Under the deal, Ottawa buys about 6% stake in airline
Article content
Shares of Air Canada opened higher before quickly dropping by more than five per cent in volatile early trading Tuesday following Monday evening’s news that the federal government reached a multi-million deal with the airline, which had been struggling in the pandemic.
Air Canada shares opened at $28.40 on the Toronto Stock Exchange Tuesday, up more than five per cent from a market close of $27 per share, but immediately began to plunge. They were trading down more than four per cent at $25.88 about 10 minutes after opening.
Months after beleaguered airlines launched negotiations over a bailout, Air Canada and the federal government announced on Monday evening that the country’s largest airline will have access to up to $5.9 billion in low-interest loans and equity financing.
Under the terms of the deal, the government will buy $500 million worth of shares in the airline at a 15 per cent discount to their recent trading price through the Canada Enterprise Emergency Funding Corporation (CEEFC). It amounts to a roughly 6 per cent stake.
The airline will be required to repay $4 billion in loans from the Large Employer Emergency Financing Facility (LEEFF) program.
With additional reporting by Stefanie Marotta
