ACE Aviation shares jump on report of windup plans

Tue Dec 9, 2008 1:44pm EST
 
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CALGARY, Alberta (Reuters) - Shares of Air Canada parent ACE Aviation Holdings Inc rose as much as 14 percent on Tuesday after a media report that said the company may distribute its interest in Canada's biggest airline to investors as it winds up its operations.

ACE's class B shares rose 36 Canadian cents to C$3.07 early on Tuesday afternoon on the Toronto Stock Exchange. Earlier they touched C$3.09.

The Globe and Mail newspaper, quoting an unnamed industry official, said ACE was mulling paying out its note holders with cash and offering preferred shareholders cash and new debt instruments. As well, the company could distribute its 75 percent holding in Air Canada to its shareholders.

While ACE has mulled offering up its own shares as currency in a move to buyback the stake in Air Canada it doesn't own, the industry official said "a creative alternative" has emerged that would see Air Canada remain a publicly listed company while ACE would be wound down.

Air Canada's class A shares fell 20 Canadian cents, or 10 percent, to C$1.29 on the Toronto Stock Exchange.

($1=$1.26 Canadian)

(Reporting by Scott Haggett; editing by Peter Galloway)