Air Canada announced today that it will be
adopting certain amendments to the terms of its Shareholder Rights Plan, which
will be considered at its upcoming May 16, 2000 shareholders meeting.
Fairvest Securities Corporation has recently suggested a number of minor
amendments to reflect its latest preferred wording and other matters which are
generally not material and are to be adopted by Air Canada, as well as three
other changes, two of which are substantive. Air Canada has agreed to adopt
one of the changes, but has decided not to adopt the two substantive ones in
light of its unique circumstances and the provisions of the Air Canada Public
The three proposed changes are as follows:
- Firstly, Fairvest believes that the Plan should trigger at a fixed 20%
level, as do most other rights plans of corporations that are not governed by
a special statute. Air Canada has provided for a flexible trigger, currently
at 10% in view of the 10% voting share limit currently prescribed by
Parliament under the Air Canada Public Participation Act, but increasing to up
to 20% if the law were to change. Air Canada believes that its Plan should be
consistent with the Act and has not adopted a fixed 20% level.
Secondly, Fairvest believes that a ``permitted bid`` should be able to
be launched and commence the 60 day clock running prior to any amendment to
the Act to permit someone to acquire control of Air Canada, which is currently
not permitted. Air Canada believes that this would not create a level playing
field in which to maximize shareholder value and carry out a proper search for
alternatives, and has therefore declined to adopt this change.
- Thirdly, Fairvest has suggested that rather than having the Plan
trigger based solely on a holding of Class A Non-Voting Common Shares above
the triggering threshold, it should trigger based on a combined holding of
Common Shares and Class A Non-Voting Common Shares. Air Canada has agreed to
this change. Accordingly, subject to the usual exceptions, the Plan will be
triggered based on a holding of 10% or more of the Common Shares or based on a
holding of 10% or more of the overall Common Shares and Class A Non-Voting
Common Shares. Air Canada originally had proposed an equal trigger on both
classes. As noted above, Fairvest would prefer a 20% trigger, but Air Canada
has not agreed to this change.
The amended and restated Plan will be considered by Air Canada`s
shareholders at the upcoming meeting on May 16, 2000. Air Canada welcomes
Fairvest`s review of and comments on its Plan, which has been adopted in the
interests of Air Canada`s shareholders. There is currently no proposed or
pending bid for control of Air Canada of which management is aware. Such a bid
would not be permitted under the laws of Canada.