Chorus updates on its Pluna investment

Chorus Aviation has commented on developments relating to its investment in Pluna Líneas Aéreas Uruguayas, as the Uruguayan airline has been suffering from financial problems.

In April 2010, Chorus (formerly the Jazz Air Income Fund) invested $15 million 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, with the Government of Uruguay holding an indirect equity interest of 25%.

The Uruguayan government has taken control of Pluna, allowing the airline to continue operating. Chorus says it is working directly and co-operatively with the national government to produce and assess potential recapitalisation 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.

Chorus adds that there can be no assurances as to the extent of its participation and involvement. Further, the company says, there are 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 says it will provide an update and share next steps upon the finalisation of the review and will not speculate on the outcome or Pluna’s future.

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