Porter is planning an IPO
On Monday, Andrew Willis reported in the Globe and Mail Report on Business that Porter Airlines is going to do an IPO (Initial Public Offering) on the Toronto Stock Exchange.
http://www.theglobeandmail.com/globe-investor/onex-ready-to-cash-in-on-ipo-thaw/article1364577/
So why is Deluce organizing an IPO? There are a limited number of reasons.
- Companies go public to raise capital to expand their operations.
- The original investors want to get their money back with a profit. These investors have been issued shares in the company in return for their investment. When the IPO is done they will sell their shares to members of the public and take their profit.
- Robert Deluce and other members of his family and close associates also have shares and they will be anxious to sell their shares and make a profit.
Porter is the second largest advertiser in the Toronto market. Those full page newspaper ads are expensive. One estimate is that Porter is spending about $100,000 a week on advertising. The reason for the advertising is to attract passengers to the airline, but a secondary reason may well have been to prepare the public for the sale of shares on the stock exchange. Advertising makes the company attractive and an expression on Bay Street is that "sex appeal sells shares."
The most important regulatory requirement of doing an IPO is full financial disclosure. That will be interesting for members of CommunityAIR. We have been speculating for months -- years -- whether Porter is making money or not. Once the company gives full financial disclosure we won't have to speculate any longer. The truth will come out.
Bill Freeman
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