Cerberus eyes Air Canada offer
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Air Canada has asked the court to approve a friendly offer from Hong Kong's Victor Li.
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MONTREAL, Canada (Reuters) -- New York-based buyout firm Cerberus Capital Management LP expects to submit a new offer in the coming days to take up an equity stake in Air Canada, according to court papers.
In a report to the court presiding over Air Canada's restructuring under bankruptcy protection, Ernst & Young, the court-appointed monitor for the insolvent airline, said Cerberus will make the offer before December 12.
Details of the new proposal for Air Canada, the top airline in Canada and world No. 11, were not available.
In the meantime, Air Canada is asking the court to approve a friendly offer from Hong Kong-based businessman Victor Li to provide the Montreal-based airline with C$650 million ($500 million) of equity in return for a 31 percent stake in a restructured version of the carrier.
If the airline then decides that it has received a superior proposal from someone other than Li, son of Li Ka-shing, Asia's wealthiest businessman, it will ask the court for permission to take further steps to find a new equity partner, Ernst & Young said.
The Ontario court is expected to decide early next week whether to approve the offer by Li, made through his Trinity Time Investment unit.
Cerberus, a vulture fund that invests in distressed debt and assets with a view to turning them around for a profit, has already submitted three offers for Air Canada.
In September, the airline, which has been under court protection from creditors since April 1 as it seeks to restructure some C$13 billion of debt and obligations, short-listed both Cerberus and Trinity in its search for an equity partner.
In early November, Air Canada, hoping to emerge from bankruptcy protection by the new year as a leaner, less indebted and profitable airline, chose Trinity under the court-sanctioned process.
But after failing to agree with Trinity on jointly investing in Air Canada, Cerberus made an unsolicited offer for the airline that is two different proposals.
In its current offers, Cerberus would take up an equity stake in a restructured Air Canada while offering existing creditors a chance to also own a piece of the airline.
Trinity has threatened to withdraw its current offer for Air Canada if the court does not approve it next week.
Copyright 2003
Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
