MONTREAL, Oct. 19 /CNW Telbec/ - Further to its press release dated June 15, 2009, Air Canada announced today that it is expected to complete on or about October 26, 2009 the issuance of 17,647,059 Class B voting shares (the "Share Issuance") to a new trust (the "Holding Trust") in connection with the previously announced pension funding arrangements entered into between Air Canada and its Canadian-based unions. The 17,647,059 Class B voting shares represent approximately 17.65% of the aggregate of Air Canada's currently issued and outstanding Class A variable voting shares and Class B voting shares, or 15% of the aggregate of the issued and outstanding Class A variable voting shares and Class B voting shares calculated after such Share Issuance.
The Share Issuance is being made in connection with the Pension Memorandum of Understanding dated June 16, 2009 entered into by Air Canada with the Canadian Airline Dispatchers Association, the National Automobile, Aerospace, Transportation and General Workers Union of Canada (CAW-Canada), Local 2002, the International Association of Machinists and Aerospace Workers and the Air Canada Pionairs as well as the Pension Memorandum of Understanding entered into by Air Canada with the Air Canada Pilots Association and with the Canadian Union of Public Employees, Airline Division dated June 14, 2009 and June 22, 2009, respectively (together, the "Pension MOUs").
As previously reported, the Pension MOUs provide for a 21-month moratorium on past service contributions otherwise required to be made by Air Canada to the defined benefit registered pension plans sponsored by Air Canada (the "Plans") and fixed aggregate annual past service contributions of $150 million, $175 million and $225 million in 2011, 2012 and 2013, respectively. During the term of the Pension MOUs, Air Canada will continue to make required current service contributions to the pension plans. The Pension MOUs provide that Air Canada shall issue the Class B voting shares to the Holding Trust which will be an arm's length party to Air Canada and which will be established to hold such shares for the sole purpose of contributing the eventual net proceeds realized on such shares to the Plans to be received as a contribution in respect of outstanding solvency deficits of the Plans. The Share Issuance will not materially affect control of Air Canada.
For so long as the Holding Trust continues to hold at least 2% of the aggregate of the issued and outstanding Class A variable voting shares and Class B voting shares of Air Canada, the Holding Trust will have the right to designate one member (who shall not be a member or officer of any of the unions) of Air Canada's board of directors, subject to completion of Air Canada's usual governance process for selection and confirmation of director nominees.
The TSX has accepted notice of the Share Issuance and the listing of the 17,647,059 Class B voting shares to be issued to the Holding Trust pursuant to the Share Issuance subject to, among other, the Share Issuance being approved by a majority of security holders of Air Canada. To this end, the TSX has agreed to accept, on an exceptional circumstances basis, the written consent of the security holder currently holding more than 50% of the voting securities of Air Canada, as provided under Section 604(d) of the TSX Company Manual. In satisfaction of such requirement, Air Canada has sought and received such written consent.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
Air Canada's public communications may include written or oral forward-looking statements within the meaning of applicable securities laws. Forward-looking statements, by their nature, are based on assumptions and are subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements cannot be relied upon due to, amongst other things, changing external events and general uncertainties of the business. Actual results may differ materially from results indicated in forward-looking statements due to a number of factors, including without limitation, industry, market, credit and economic conditions, the ability to reduce operating costs and secure financing, pension issues, energy prices, currency exchange and interest rates, employee and labour relations, competition, war, terrorist acts, epidemic diseases, insurance issues and costs, changes in demand due to the seasonal nature of the business, supply issues, changes in laws, regulatory developments or proceedings, pending and future litigation and actions by third parties as well as the factors identified throughout Air Canada's public disclosure file available at www.sedar.com. The forward-looking statements contained in this news release represent Air Canada's expectations as of the date of this news release and are subject to change after such date. However, Air Canada disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.
SOURCE Air Canada
For further information: For further information: Isabelle Arthur (Montréal), (514) 422-5788; Peter Fitzpatrick (Toronto), (416) 263-5576; Angela Mah (Vancouver), (604) 270-5741; Internet: aircanada.com