DHL to utilize Cargojet's entire portfolio of
services to support its growth
DHL to receive warrants, with vesting tied to
achievement of commercial milestones up to C$2.3 billion in business volume over 7
years
MISSISSAUGA, ON, March 29,
2022 /CNW/ - March 29,
2022 – Cargojet Inc. ("Cargojet") (TSX: CJT)
announced today that it has entered into a new long-term strategic
agreement (the "Agreement") with DHL Network Operations
(USA) Inc. ("DHL"), an
affiliate of Deutsche Post DHL Group (the "Group") (XETRA:
DPW.DE), for a term of five years with a renewal option for an
additional two years, to provide air-transportation services for
DHL's global network.
The Agreement is expected to be meaningfully accretive to
Cargojet's earnings and cash flows over time and help Cargojet
further diversify its portfolio of services in line with its
previously announced strategic goal of achieving a balanced
portfolio.
Under the Agreement, Cargojet will provide ACMI, CMI, charter,
and aircraft dry lease services to DHL to support DHL's
international requirements for Europe and North, South, Central and
Latin America, as well as
Asia. Cargojet utilizes 12
freighters to service DHL's current requirements. DHL intends
to add 5 additional B-767 freighters during the 2022-23 timeframe
to fulfill DHL's anticipated network requirements. Additionally,
DHL intends to be Cargojet's inaugural launch customer for the
state-of-the-art B-777 wide body long-range cargo aircraft, which
are expected to be deployed in late 2023 or early 2024.
"Earning the trust and confidence of Deutsche Post DHL Group
is a remarkable milestone in Cargojet's journey. We are even more
excited about the opportunity to add value and earn the right to be
a long-term strategic partner each and every day." said Chief
Executive Officer Dr. Ajay Virmani.
"This strategic partnership is a real tribute to our people who
have worked extremely hard all through the pandemic while
maintaining the industry best on-time performance and
flexibility that has allowed us to earn this business".
Cargojet's international and ACMI growth will be led and managed
by its international team of specialists while Cargojet's current
core team will continue to focus on delivering excellence within
its existing and growing domestic network. As the Cargojet fleet
grows and it benefits from the scale of operation, Cargojet remains
committed to providing cost effective, flexible and
competitive air-cargo services to all customers.
"DHL's international aviation network is a true competitive
differentiator and an enabler of growth for our customers.
Cargojet's "customer first" culture has added flexibility and
resilience to our network," said Travis
Cobb, EVP, Global Network Operations & Aviation, DHL
Express. "A longer-term strategic alignment with Cargojet will
bring additional capacity and allow us to continue delivering the
highest levels of service quality to the market."
"Cargojet is an important aviation partner of DHL in
North America and we see this
expansion of our relationship further strengthening intra-regional
and intercontinental links to and from this region," said
Mike Parra, CEO, DHL Express
Americas. "Its versatile cargo fleet and high on-time reliability
positions us well to further capitalize on the dynamically growing
e-commerce market, in particular. This step builds on the
significant investments we have made in DHL's aviation capacity and
capabilities over the last two years in the Americas."
In addition, to align interests and strengthen the long-term
strategic relationship, Cargojet will issue to DHL warrants to
acquire up to 9.5 percent of Cargojet's outstanding voting shares
(on a non-diluted basis as of the date hereof) at a price of
C$158.92 per share (based on the
20-day volume weighted average trading price immediately prior to
the date hereof) over a period of seven years, with vesting tied to
the delivery by DHL of up to C$2.3 billion1 in business volume
during the same term.
Management will be hosting at conference call Tuesday, March 29, 2022, at 9:00am est.
Dial in Numbers:
Canada:
647 484 0475
USA: 888 394
8218
Reference: Cargojet Conference Call
Additional Information
Cargojet intends to file a material change report in connection
with the transactions contemplated by this news release, which will
be available under its corporate profile on SEDAR at www.sedar.com.
In connection therewith, a copy of the warrant certificate will be
filed with the applicable Canadian securities regulators on
SEDAR.
Cargojet has received conditional listing approval from the
Toronto Stock Exchange to list an aggregate of
1,645,000 variable voting shares issuable upon the full
vesting of the warrants, representing 9.5% of Cargojet's voting
shares on a non-diluted basis.
The summary of the key terms of the warrants contained herein
and in the to-be-filed material change report are expressly
qualified in their entirety by the full text of the as filed
warrant certificate.
1
|
Being the C$ equivalent
of approximately US$1.8 billion, using an exchange rate of 1.2518
at close of business on March 28,2022.
|
About DHL:
DHL is the leading global brand in the logistics industry.
Our DHL divisions offer an unrivalled portfolio of logistics
services ranging from national and international parcel delivery,
e-commerce shipping and fulfillment solutions, international
express, road, air and ocean transport to industrial supply chain
management. With about 380,000 employees in more than 220 countries
and territories worldwide, DHL connects people and businesses
securely and reliably, enabling global sustainable trade flows.
With specialized solutions for growth markets and industries
including technology, life sciences and healthcare, engineering,
manufacturing & energy, auto-mobility and retail, DHL is
decisively positioned as "The logistics company for the world".
DHL is part of Deutsche Post DHL Group. The Group generated
revenues of more than 81 billion
euros in 2021. With sustainable business practices and a
commitment to society and the environment, the Group makes a
positive contribution to the world. Deutsche Post DHL Group aims to
achieve zero-emissions logistics by 2050.
About Cargojet:
Cargojet is Canada's leading
provider of time sensitive premium air cargo services to all major
cities across North America,
providing dedicated, ACMI and international charter services and
carries over 25,000,000 pounds of cargo weekly. Cargojet operates
its network with its own fleet of 31 cargo aircraft.
Notice on Forward Looking Statements
Certain statements contained herein constitute "forward-looking
statements", including with respect to the expectation that the
Agreement will be meaningfully accretive to Cargojet's earnings and
cash flows over time as well as create other benefits and
opportunities, including to diversify Cargojet's portfolio as
described above; the addition of 5 B-767 freighters
during the 2022-23 timeframe; the deployment of B-777 cargo
aircrafts in late 2023 or early 2024 and DHL's intention to be the
inaugural launch customer; benefits from the scale of operation and
commitment to providing cost effective, flexible and competitive
air-cargo services to all customers; the performance-based vesting
of the warrants to be issued to DHL; and the listing of the
underlying shares on the Toronto Stock Exchange. Forward-looking
statements look into the future and provide an opinion as to the
effect of certain events and trends on the business.
Forward-looking statements may include words such as "plans,"
"intends," "anticipates," "should," "estimates," "expects,"
"believes," "indicates," "targeting," "suggests" and similar
expressions.
These forward-looking statements are based on current
expectations and entail various risks and uncertainties. Although
Cargojet believes that the forward-looking statements in this press
release are based on information and assumptions that are current,
reasonable and complete, these statements are by their nature
subject to a number of factors that could cause actual results to
differ materially from management's expectations and plans as set
forth in such forward-looking statements, including, without
limitation, the following factors, many of which are beyond
Cargojet's control and the effects of which can be difficult to
predict: (a) the failure to achieve the financial and other
anticipated benefits from the Agreement on the timeline
contemplated or otherwise; (b) the uncertainties and risks related
to the ongoing COVID-19 pandemic, including variants of concern,
and impacts related to government responses and restrictions,
health and safety measures, supply chain disruptions, the
effectiveness and availability of vaccines, and the extent of the
impact of the pandemic on consumer spending habits, the competitive
landscape, and overall economic conditions; (c) credit, market,
currency, operational, capital expenditures, liquidity and funding
risks generally, including changes in economic conditions,
inflation, interest rates, exchange rates or tax rates; (d) risks
and uncertainties relating to retail, e-commerce growth, labour,
technology, changes in law or regulation, competition, and business
generally; and (e) other risks inherent to the Cargojet's business
and/or factors beyond its control which could have a material
adverse effect on Cargojet. In addition, reference should be made
to the issuer's most recent Annual Information Form filed with the
Canadian securities regulators, and its most recent Annual
Consolidated Financial Statements and Notes thereto and related
Management's Discussion and Analysis (MD&A), for a summary of
major risks. Actual results may materially differ from
expectations, if known and unknown risks or uncertainties affect
our business, or if our estimates or assumptions prove inaccurate.
Cargojet assumes no obligation to update or revise any
forward-looking statement, whether as a result of new information,
future events or any other reason, other than as required by
applicable securities laws. In the event Cargojet does update any
forward-looking statement, no inference should be made that the
issuer will make additional updates with respect to that statement,
related matters, or any other forward-looking statement.
SOURCE Cargojet Inc.