Chorus Aviation Inc. (Halifax) today (June 21) announced certain developments relating to Chorus’ investment in Pluna Líneas Aéreas Uruguayas S.A. (Montevideo).
In April 2010, Chorus (formerly the Jazz Air Income Fund) invested $15 million (USD) in Latin American Regional Aviation Holding Corporation (LARAH) in return for a 33.3% non-voting equity interest in the company, which translated into a 25% indirect ownership in Pluna. At the time of the investment, LARAH held an indirect 75% equity interest in Pluna; the Government of Uruguay held an indirect equity interest of 25%.
The Uruguayan government has taken control of Pluna, allowing the airline to continue operating. Chorus is working directly and cooperatively with the national government to produce and assess potential recapitalization and business plans for Pluna. As part of the proceedings, all of the shares in Pluna held indirectly by LARAH have been delivered in trust with the Montevideo Stock Exchange in return for certain conditions and indemnities from the Uruguayan government. There can be no assurances as to the extent of Chorus’ participation and involvement. Further, there can be no assurances that a successful recapitalization of Pluna will be accomplished, and if so, that Chorus will retain an equity stake or other investment therein.
Chorus is currently assessing the valuation of its original $15 million investment and how it will be accounted for in its second quarter financial disclosure planned for mid-August, 2012. The situation at Pluna has no effect on Jazz operations or current cash flows. Chorus will provide an update and share next steps upon the finalization of the review and will not speculate on the outcome or Pluna’s future.