Workathon is the site I use to handle business matters that are slightly different or not normal business reporting.In this blog I cover press releases given by three separate companies:Holloway Lodging,Capital Power and Chorus Aviation.They are not reporting quarterly nor annual business reports and they are not big enough to be handled in one blog so I bundle them together.All are certainly significant and positive factors for the companies involved.The first to be discussed is Chorus Aviation.
Chorus Aviation
Chorus Aviation is a regional aircraft service that has a semi-regulated connection to Air Canada.Prices and a part of their costs are set by Air Canada.There was a revision of the agreement in 2014 and it has been loosened up slightly.But revenues and profits are largely determined by Air Canada.However Chorus has been investing in other opportunities outside of the regulated umbrella.To that point, they announced on March12,2015 that they have purchased a holding company that owns Voyageur Airways, a leading provider of specialized aviation services.Voyageur is a Transport Canada approved operator;it operates medical, logistical and humanitarian flights for government agencies.It has 18 aircraft of which 13 are owned.The majority are Bombardier Dash 8-300 and CRJ-200 aircraft.It operates in Canada, Africa and Central Asia.It also has specialized engineering and advanced maintenance operations and has a number of certificates for modifications and improvements to Bombardier aircraft.
It has full in house design engineering and aircraft modification capabilities;it also does sales of parts and some manufacturing.Plus it has storage and parking capacity for up to 65 aircraft.It had adjusted EBITDA of $17 million in 2014.Chorus paid $80 million with $47 million in cash and $8 million in Chorus B shares and $25 million in deferred cash payments to acquire it.
Closing
This is seen as a good price as it is 4.7 times adjusted EBITDAand will be immediately accretive.A good rule of thumb is 4 to 5 times operating income for a going concern.This opens up new opportunities for Chorus but it will also require more investment in this multitasking business.It is possible that Chorus may sell the operation in North Bay as it is not too close to it's main operation in Halifax.Chorus will probably sell off the international operations and the certificates.But it is easy to see that the specialized engineering and advanced operations will fit in nicely with the existing Chorus operation.It is not clear at this time how profitable the medical and logistical operations will be. Only time will tell here.
Capital Power
On April 2,2015 Capital Power announced that Epcor,an Edmonton utility,sold in a secondary offering 9,450,000 shares of Capital Power for $23.85 a share.The proceeds were $225,382,500.Epcor still owns 9.1% of Capital shares now and before the offering owned about 21% of Capital shares;Capital Power has about 85 million shares outstanding.
These almost 10 million shares were a drag on Capital Power shares and prevented Capital from rising beyond $24 a share.Now that this tranche of shares has been bought there will be more pressure on the demand side to buy shares up.This acted as a damper on the share price while EPCOR was selling.Now with a good quarterly report coming up this could send Capital Power into the $25 level again.
Holloway Lodging
On April1, 2015 Holloway Lodging announced that it had sold it's Travellodge franchise for $21 million and a gain of approximately $6.5 million.The purchase was made through a $16 million cash payment and a issue of $5 million subordinated notes.Travelodge was a part oif the assets that Holloway got with the acquisition of Royal Host, a lodging company listed on the TSX.Travellodge was considered as a non-core asset and let go for $21 million.Holloway will use the $16 million of cash to repay the loan used to finance the acquisition of Royal Host.This has been seen as a positive move by Holloway as the shares rose $.50 this week.
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