Air Canada is out with a share offering attempting to raise $850 million in “an overnight marketed deal”.
I’m certainly not surprised that they need money. I saw the CEO claim recently that their balance sheet is very strong. I am not going to attempt to analyze their balance sheet on the fly here but I will say I am skeptical of that claim.
I find it strange that they have not set a price to sell the shares at. TD is helping to market these shares and their offering states that
| The company has provided a price range of $24.00 CDN to $24.75 CDN. The Final Price may fall above or below this range. |
The shares closed today at $26.34.
I find it strange that investors are expected to agree to buy at an unknown price. At $24.75 the price would be 6% below today’s close. But if I was not interested in buying Air Canada today at $26.34, why should I suddenly be very much interested at a price 6% below that? Well, the brokers may be able to convince people to buy and may have some institutional investors lined up. But my guess would be that the price will land at $24 or lower and that is if they are able to successfully market these at all.
The reason there is no fixed price for the shares is because this is not a “bought deal”. Normally the brokers would basically guarantee that they can sell the shares at a given price. In this case the brokers understandably do not want to take the risk. Or perhaps they would have offered a “bought deal” only at a lower price.
I guess best wishes to Air Canada in seeing if this deal will fly.