Canada Jetlines to go public in reverse takeover as it races to be first ultra-low co
Good Morning All:
From today's Financial Post and via a reverse takeover of a junior uranium mine. That's going to spark some jokes.
"In the wake of NewLeaf Travel Co.’s failed attempt to launch service last month, Canada Jetlines Ltd. revealed Wednesday plans to go public as it aims to be the first ultra-low-cost airline out of the gate.
Jetlines will list on the TSX Venture Exchange in a reverse takeover of Jet Metal Corp., a junior uranium explorer, with the initial public offering expected to occur sometime in May. The Richmond, B.C.-based airline had intended taking this route earlier, but held off due to market uncertainty. Strong signals from investors prompted it to resume its course.
According to terms of the arrangement, each 1.5 share of Jet Metal will convert to one share of the new company, which will list under the same symbol, JET. Each Jetlines share will be treated as 1.5 shares of the new entity. The transaction is subject to TSX approval.
Jetlines chief executive Jim Scott said when the company put out a proposal for shell companies, several came forward. Last Thursday the board of directors decided on Jet Metal, which owns uranium properties in Newfoundland and Wyoming.
Jet Metal shares have not traded since Jan. 15, when talks began with Jetlines.
Scott said part of what made Jet Metal appealing was its $2 million in cash on hand, as well as its $5 million in assets that will be converted to cash.
“What we [also] liked about this particular shell is that it came with a management team that focuses on incubating new [start-ups),” Scott said in an interview. “They have a tremendous vision of how to finance the remaining market portion of the airline.”
To that end, Scott said the company will turn its attention to securing the funding it needs and expediting the regulatory licensing process. As part of those efforts, Jet Metal will try to raise up to $6 million by way of a private placement.
The Canadian Transport Agency has told Jetlines that it needs $40 million in funding before it can operate. Indeed, as part of the regulator’s “financial fitness” test, it requires a new carrier to prove it can operate for 90 days without producing any income.
Jet Metal will assume two seats on the new company’s board. Due to administrative restructuring, Jetlines president David Solloway will be leaving the company.
Jetlines intends to launch service out two primary hubs, in Vancouver and Hamilton, as well as a secondary base in Winnipeg, with a promise to offer fares 40 per cent lower than competitors. Its route map spans across Canada, and includes several destinations in California, Florida and Mexico.
On Jan. 18, NewLeaf announced it was suspending tickets sales less than two weeks after it began to do so, while it waited for the CTA to complete a review of how it issues licenses. NewLeaf was initially supposed to be in the skies last Friday.
The CTA has not announced its decision. Its public consultation ended Jan. 22."