,” Susan Kudzman, president of the board, said in the statement.
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