Air Canada 2013 Annual Report Download - page 125

2013 Consolidated Financial Statements and Notes
125
Warrants
In 2013, the Corporation purchased for cancellation 2,083,333 warrants expiring July 30, 2013 for an aggregate purchase price
of $2, representing the average trading price, at the time of purchase, of Air Canada shares on the Toronto Stock Exchange less
the exercise price of $1.51 of each warrant. In addition, the outstanding number of ordinary shares increased by 7,916,667
upon exercise of warrants with proceeds to Air Canada of $12.
In 2012, 79,430,300 warrants with an exercise price of $2.20 expired. Upon expiry, the value ascribed to the Share capital
related to the warrants of $18 was reclassified to the Deficit. No warrants were exercised during 2012.
The Corporation has no warrants left outstanding.
Normal Course Issuer Bid
In 2011, Air Canada received approval from the Toronto Stock Exchange (“TSX”) to implement a normal course issuer bid to
purchase, for cancellation, up to 24,737,753 Class A Variable Voting Shares and/or Class B Voting Shares (the “Shares”),
representing, at that time, 10% of the total public float of the Shares. The repurchase program, which commenced on
December 12, 2011 and ended December 11, 2012, was conducted through the facilities of the TSX.
During 2012, the Corporation purchased and cancelled 3,019,600 shares for cash at an average cost of $1.67 per share.
Shareholder Rights Plan
In 2012, the shareholders of Air Canada approved amendments to the shareholder rights plan agreement (the "Rights Plan")
which provide that, subject to certain exceptions identified in the Rights Plan, the Rights Plan, as last amended, would be
triggered in the event of an offer to acquire 20% or more of the outstanding Class A variable voting shares and Class B voting
shares of Air Canada calculated on a combined basis, instead of 20% or more of either the outstanding Class A variable voting
shares or the Class B voting shares calculated on a per class basis as was the case under the Rights Plan prior to the
amendments that came into effect in 2012.
The amendments to the Rights Plan were proposed and implemented in order to render effective a decision issued by
Canadian securities regulatory authorities (pursuant to an application of Air Canada) that effectively treats Air Canada's
Class A variable voting shares and Class B voting shares as a single class for the purposes of applicable take-over bid
requirements and early warning reporting requirements contained under Canadian securities laws.
Under the terms of the Rights Plan, one right (a “Right”) has been issued with respect to each Class B Voting Share and each
Class A Variable Voting Share (each a “Share”) of Air Canada issued and outstanding as of the close of business on March 30,
2011 or subsequently issued. These Rights would become exercisable only when a person, including any party related to it,
acquires or announces its intention to acquire 20% or more of the outstanding Class A Variable Voting Shares and Class B
Voting Shares of Air Canada calculated on a combined basis, without complying with the “Permitted Bid” provisions of the
Rights Plan or, in certain cases, without the approval of the Board. Until such time, the Rights are not separable from the
shares, are not exercisable and no separate rights certificates are issued. To qualify as a “Permitted Bid” under the Rights Plan,
a bid must, among other things: (i) be made to all holders of Shares, (ii) remain open for a period of not less than 60 days, (iii)
provide that no Shares shall be taken up unless more than 50% of the then outstanding Class A Variable Voting Shares and
Class B Voting Shares, on a combined basis, other than the Shares held by the person pursuing the acquisition and parties
related to it, have been tendered and not withdrawn, and (iv) provide that if such 50% condition is satisfied, the bid will be
extended for at least 10 business days to allow other shareholders to tender.
Following the occurrence of an event which triggers the right to exercise the Rights and subject to the terms and conditions of
the Rights Plan, each Right would entitle the holders thereof, other than the acquiring person or any related persons, to
exercise their Rights and purchase from Air Canada two hundred dollars worth of Class A Variable Voting Shares or Class B
Voting Shares for one hundred dollars (i.e. at a 50% discount to the market price at that time). Upon such exercise, holders of
rights beneficially owned and controlled by Qualified Canadians would receive Class B Voting Shares and holders of rights
beneficially owned or controlled by persons who are not Qualified Canadians would receive Class A Variable Voting Shares.
The Rights Plan is scheduled to expire at the close of business on the date immediately following the date of Air Canada's
annual meeting of shareholders to be held in 2014, unless terminated earlier in accordance with the terms of the Rights Plan.
The Rights Plan may be renewed or extended with shareholders’ approval.