In the wake of NewLeaf Travel Co.’s failed attempt to launch service recently, Canada Jetlines Ltd. revealed Wednesday plans to go public because it aims to become the very first ultra-low-cost airline from the gate.
Jetlines can place around the TSX Venture Exchange in a reverse takeover of Jet Metal Corp., a junior uranium explorer, using the dpo expected to occur sometime in May. The Richmond, B.C.-based airline had intended using this route earlier, but held off due to market uncertainty. Strong signals from investors prompted it to resume its course.
According to the arrangement, each 1.5 share of Jet Metal will become one share from the new company, which will list underneath the same symbol, JET. Each Jetlines share will be treated as 1.5 shares of the new entity. The transaction is susceptible to TSX approval.
Jetlines leader Jim Scott said once the company released a proposal for shell companies, several came forward. Last Thursday the board of directors decided on Jet Metal, which owns uranium properties in Newfoundland and Wyoming.
Jet Metal shares have not traded since Jan. 15, when talks began with Jetlines.
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Scott said a part of what made Jet Metal appealing was its $2 million in cash on hand, as well as its $5 million in assets that’ll be converted to cash.
“What we [also] liked about this particular shell is it included a management team that concentrates on incubating new [start-ups),” Scott said within an interview. “They possess a tremendous vision of methods to invest in the remaining market area of the airline.”
To that end, Scott said the organization will turn its attention to securing the funding it requires and expediting the regulatory licensing process. Included in those efforts, Jet Metal will attempt to boost as much as $6 million by way of a private placement.
The Canadian Transport Agency has told Jetlines that it needs $40 million in funding before it can operate. Indeed, as part of the regulator’s “financial fitness” test, it requires a new carrier to prove it may operate for 3 months without producing any income.
Jet Metal will assume two seats on the new company’s board. Due to administrative restructuring, Jetlines president David Solloway is going to be leaving the organization.
Jetlines intends to launch service out two primary hubs, in Vancouver and Hamilton, as well as a secondary base in Winnipeg, having a promise to provide fares 40 per cent lower than competitors. Its route map spans across Canada, and includes several destinations in California, Florida and Mexico.
On Jan. 18, NewLeaf announced it had been suspending tickets sales less than fourteen days after it began to do so, although it waited for the CTA to complete a review of how it issues licenses. NewLeaf was said to be within the skies last Friday.
The CTA hasn’t announced its decision. Its public consultation ended Jan. 22.
