Transat A.T. Inc. – the parent of Air Transat (TS, Montréal Trudeau) - has secured a final CAD150 million Canadian dollars (USD117 million) Covid-support loan from the Canada Enterprise Emergency Funding Corporation (CEEFC).

The funding will be Transat's last loan through the Large Employer Emergency Financing Facility (LEEFF), aimed at protecting jobs in Canada's airline sector during the pandemic, the CEEFC announced in a statement. The loan concludes an application Transat filed during the height of the Omicron wave, which severely impacted the company's revenues and workers.

The CEEFC said applications under the LEEFF Covid scheme had now closed. "The CEEFC has stopped accepting new LEEFF applications, reflecting Canada's strong economic recovery from the pandemic and the fact that no new applications for securing LEEFF loans have been received from Canadian companies, except for Transat, over the last year," it stated.

The CAD150 million for Transat will consist of CAD100 million (USD78 million) upfront in LEEFF loans and another CAD50 million (USD39 million) credit facility contingent on Transat raising third-party funding (matched dollar for dollar up to CAD50 million) by July 29, 2023.

In addition, Transat lenders have agreed to defer maturity dates for debts totalling CAD198 million (USD154 million) for another year from April 2023 to April 2024, as well as to defer from October 2022 to October 2023, the date by which the corporation must meet certain financial covenants, the corporation said in a separate statement.

The additional liquidity is in addition to initial LEEFF financing of CAD700 million (USD545 million) on April 29, 2021. On March 10, 2022, Transat also received an additional CAD43.3 million (USD33.7 million) for traveller refunds and negotiated favourable 20-month deferrals for certain key terms of the unsecured LEEFF financing agreement.

"This complementary financing and the changes to the existing agreements strengthen our treasury position and reinforce our financial resilience," commented President and Chief Executive Officer Annick Guérard. "This important financing milestone, combined with sales that have been doing well in recent months, will give us the financial flexibility to deploy our strategic plan with optimism and confidence."

Transat said it would use the CAD100 million credit facility from the CEEFC as needed over the next few months. Of the amount, 80% was made available under the terms and conditions of a non-revolving and unsecured credit facility amended in March 2022, and 20% under the terms and conditions of a revolving and secured credit facility.

Under the LEEFF financing, Transat issued 4,687,500 warrants for purchasing an equivalent number of Transat shares at an exercise price of CAD3.20 (USD2.49) per share over ten years. The warrants are to vest in proportion to the drawings that will be made, but 50% of vested warrants will be forfeited if the loan were to be repaid in full by December 31, 2023.