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Gold/Mining/Energy : Air Canada is taking off?
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To: Alomex who wrote (917)10/19/1999 7:43:00 PM
From: Serge Collins  Read Replies (2) of 1033
 
Alomex: That's precisely the point, the Onex deal is not a straight cash deal, it's a cash/share exchange tentatively valued by Onex at $8.25 per share. My contention is that there is no way one can accurately determine the value of an AirCo share, but I believe it will be substantially lower than $8.25 due to concerns about debt and integration related matters.

Once analysts start taking a close look at the new company's capital structure, they will become wary of AirCo. The new company will be highly leveraged, have major problems with route duplications, be forced to spend hundreds of millions on severance and other expenses related to the amalgation and create enormous tensions between both employee groups.

The Onex deal will not fly. Having said this, the proposal put forward today by Air Canada has made this debate academic. The fact is, this counter proposal is excellent in its scope, it is very comprehensive and less illusory. Forget the Onex deal, it's grounded before it even got off the ground.

Expect Onex to throw in the towel after the upcoming rejection. The reason -- this proposal is so comprehensive that Onex can't touch it. Mr. Schwartz can go back to running his holding company.

You can bet on it.
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