Porter Air at the Toronto Island Airport.Peter Power/The Globe and Mail
Porter Aviation Holdings boss Robert Deluce has always been an optimist.
You have to be one to start an airline, period, especially an airline like Porter, which based its whole business model on operating out of an airport the mayor of Toronto wants to close.
Mr. Deluce is now taking that optimism to new levels, as Porter is seeking an equity valuation in the $400-million range in its initial public offering, according to sources who have seen the marketing documents distributed to investors Tuesday.
The company is seeking to raise about $120 million selling shares representing about 30 per cent of the company. The shares will be priced at $6 to $7 apiece.
The airline posted earnings before interest, taxes, depreciation and amortization of $7.9-million for the 12 months ended Dec. 31, 2009, which translates to a trailing earnings multiple well north of 40 times EBITDA.
Add the airline's not insignificant debt of $325-million as of year-end and the valuation based on a total enterprise value of around $700-million becomes "astronomical," said one person familiar with the numbers.
The pitch is that EBITDA is expected to soar to the $100-million range in coming years to bring the multiple more into line with the kind of numbers that investors are used to seeing.
Mr. Deluce's optimism so far has been warranted. He's managed to keep his airport open and even build a shiny new terminal, and Porter's numbers are on an improving trend even in an economy that's been lousy for much of the past two years.
The IPO valuation would be a huge win for Mr. Deluce and his original backers, but getting it might be the biggest test yet of his rosy outlook.