Cargojet Announces Closing of C$350 Million Bought Deal Equity Offering
Cargojet Inc. (“Cargojet” or the “Company”) (TSX: CJT) is pleased to announce that it has closed its previously announced offering of 1,642,000 common voting shares (“Common Voting Shares”) and/or variable voting shares (“Variable Voting Shares” and, together with the Common Voting Shares, the “Shares”) of Cargojet at a price of C$213.25 per Share (the “Offering Price”) for aggregate gross proceeds to Cargojet of C$350,156,500 (the “Offering”). The Offering was made pursuant to a final short form prospectus dated January 25, 2021 (the “Prospectus”).
The Company intends to apply the net proceeds of the Offering to fund the following strategic priorities:
| (a) | Expand Domestic Capacity and Facilities. The COVID-19 pandemic has generally increased demand for Cargojet’s domestic air cargo services due to the dramatic increase in e-commerce activity. The Company intends to use a portion of the net proceeds of the Offering, along with cash on hand and drawings on its revolving credit facility, to fund growth capital expenditures and acquisition of five B767 freighter aircraft for re-delivery in 2021/2022 (with the last delivery in 2023) (approximately $200.0 million), as well as investments in a new hanger and additional land-based facility infrastructure in Canada. The infrastructure investments will support additional ecommerce volumes, driven by the ongoing pandemic, that are expected to establish a new higher baseline going forward. |
| (b) | Pursue U.S. and International Growth Strategy. The COVID-19 pandemic has significantly increased demand for Cargojet’s international air cargo services. Air cargo capacity has been severely constrained due to the reduction of passenger aircraft operating on international routes and it is uncertain when such capacity will return to pre-pandemic levels. Furthermore, U.S. and international air cargo growth opportunities have emerged as a result of rapidly evolving global supply chains and a lack of air cargo capacity in key markets. The Company intends to use a portion of the net proceeds of the Offering, along with cash on hand and drawings on its revolving credit facility, to capitalize on potential strategic investments in the U.S. and the acquisition of two long-range B-777 freighter aircraft for international routes for re-delivery in late 2023 and the first half of 2024. The Company estimates the cost of each B-777 freighter aircraft to be approximately $75.0 million. |
| (c) | Repay Indebtedness. The Company intends to use a portion of the net proceeds of the Offering to discharge aircraft financing leases, including associated balloon payments, for six aircraft maturing in the next twelve months (approximately $89.3 million) and retire the outstanding balance under its credit facility ($98.9 million as of the date hereof, including letters of credit), which is primarily used to finance the working capital requirements and capital expenditures of the Company. |
The Shares were offered by Scotiabank, CIBC Capital Markets, RBC Capital Markets, J.P. Morgan Securities Canada Inc., Morgan Stanley Canada Limited and BMO Capital Markets acting as co-leads and joint bookrunners, on behalf of a syndicate of underwriters (collectively, the “Underwriters”). The Company has granted to the Underwriters an over-allotment option, exercisable in whole or in part, at any time until 30 days following the closing of the Offering, to purchase up to an additional 246,300 Shares at the Offering Price, on the same terms and conditions as the Offering.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities issued pursuant to the Offering have not been, and will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or under any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons, absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws.