Thursday, February 21, 2008

Air Canada shareholder ACE's majority stake more appealing as gov't entertains possible review of foreign-ownership laws - report

ACE Aviation Holdings could more easily unload its 75% stake in Air Canada now that the federal government is believed to be open to taking another look at the country's airline industry foreign-ownership rules, the National Post said.
The 21 February report cited unidentified sources as saying that the government of Canada has been seriously considering upping foreign-ownership caps in the airline sector, though it likely will not move on that front until a current review of the country's foreign-ownership and competition regulations is completed.
The report noted that Robert Milton, chief executive officer of listed Montreal, Quebec-based ACE, previously said that pension funds and private equity companies have already expressed an interest in listed Dorval, Quebec-based Air Canada. He added that Air Canada could end up being picked up by a US player. However, the current rules would prevent a US rival from acquiring in excess of 49% of Air Canada's equity and over 25% of its voting stock. Unidentified senior Ottawa-based sources said in the report that the federal government's desire to review foreign-ownership regulations in the airline industry is motivated by a strategy to inject Canada's airline sector with additional investment while not giving foreign interests complete control over the sector.


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