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MISSISSAUGAThe Canadian freighter operator Cargojet announced that it has entered into an agreement with 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”), pursuant to which the Underwriters have agreed to purchase, on a bought deal basis, 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”).




Cargojet has also granted the Underwriters an over-allotment option to purchase up to an additional 246,300 Shares at the Offering Price, on the same terms and conditions, exercisable, in whole or in part, at any time for a period of 30 days following the closing of the Offering. If this option is exercised in full, an additional C$52,523,475 in gross proceeds will be raised pursuant to the Offering and the aggregate gross proceeds of the Offering will be C$402,679,975.


In line with previously stated strategic priorities to invest in growth opportunities and continue to pay down debt, the net proceeds from the Offering will be used to fund the following:


  1. 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 to fund growth capital expenditures including the acquisition of five B-767 freighter aircraft for delivery in 2021/2022, as well as investments in a new hanger and additional land-based facility infrastructure in Canada. The infrastructure investments will support additional e-commerce volumes, driven by the ongoing pandemic, that are expected to establish a new higher baseline going forward.
  2. 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 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 delivery in 2023.
  3. Repay Indebtedness. The Company plans to use a portion of the net proceeds of the Offering to discharge finance leases, including associated balloon payments, on six aircraft maturing in fiscal 2021 and fully pay down outstanding revolver balances. The Company remains committed to maintaining a strong balance sheet to support its long-term growth strategy and capitalize on new domestic and international growth opportunities.


The Company completed the year experiencing record volumes during the peak season, consistent with previously disclosed expectations, and delivered approximately 99% on time performance to its customers. Cargojet plans to announce fourth quarter and 2020 year-end results in early March 2021.


The Shares will be offered by way of a preliminary short form prospectus in all provinces and territories of Canada. The Shares may also be offered by private placement in the United States to qualified institutional buyers pursuant to Rule 144A under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”). Purchasers who are Canadians as defined in the Canada Transportation Act (“Qualified Canadians”) will receive Common Voting Shares and purchasers who are not Qualified Canadians will receive Variable Voting Shares.


The Offering is expected to close on or about February 1, 2021 and is subject to customary regulatory approvals, including the approval of the Toronto Stock Exchange and the securities regulatory authorities.

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 to be offered have not been, and will not be registered under 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.


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