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ACE Aviation Holdings Inc. said Friday it will sell 44 million Air Canada shares for $3.70 apiece, in a $162.8-million bought deal that begins ACE's long-expected wind-down.

Air Canada, the country's biggest carrier, emerged from its restructuring in 2004 as ACE Aviation. Since then, ACE has spun off assets including Groupe Aeroplan Inc., azz Air Income Fund and Aveos Fleet Performance Inc.

Analysts said in August that ACE was more likely to liquidate its remaining Air Canada assets after the carrier closed a debt refinancing deal. ACE's $150-million loan, part of a $700-million financing repaid by Air Canada, was cleared from the holding company's books.

ACE had planned to wind down in 2009, but some major shareholders wanted a better deal and opposed the plan. The liquidation was put on ice when a sharp drop in air travel hammered Air Canada, which came close to again filing for bankruptcy, said Robert Kokonis, managing director of airline consulting firm AirTrav Inc.

"Given the highly cyclical nature of the airline sector and its vulnerability to macro-economic shocks and geopolitical trauma, the time to go out the door with these 44 million shares in now," Mr. Kokonis said.

The value of Air Canada shares has more than tripled since the start of the year as the airline benefited from an economic recovery, resumption of travel demand and a cost-cutting effort.

Montreal-based ACE said that, under the offering, it will reduce its equity stake in Air Canada to 11.5 per cent, or 31 million shares, from 27 per cent.

Mr. Kokonis expects ACE will target a 2011 year-end wind-down of the company.

ACE also had 2.5 million Air Canada warrants and a $210-million cash balance, as of Oct. 31.

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