ONEX

[StubbleJumper]

Letter to shareholder from Gerry S.

 

https://ml.globenewswire.com/Resource/Download/4bdb91ff-7bb5-4f32-b5fb-f82d4a1e2de5

 

 

Not a single word about Westjet in that letter.  I must confess that I am not familiar with Westjet's ownership structure, so perhaps it's one of Onex's funds that is exposed and not the actual parent company?

 

 

SJ

[longlake95]

WestJet is held in Onex Capital Partners V, along with a new insurance company. Onex put $261M into the WJ deal. The LP's put up the rest - it was a $5B deal. Onex has a track record of sticking with their investments. Onex has cash to weather the storm and a long-term view of their assets. OCP V has an 8% CAGR hurdle. I think that's easy over time, and LP's make a satisfactory return.

 

 

[StubbleJumper]

That makes sense. The investment in WJ isn't really material for Onex if they only have $261m at stake.  If WJ puts out a cash-call, presumably all partners would end up ponying up cash or diluting their position.  With a ~5% stake in WJ, a cash call wouldn't be the end of the world for Onex.

 

 

SJ

[longlake95]

prior to going private WJ had $1.2B in cash. So, some breathing room. 85 Days to be exact. More when expenses are slashed. I think Onex would add cash if needed, as they too, are responsible to the LP's to make this whole thing work. WJ's revenues are not going to zero, they will be operating some flights - yes, that can change for the worse or maybe even for the better.