Discovery Air Inc.
TSX : DA.A
TSX : DA.DB

Discovery Air Inc.

April 21, 2011 08:13 ET

Discovery Air Announces $30 Million Public Offering of Convertible Debentures and Early Redemption of Existing Convertible Debentures

YELLOWKNIFE, NORTH WEST TERRITORIES--(Marketwire - April 21, 2011) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Discovery Air Inc. (TSX:DA.A)(TSX:DA.DB) today announced that it has entered into an agreement with GMP Securities L.P. (the "Underwriter") pursuant to which the Underwriter has agreed to purchase $30 million principal amount of convertible unsecured subordinated debentures ("Convertible Debentures") at a price of $1,000 per debenture. Discovery Air has also granted the Underwriter an over-allotment option to purchase up to an additional $4.5 million aggregate principal amount of Convertible Debentures for a period of 30 days following closing to cover over-allotments and for market stabilization purposes.

The Convertible Debentures will mature on June 30, 2016 and will accrue interest at the rate of 8.375% per annum payable on a semi-annual basis. At the holder's option, the Convertible Debentures may be converted into common shares in the capital of Discovery Air Inc. at any time up to the maturity date. The conversion price will be $0.73 for each common share, subject to adjustment in certain circumstances.

The Convertible Debentures will be direct, unsecured obligations of Discovery Air Inc., subordinated to other indebtedness of the company for borrowed money and ranking equally with all other unsecured subordinated indebtedness.

The Convertible Debentures will not be redeemable before June 30, 2014. From June 30, 2014 through the maturity date, Discovery Air may, at its option, redeem the Convertible Debentures, in whole or in part, at par plus accrued and unpaid interest provided that the weighted average trading price of the common shares on the Toronto Stock Exchange during a specified period prior to redemption is not less than 125% of the conversion price.

Subject to specified conditions, Discovery Air will have the right to repay the outstanding principal amount of the Convertible Debentures, on maturity or redemption, through the issuance of common shares of the company. Discovery Air also has the option to satisfy its obligation to pay interest through the issuance and sale of additional common shares of the company. Additionally, Discovery Air will have the option, subject to prior agreement of the holders, to settle its obligations on conversion by way of a cash payment of equal value.

Simultaneously with closing of the offering, Discovery Air has agreed to provide notice to Computershare Trust Company of Canada, as trustee under the trust indenture dated as of December 19, 2006 between Computershare and Discovery Air, that it will redeem all of the existing 8.75% convertible unsecured subordinated debentures (the "Existing Debentures"). Discovery Air will use the net proceeds of the offering to redeem all of the Existing Debentures, and the balance, if any, for working capital and general corporate purposes. A portion of the net proceeds from the sale of the Convertible Debentures will be deposited into escrow at closing of the offering in order to satisfy the redemption obligations of Discovery Air.

The offering is scheduled to close on or about May 12, 2011 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Toronto Stock Exchange.

A preliminary short-form prospectus will be filed with securities regulatory authorities in the provinces of Ontario, Manitoba, Saskatchewan, Alberta and British Columbia and the Northwest Territories. The securities offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act. This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction.

ABOUT DISCOVERY AIR AND ITS SUBSIDIARIES

Founded in 2004, Discovery Air Inc. is a specialty aviation services company operating across Canada and in select locations internationally. With over 130 aircraft, it is one of the largest air operators in Canada, employing more than 600 flight crew, maintainers and support staff to deliver a variety of air transport, maintenance and logistics solutions to a wide range of government, airline and business customers. The Company's Government Services segment includes three subsidiaries: Top Aces, which delivers airborne training and special mission services to the Canadian military; Hicks & Lawrence, a supplier of airborne fire management services to the Ontario government and charter services to government agencies and corporate customers; and Discovery Air Technical Services, which provides a range of maintenance, repair, overhaul, modification, engineering and certification services from its Quebec City location. The Company's Northern Services segment includes three subsidiaries: Great Slave Helicopters, the second-largest VFR helicopter operator in the country; Air Tindi, the largest fixed-wing aircraft charter provider based in Northern Canada; and Discovery Mining Services, which constructs and rents all-weather exploration camps and provides expediting and logistics support services.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

Discovery Air's public communications may include written or oral forward-looking statements (as defined in applicable securities laws) regarding the future performance of the company and/or its subsidiaries. Forward-looking statements by definition are based on assumptions and are as a result subject to risks and uncertainties, including those identified in the Management's Discussion and Analysis section of Discovery Air's financial statements for the fiscal year ended January 31, 2010, available at www.sedar.com. As a result of such risks and uncertainties, actual results may differ materially from those discussed in forward-looking statements, and readers should not place undue reliance on such statements. Forward-looking statements represent expectations as of the date they are made, and Discovery Air disclaims any intention or obligation to update or revise any forward-looking statements it may make, whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

Discovery Air's shares and debentures trade on the Toronto Stock Exchange (Symbols DA.A and DA.DB respectively).

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Contact Information