Air Canada (AC) was busy after the bell, announcing Q2 results and reinstating a full-year guide that sits just under consensus on EBITDA and well below on FCF.

More interesting than that is its $2.5B, 25% sale of Aeroplan to Blackstone and CDPQ among other investors - with $800M of the proceeds going towards a substantial issuer bid…

… and the remaining $1.7B earmarked for an upcoming bond maturity. While the headline $10B valuation looks good on paper (AC’s market cap is sub-$8B), the deal is structured like debt instead of equity…

… given it comes with a 5-8 year repurchase option at a 6.5% IRR cap, so a better frame would be a 25% LTV loan at 6.5% interest - and that’s if you believe in the $10B number (I don’t). We’ll see at the open if investors view this as a true valuation mark…

… or if they call it for what it is: good financial engineering paired with ridiculous marketing.

Consumer insolvencies edged higher sequentially in Q2, with June’s print rising 12% versus last year…

… led by Ontario and British Columbia, whose continued weakness was tempered by a small increase in Alberta.

On a relative basis, the headline number remains unconcerning - with insolvencies as a percentage of the 15+ population sitting just above long-term averages.

Altius Minerals (ALS) reported strong Q2 results, with adj. EBITDA margins expanding to 78% on the back of record royalty revenue of $30M - which is up 137% Y/Y and should continue…

… as mine expansions, restarts, and new builds drive near-term growth - with the lithium segment being the main contributor.

Contribution from renewable royalties should pick up too, with the company’s 50% stake in GBR set to benefit from the delivery of 2.3 GW under construction and strong deal flow…

… which Altius has plenty of capacity to fund, with $500M of available liquidity. Any new investments would represent upside to our estimates, which we break down in the full report below:

H&R REIT (HR-U) announced a $6.7B transaction to split up its real estate - with Blackstone, Crestpoint, and PSP taking a bite out of its industrial footprint…

… the CEO’s family office absorbing its non-core assets, and GO REIT (GO-U) acquiring its residential portfolio for US$2.8B in a deal that would make it the second largest residential REIT on the TSX…

… and shift its New York luxury footprint towards the Sunbelt. While there’s a clear rationale for the deal, with management highlighting margin expansion and leverage reduction post-close…

… the complexity and discounted equity financing introduce more uncertainty than previous resi takeouts.

Pet Valu (PET) ripped 9% on the back of its Q2 results, which delivered flat same-store growth as expected…

… but beat big on the bottom line - with a better promotional mix, supply chain efficiency, and corporate store resales all contributing in the quarter. Margin pressure has been the main source of concern…

… so management’s commitment to the full-year guide likely drove some capital back to the name, with PET shares trading near trough multiples.

Was this forwarded to you? Join 10,000+ investors reading The Morning Meeting by clicking the button below.