Maturity dates for debts totalling $198 million are deferred from April 2023 to April 2024
MONTRÉAL, July 29, 2022 /CNW Telbec/ - Transat A.T. Inc. ("Transat" or the "Corporation") announced today that it has reached an agreement with Canada Enterprise Emergency Funding Corporation ("CEEFC"), a federal Crown corporation, to obtain $100 million in additional liquidity. In connection with the establishment of such additional funding, through the Large Employer Emergency Financing Facility (LEEFF), Transat has reached an agreement with all lenders to defer the April 2023 maturities to April 2024, as well as to defer from October 2022 to October 2023 the date by which the Corporation must meet certain financial covenants.
Such liquidity is in addition to initial financing secured on April 29, 2021, through LEEFF to help the Corporation overcome the effects of the pandemic. On March 10, 2022, Transat also received an additional $43.3 million for traveller refunds and negotiated favourable 20-month deferrals for certain key terms of the unsecured LEEFF financing agreement.
As stated by Annick Guérard, President and CEO, "This complementary financing and the changes to the existing agreements strengthen our treasury position and reinforce our financial resilience. This important financing milestone, combined with sales that have been doing well in recent months, will give us the financial flexibility to deploy our strategic plan with optimism and confidence."
The additional credit facility made available by the Canada Enterprise Emergency Funding Corporation, which Transat will use as needed over the next few months, is for an amount of $100 million of which 80% is under the terms and conditions of the non-revolving and unsecured credit facility amended this past March, and 20% is under the terms and conditions of the revolving and secured credit facility.
Under the LEEFF financing, Transat issued a total of 4,687,500 warrants for the purchase of an equivalent number of Transat shares at an exercise price of $3.20 per share over a 10-year period1. The warrants are to vest in proportion to the drawings that will be made, but 50% of vested warrants will be forfeited if the loan were to be repaid in full by December 31, 2023.
The financial arrangement also provides Transat with an additional credit facility for a maximum amount of $50 million, subject to certain conditions that must be met no later than July 29, 2023, including securing additional funding from a third party. This demonstrates the Crown corporation's renewed commitment to Transat in the implementation of its recovery plan.
Caution regarding Forward-looking Statements
This press release contains certain forward-looking statements with respect to Transat, including regarding the effect of the additional liquidity on the Corporation's cash flow and the prospects for the resumption of operations and the implementation of the strategic plan aimed at making the Corporation profitable again. These statements are based on certain assumptions deemed reasonable by Transat, but are subject to certain risks and uncertainties, several of which are beyond Transat's control, which may cause results to differ materially.
In making these statements, the Corporation has assumed, among other things, that travel and border restrictions imposed by government authorities will be relaxed to allow for a resumption of operations of the type and scale expected, that the standards and measures imposed by government and airport authorities to ensure the health and safety of personnel and travellers will be consistent with those announced or currently anticipated, that travellers will continue to travel despite the new health measures and other constraints imposed as a result of the pandemic, that credit facilities and other terms of credit extended by its business partners will continue to be made available as in the past, and that management will continue to manage changes in cash flows to fund working capital requirements for the full fiscal year. If these assumptions prove incorrect, actual results and developments may differ materially from those contemplated by the forward-looking statements contained in this press release. Risks and uncertainties that could affect these assumptions and forward-looking statements include those set out in the MD&A for the fiscal year ended October 31, 2021, and for the quarter ended April 30, 2022, filed with Canadian securities commissions and available on SEDAR at www.sedar.com.
The reader is cautioned that the foregoing list of factors is not exhaustive of all factors that may affect any of the Corporation's forward-looking statements. The reader is also cautioned to consider these and other factors carefully, and not to place undue reliance on forward-looking statements.
These statements reflect current expectations regarding future events and operating performance, speak only as of the date this press release is issued, and represent the Corporation's expectations as of that date. The Corporation disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by applicable securities legislation.
Founded in Montréal 35 years ago, Transat has grown to become a travel reference worldwide, particularly as an air carrier under the Air Transat brand. Voted four times since 2017 as the World's Best Leisure Airline by passengers at the Skytrax World Airline Awards, it flies to international and Canadian destinations and strives to provide its customers with service that is enthusiastic, friendly and entirely safe. Transat has been Travelife-certified since 2018. As part of its commitment to a healthier environment, it has been renewing its fleet with aircraft considered the greenest in their category, knowing that this is essential to the integrity of its operations and the destinations it serves (TSX: TRZ).
1 The holder may exercise the warrants to the extent that this would not entitle the holder to more than 19.9% of the outstanding shares and any exercise above this threshold shall be paid in cash by the Company based the market price of its shares.
SOURCE Transat A.T. Inc.
Media Relations: Christophe Hennebelle, Chief People, Sustainability, and Communications Officer, 514-987-1660, ext. 4584; Financial Analysts: Patrick Bui, Chief Financial Officer, 514-987-1660, ext. 4567