Chorus adopts poison pill to prevent a hostile takeover

By Brett Ballah on April 27, 2020

An Air Canada CRJ-900 owned by Chorus and operated by Jazz, touches down at Vancouver International Airport in July 2019 (photo: Brett Ballah).

Chorus Aviation, perhaps the biggest Canadian airline you’ve never heard of, announced late Monday it would adopt measures to prevent being taken over as its stock price sags as a result of COVID-19.

Halifax-based Chorus leases regional aircraft to airlines around the world, but the bulk of its business comes from operating regional flights on behalf of Air Canada, mainly aboard De Havilland Dash 8 and Bombardier CRJ aircraft.

Like other airlines around the world, Chorus has been harshly affected by the pandemic, slashing flights and active staff.

Executives also believe the depressed market leaves Chorus open to a hostile takeover, as its share price has dropped from a high of $8.45 earlier this year to close at $3.07 Monday.

“Since the onset of the COVID-19 pandemic, the price of Chorus’ shares have declined significantly,” said Joe Randell, President and Chief Executive Officer, Chorus. “We have taken significant steps to bolster our liquidity and remain focused on taking all actions necessary to emerge from this crisis as a strong company. We have adopted the Rights Plan to protect against those who may seek to take advantage of the current market environment to the detriment of Chorus and its shareholders.”

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The so-called shareholder rights plan – otherwise known as a poison pill – kicks in if a person or company acquires 20% of Chorus’ shares. It allows other shareholders to buy new shares at a 50% discount

Jazz laid off 3,000 people as the pandemic caused passenger numbers to plummet, but announced April 9 that it would rehire furloughed staff and put them on a federal emergency wage subsidy.

A calculation by Western Aviation News shows the subsidy would be worth about $50 million to Jazz and its employees by the time it expires in early June.

“Any near-term recovery in Jazz’s flight operations depends exclusively on the lifting of domestic and trans-border travel restrictions and protocols,” the company said in a release.