Trinity Rival Could Ignite Bidding War

Just when Air Canada thought it was going to meet up with its white knight and all his money, it now appears there's another suitor for the bankrupt Canadian airline. Cerberus Corporation is expected to tender an offer for the company that could top an offer already on the table from Victor Li's Trinity Time Investments.

The Trinity offer is about $650 million and would make Li the biggest single investor in Air Canada. "We'll be vigorously seeking the court's approval of the agreement," Mark Gelowitz, a lawyer for Trinity, said of tomorrow's court hearing.

The airline is also hopeful that the Trinity deal will go through, for several reasons. Even though Li is from Hong Kong, Trinity is a Canadian company. It's expected Trinity will settle outstanding Air Canada debts with major creditors like GE. "The selection of an equity plan sponsor around whom a comprehensive plan can be built is a crucial milestone in the restructuring of Air Canada and is of benefit to all stake holders," the airline said.

Not only that, but if Air Canada busts its deal with Trinity, it'll be liable for $19.5 million in breakup fees.

Time appears to be running out in Air Canada's bankruptcy. SNECMA, a French aerospace company that makes jet engines, is expected to ask the Canadian bankruptcy court for permission to sue the airline. SNECMA says Air Canada's bankruptcy has cost it $51 million dollars owed to its creditors and accuses Air Canada managers of fraud.

FMI: www.aircanada.ca