- Chorus Aviation Inc (TSX:CHR) has implemented a rights plan to protect its shareholders, after the company’s recent share-price drop
- The right plans will protect the company against any opportunistic investors who might take advantage of the low share price and buy up a large interest in the company
- Through the plan, when a single person, or an associated group of people, accumulates an interest greater than 20 per cent of the company, other shareholders will be entitled to purchase shares at 50 per cent discount to the market rate
- Since the COVID-19 pandemic began to hit the aviation industry in late February, the company’s market share has fallen by more than 58 per cent
- Chorus Aviation Inc (CHR) is up 6.35 per cent, with shares trading for C$3.26 and a market cap of $514.17 million
Chorus Aviation Inc (TSX:CHR) has implemented a rights plan to protect its shareholders, after the company’s recent share-price drop.
Since the COVID-19 pandemic began to hit the aviation industry in late February, the company’s market share has fallen by more than 58 per cent.
As a result, the company has brought in the shareholder rights plan to ward off any opportunistic investors who could take advantage of the low share price and buy up a large interest in the company.
The plan affects the company’s Class A and Class B voting shares and will ensure no investor can accumulate more than a 20 per cent interest in Chorus.
Through the plan, when a single person, or an associated group of people, exceeds more than 20 per cent of the company, other shareholders will be entitled to purchase shares at 50 per cent discount to the market rate. This will make it easier to adjust the share float and subsequently diminish any majority holding in the company.
While the plan is effective from today, it will need to be ratified at the annual shareholders meeting, scheduled for June 29, 2020.
Similar plans have been announced by companies across Canada, wishing to guard against the same potential problem. Chorus was quick to point out, however, that the plan has not been announced in response to an undisclosed take-over bid.
Joe Randell, President and CEO of Chorus, believes this step is necessary to protect the company in its current condition.
“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,” he said.
Chorus Aviation Inc (CHR) is up 6.35 per cent, with shares trading for C$3.26 at 11:17am EST.
