IDEA
AUTHOR
PUBLISHED DATE
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SUBJECT
AUTHOR
POSTED DATE
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To rjm59-
I don't think anyone here could be more aggreived by what's gone on with Aimia recently than myself, but I think your recollection of the longer term history is incorrect, and your claim of
... Read more
<p>To rjm59- </p>
<p>I don't think anyone here could be more aggreived by what's gone on with Aimia recently than myself, but I think your recollection of the longer term history is incorrect, and your claim of value destruction is discernibly false. </p>
<p>When I arrived in Montreal in March 2018 as a frustrated owner of Aimia since late May 2017, I found a board whose advisers had convinced them that Aeroplan had little to no equity value, given the C$2 billion in points liability. I argued it was worth at least C$1 bil. and that the points liability should not be included in enterprise value (<a href="https://canadianaviationnews.wordpress.com/2018/08/06/aimias-largest-shareholder-says-air-canada-led-aeroplan-offer-is-undervalued/">https://canadianaviationnews.wordpress.com/2018/08/06/aimias-largest-shareholder-says-air-canada-led-aeroplan-offer-is-undervalued/</a>). </p>
<p>Yes, I failed to achieve the C$1 bil., and had to settle for what became just over C$500 mil., but that was because behind the scenes, Air Canada and TD were writing letters to Aeroplan members, freaking them out about the future, and sparking a surge in the earn/burn ratio that left unchecked might have wiped Aimia out, and Aimia had bank debt then. </p>
<p>But C$500M was still C$250M more than Air Canada's initial C$250M bid (which had adjustments that would have reduced that number substantially), so that was a minimum of C$250M in value creation (the legacy board was chomping at the bit to accept both the first offer of C$250M and even more so the second offer of C$325M; you have no idea what it took to convince them to say no to the improved C$325M bid which was an exploding offer with huge threats attached if we rejected it. The board room drama was like "12 Angry Men", with my appointee turning a otherwise unanimous group of yes votes to no votes, one by one). Anyway, my point is that not getting fair value for Aeroplan is not the same as destroying value. </p>
<p>Also, at my 2nd meeting in Montreal in March 2018, after we'd come to an agreement on board seats and replacing the CEO (the guy who sold Nectar for negative EV), the then-COB was chuckling as he was shuffling his papers up and getting up to leave the table. I asked what was so funny. He said, "<em>well, you really got here right in nick of time, because I was just about to sell PLM for a LOT less than what you're saying it's worth</em>." And I said, "<em>what do you mean by "just about to</em>""? And he said, "<em>today, we were going to sign the papers to sell PLM today</em>." </p>
<p>We later found out that the price he was going to sell Aimia's 49% of PLM for in March 2018 was USD $180M (CAD 235M). Aimia ultimately got CAD 537M for that stake last year, and nearly CAD 100M in cash dividends from PLM over the 5 years of 2018-2022 inclusive.</p>
<p>So rather than destroying value, I see my activism with Aimia as having created a minimum of CAD 250M in value with a hard-fought improved outcome vs. Air Canada on Aeroplan, and CAD 400M for an even harder fought outcome vs. Apollo and Aeromexico (in bankruptcy) with PLM. Those two numbers add up to CAD 650M which is where Aimia's shareholder equity sits today (C$7.50 per share), and that's after massive share buybacks over the past few years.</p>
<p>I know some of this stuff was behind the scenes then, so you couldn't have known some of those details, but I did want to correct you because I put in a lot of work into that project, and I missed a lot of family time with my then 2-year old daughter, and while I'm deeply saddened by how it's all turned out now, I remain proud of what my intervention accomplished at Aimia, at least initially.</p>
<p>All that said, I still own my Aimia shares, and have no interest in selling them to anyone for C$3.66.</p>
<p>-CM</p>
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