A $200 million equity commitment from Canada’s Caisse de depot et placement du Quebec to Air Canada may be used to facilitate that airline’s hostile takeover of Canadian Airlines International Ltd.
Earlier this month, the Quebecois pension bought a C$150 million ($100 million) convertible subordinated debenture from Air Canada, and retained an option to buy additional debentures worth up to C$150 million.
Air Canada is in the midst of an attempt to buy out its rival.
A spokesperson for the caisse said the debentures constitute a normal investment and are not related to the takeover battle. But the Canadian press has reported that the pension’s investment was timed perfectly to facilitate Air Canada’s proposed acquisition of Canadian Airlines, should that bid be successful. Canadian Airlines already rebuffed an attempt by Toronto private equity shop Onex Corp. to buy them out for approximately $1.5 billion.
In a further twist, Newcourt Capital and CIT Group Inc. last Tuesday backed a group that will attempt to buy all of the regional carriers from both airlines and consolidate them into one Canadian regional airline services company.
The caisse currently owns 5.6% of Air Canada’s common shares and 19.9% of its class A stock, making it the airline’s largest shareholder.