Chorus Aviation arranges $50M substantial issuer bid

Executive Summary

• Chorus Aviation Inc. has announced a substantial issuer bid to repurchase up to $50 million worth of its Class A variable voting shares and Class B voting shares.
• The offer utilizes a modified Dutch auction mechanism, allowing shareholders to tender shares at a price between $23 and $25 per share, with the final purchase price determined by the auction results.
• The board believes the current share price does not fully reflect the company's value and that the repurchase is an advisable use of financial resources, while ensuring sufficient working capital remains for operations.

Key Details

• Aggregate Purchase Price: Up to $50 million.
• Share Classes: Class A variable voting shares and Class B voting shares.
• Price Range: Not less than $23 and not more than $25 per share.
• Mechanism: Modified Dutch auction.
  • Auction Tenders: Shareholders specify the number of shares and a price within the $23–$25 range in increments of five cents.
  • Purchase Price Tenders: Shareholders specify the number of shares but do not set a price; these are deemed deposited at the minimum price of $23.
• Final Price Determination: The company will determine a single purchase price (between $23 and $25) that allows it to purchase the maximum number of validly deposited shares without exceeding the $50 million cap. All purchased shares will be bought at this single price.
• Odd-Lot Preference: If the aggregate purchase price exceeds $50 million, shares from "odd-lot holders" (shareholders owning fewer than 100 shares as of the close of business on the expiration date) will be purchased first at the purchase price. Remaining shares will be purchased on a pro rata basis.
• Conditions: The offer is not conditioned on a minimum number of shares being deposited. The company reserves the right to withdraw, extend, or vary the offer subject to applicable laws.
• Timeline:
  • Expected Commencement: On or about September 26, 2025.
  • Expected Expiration: 5 p.m. Toronto time on November 10, 2025.
• Tax Implications: The company estimates the paid-up capital per share is approximately $15.75. Non-resident shareholders disposing of shares may be deemed to receive a taxable dividend equal to the excess of the purchase price over the paid-up capital.
• NCIB Termination: The automatic share purchase plan associated with the existing Normal Course Issuer Bid (NCIB) was automatically terminated. Further purchases under the NCIB are suspended until after the expiration or termination of this offer.
• Valuation Exemption: The board concluded the company can rely on the liquid market exemption under Multilateral Instrument 61-101, avoiding the requirement for a formal valuation.
• Depositary: TSX Trust Company has been engaged to act as the depositary.
• Board Stance: The board believes the offer is advisable given available cash resources and the belief that the trading price is not fully reflective of business value. It is not expected to preclude future growth or business opportunities. No recommendation is made to shareholders regarding whether to tender.

Notable Quotes

• "Chorus's board of directors believes that the offer is an advisable use of the company's financial resources given its available cash resources, its continuing cash requirements and access to capital markets, as well as the fact that the company believes the recent trading price of its shares is not fully reflective of the value of the company's business and future prospects."
• "The offer allows the company to return up to $50-million to shareholders who elect to tender their shares while at the same time increasing the equity ownership of shareholders who elect not to tender."