ACE Aviation makes offer for all 4.25% convertibles, preferreds, seeks approval for liquidation

By Jennifer Chiou

New York, Dec. 10 - ACE Aviation Holdings Inc. said its board authorized an offer for all of the company's C$322.75 million of 4.25% convertible senior notes due 2035.

The company said it is offering C$900 in cash for each C$1,000 principal amount of notes, adding that no accrued interest will be paid.

ACE intends to cancel the repurchased notes.

The offer will end at 5 p.m. ET on Jan. 19.

There is no tender minimum.

ACE said that the independent formal valuation from Ernst & Young LLP concludes that the fair market value of the notes per C$1,000 principal amount at Dec. 9 ranges from about C$825 to C$875.

Preferred share offer

The company is also offering to purchase all of its 12.5 million outstanding preferred shares at a purchase price of C$20.00 in cash per preferred.

ACE noted that it has obtained an advance income tax ruling from the Canada Revenue Agency, which provides that the purchase structure under the offer does not result in "taxable preferred shares" or "short-term preferred shares" being purchased.

The preferred offer also ends at 5 p.m. ET on Jan. 19.

Ernst & Young determined the fair market value of the preferred shares at Dec. 9 to be C$19.75 to C$20.75 per share.

Approval sought to liquidate

ACE also announced that it intends to seek court and shareholder approvals for a plan of arrangement under which a court-appointed liquidator will proceed with the distribution of ACE's net assets, including its shares in Air Canada, after providing for outstanding liabilities and costs of the transaction, and thereafter to voluntarily dissolve.

As of Wednesday, ACE's principal assets consisted of its cash and cash equivalents totaling about C$811 million, its 75% interest in Air Canada and its 27.8% interest in Aero Technical Support & Services Holdings Sarl while ACE's principal obligations consisted of its C$322.7 million of outstanding notes and estimated wind-up and other obligations of about C$26 million.

ACE is a Montreal-based holding company of aviation interests including Air Canada and ACTS.

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