Investing (Aeroplan)

  • Last Updated:
  • Sep 12th, 2019 2:15 pm
Deal Guru
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Mar 22, 2005
10039 posts
I was really wanting at least 5 but will probably sell today. Most analysts were around there.

Cost base of 2 bucks I can't complain too much.
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Nov 14, 2003
3322 posts
kr0zet wrote:
Aug 21st, 2018 11:05 am
35% TFSA / 65% RRSP.

You did give me a nudge, I was worried about the liability but after re-reading I realized that the liabilities were not the boggy man that they were painted as. If they were, there would have been an uptick in redemption or some material change in Canadians habits. That didn't happen over the year since AC announced the end to the partnership. Its not the same as a cash debt, or a bond, those are set liabilities. Points redemption's have to assume 100% redemption and 0 breakage and those don't happen. AIM was still making more money each quarter than they were paying out and there was no reason to believe that would have changed. But all that is in the past.

Again, thank you. You did give me a nudge in the direction of profit.
Baller! Way to go!
Nov 10, 2007
278 posts
What do you guys think about Mittleman's numbers. Does Aimia still have the ability to get anywhere near 7.50 without Aeroplan?

I'm assuming that post sale, Aimia continues on with their own loyalty program with Porter/Flair/Air Transat/whoever else they get, yeah? Also that idea of being a loyalty hub where you transfer points to other programs. It would be interesting to see if they can firm up that OneWorld rumour without Aeroplan. But I guess without a credit card partner this won't really work.

Mittleman Brothers LLC Statement on Sale of Aeroplan

Canada NewsWire

NEW YORK, Aug. 21, 2018

NEW YORK, Aug. 21, 2018 /CNW/ -- We believe that our acquiescence in agreeing to sell Aeroplan for C$450M in cash was the best available outcome for all Aimia stakeholders. We appreciate the Board's efforts in pushing for a vastly improved valuation from the initial C$250M offered, a conditional figure that would have likely been decimated by adjustments.

The outcome should leave Aimia Inc. with just over C$1B in cash to invest in other opportunities, a significant tax loss carry-forward in Canada and the U.S. to facilitate such, and an NAV that we now calculate at C$7.50 per share.

Our revised sum of the parts valuation for Aimia is C$7.50 (USD 5.73), which is 95% higher than yesterday's closing price of C$3.84:

Aeroplan (Canada): C$450M cash from sale, no tax leakage as proceeds far below tax cost basis est. C$1.1B

PLM Premier (Mexico): (48.9%), fair value = US$489M, 10x US$100M EBITDA est. 2019 = US$3.21 per share 5.7M members in fast growing coalition loyalty program anchored by Aeromexico, Mexico's flagship airline. Aimia invested US$124M for 48.9% stake between 2010-2012, and since then received US$84M in cash dividends. At last financing round in 2012, PLM total enterprise was valued at US$518M, and it grew a lot since then. Comps: Smiles Fidelidade S.A. (SMLS3 BZ) and Multiplus S.A. (MPLU3 BZ) trade about 7.5x EBITDA, down sharply in emerging market sell-off, fair value likely closer to 10x EBITDA for both.

Cardlytics (CDLX): ownership (2.978M shares), price on 8/20/18= $18.43 = USD 55M = US$0.36 per share

Think BIG Digital – Air Asia: (20%), est. fair value = USD 50M, US$16 x 16M members = US$0.33 per share

Fractal Analytics (USA): (5%), est. fair value = US$18M (5% of $360M (=6x $60M sales) =US$0.12 per share

Assets (excluding cash) = C$1.254B = C$8.23 / US$6.28 per share

(+ cash & bonds C$576M – C$330M debt – C$323M preferred – C$34M accrued interest) = -C$111M

NAV: = C$1.143B / US$873M / 152.3M shares = C$7.50 / US$5.73 per share (CAD/USD = 1.31 as of 6/30/18)
Sr. Member
Dec 23, 2006
504 posts
^^They also said Aimia was worth $10 just 3 weeks ago and now they are okay with selling the biggest piece for $2.50/share less (Assuming O/S shares remain constant).

Without further news I would take the rest of the valuation with a grain of salt.
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Deal Fanatic
Feb 15, 2006
8283 posts
-=phelan=- wrote:
Aug 21st, 2018 2:35 pm
damn i was thinking about buying at 3.7x a few days ago...oh well congrats on whoever pocketed some $$$ :)
That included me. I've been in and out of AIM, each time with some gains. The last gamble was bigger, and glad it worked out.
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Jan 16, 2011
3301 posts
If this breaks under $4 i may buy back in. AC looking to finalize September'ish, that announcement should push it back up again. Cant see this deal not getting finalized...
Jr. Member
Nov 7, 2012
159 posts
Seems like its hovering between 4.06-4.09. Was planning to buy in below 4
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Jan 16, 2011
3301 posts
Well.... I'm a glutton for punishment... Bought 49000 shares @ $4.06 and some $4 September call options... Hope I am not riding this horse to the glue factory...
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Jan 16, 2011
3301 posts
Pulled from tmx
Last 25 Trades
Time Price Shares Change
08/22/2018 4:00 PM EDT Q 4.19 295,400 -0.02

20ish% of the entire days volume was a $1.2 million dollar trade at the end of the day? Buyer was Soctia Capital.
Deal Addict
Aug 17, 2008
2705 posts
DBRS Comments on the Sale of Aimia Inc.’s Aeroplan Loyalty Business ... y-business

August 22, 2018
DBRS Limited (DBRS) notes that Aimia Inc. (Aimia or the Company) has reached an agreement in principle to sell its Aeroplan loyalty business to Air Canada, The Toronto-Dominion Bank (rated AA with a Positive trend by DBRS), the Canadian Imperial Bank of Commerce (rated AA with a Stable trend by DBRS) and Visa Canada Corporation (collectively, the Consortium) for approximately $450 million in cash (the Transaction). As part of the Transaction, the Consortium will assume the $1.9 billion Aeroplan redemption liability. The agreement has been approved by Aimia’s board of directors and is supported by the Company’s largest shareholder, Mittleman Brothers, LLC, which owns approximately 17.6% of the outstanding common shares. The Transaction is subject to the satisfactory conclusion of definitive transaction documents, Aimia shareholder approval and certain other conditions, including due diligence, receipt of customary regulatory approvals and completion by the Consortium of credit card loyalty program and network agreements for future participation in Air Canada’s new loyalty program. The Transaction is expected to close in the fall of 2018.

Aimia’s ratings remain Under Review with Developing Implications, where they were placed on July 26, 2018, following the Consortium’s initial proposal to acquire the Aeroplan business for $250 million (see the DBRS press release “DBRS Places Aimia Inc. Under Review with Developing Implications” dated July 26, 2018). The Under Review with Developing Implications status reflects the uncertainty over how the net proceeds will be used and what the future strategic and financial management intentions of the Company will be following the Transaction.

<my bolding>

DBRS notes that although the Consortium’s proposal is not for Aimia shares, the sale of the Aeroplan program could be sufficient in size to trigger a change-of-control provision in Aimia’s Senior Secured Debt that requires the occurrence of both a change of control and a rating event (i.e., a rating downgrade of the Senior Secured Debt). If triggered, the provision requires that an offer be made to repurchase at a price equal to 101% of the outstanding Senior Secured Debt of the Company.

DBRS notes that as of Q2 2018, Aimia had approximately $329 million of debt, $249 million of cash, $22 million of restricted cash and $260 million invested in corporate and government bonds. The debt consists of $250 million of Senior Secured Notes due May 2019 and $80 million (including $9 million of letters of credit) drawn on the credit facility, which matures in 2020. Following the Transaction, Aimia would be meaningfully smaller in size and consist of Proprietary Loyalty Canada and Insights & Loyalty Solutions (which includes Air Miles Middle East), along with investments in PLM Premier, S.A.P.1. de C.V.; Cardlytics; and Think Big Digital. The Company would have approximately $720 million of cash and $260 million of bond investments that would be sufficient to repay the outstanding debt.

DBRS will proceed with its review as more information becomes available.

All figures are in Canadian dollars unless otherwise noted.

* What does this all mean to equity holders or those thinking about investing in AIM? *

If this provision is triggered, AIM may have to buy back their senior secured notes at a price of 101% of par or $250mm x $1.01 = $252,500,000
Therefore the $450 million in cash being offered for the Aeroplan loyalty program may only net $197,500,000 ($450-$252.5) excluding any other expenses, fees or taxes etc.

Add: If the bonds are trading at $96, then there would be a huge incentive for all holders to redeem their bonds. If the bonds are trading at $102, then there might not be any incentive to sell at a lower price of $101
Deal Fanatic
Feb 15, 2006
8283 posts
So TD/CIBC/Visa also has agreement for future participation in AC's new loyalty program. This is a key part of the banks in the ae buyout. The banks are already bleeding from loss of customers leading up to 2020, and this buy stops that bleeding, and secures their future with the new program.
Deal Fanatic
Feb 15, 2006
8283 posts
Just bought into AIM again. It shouldn't come down much from the recent highs, but it did.