Cargojet Inc. unveiled a new long-term services pact with DHL that could see the global shipping giant pick up a 9.5 per cent stake in the Canadian air cargo company.
Under the terms of the agreement — which is initially for a term of five years, with a two-year extension option — Mississauga, Ont.-based Cargojet will provide a range of services for DHL across Europe, the Americas, and Asia, it said in a release Tuesday morning.
As well, Cargojet said it will add five B-767 freighters to meet DHL's needs in 2022-23. Cargojet currently has 12 freighters servicing DHL.
The agreement also opens the door to DHL taking a significant minority stake in Cargojet. According to the release, DHL will be granted warrants to acquire up to 9.5 per cent of Cargojet's voting shares over a seven-year timeframe at a price of $158.92 apiece. Cargojet said the vesting of warrants will depend on DHL hitting $2.3 billion in shipping volume.
Cargojet added that it has already received conditional approval from the Toronto Stock Exchange to list up to 1,645,000 shares associated with the warrants.
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