Montreal — Travel agency Transat AT Inc. says it has signed a deal with Ottawa to borrow up to $ 700 million.
Funding will be provided through the federal government’s large-scale employer emergency lending facility, the same program used to support Air Canada.
Transat CEO Jean-Mark Justash said in a statement Thursday, “The agreement with the Government of Canada provides an additional $ 700 million in liquidity to move forward with confidence. That’s the amount of money you need. “
“A strong pre-pandemic balance sheet and positive action since then have helped us survive this unprecedented crisis. This support enables safe travel and travel restrictions. We look forward to resuming business as soon as is lifted. “
Transat said $ 390 million will be used to support the business and $ 310 million will be used to refund travelers.
In connection with financing, Transat has issued 13 million warrants to the government to purchase Transat shares at an exercise price of $ 4.50 per share.
Transat also agrees to pay dividends, buy back shares, limit executive compensation, and maintain active employment at the Wednesday level.
Transat has endured a tough year, suspending all flights in response to a federal government’s January request to suspend travel to Mexico and the Caribbean due to a pandemic.
Earlier this month, Air Canada and Transat announced that two Montreal-based companies had agreed to suspend transactions that would result in the largest airline in the country buying smaller rivals.
The acquisition, which began two years ago, was priced at $ 720 million, but was reduced to $ 190 million as COVID-19 struck the transport sector and eventually disappeared on April 2. ..