Discovery Air Inc.
TSX : DA.A

Discovery Air Inc.

December 20, 2016 09:09 ET

Discovery Air Announces Revolving Credit Facility from Clairvest

TORONTO, ONTARIO--(Marketwired - Dec. 20, 2016) - Discovery Air Inc. (TSX:DA.A) ("Discovery Air" or the "Corporation") announced today that its subsidiary, Discovery Air Defence Services Inc. ("DA Defence"), has entered into a credit agreement (the "Credit Agreement") with certain funds or co-investors (such lenders, collectively "Clairvest") of Clairvest Group Inc., the majority shareholder of the Corporation, providing for a revolving credit facility in the aggregate principal amount of up to $25,000,000 (the "Revolving Credit Facility"). All borrowings under the Revolving Credit Facility are secured, bear interest at a rate of 12% per annum payable on February 15, 2017 and May 15, 2017 and mature on June 30, 2017 subject to acceleration in the event of certain refinancing transactions. DA Defence may repay and re-borrow the principal under the Revolving Credit Facility on customary conditions. Proceeds from the Revolving Credit Facility will be used to (i) refinance an existing equipment loan in favour of the Corporation pursuant to a credit agreement dated as of March 30, 2016 among the Corporation and Clairvest (including by way of repayment of certain existing intercompany indebtedness between DA Defence and the Corporation) and (ii) to re-leverage the German Aircraft (as defined in the Credit Agreement) in support of certain growth initiatives and for business development activities at certain affiliates.

The Revolving Credit Facility also contains an optional conversion feature (the "Conversion Feature"), which provides Clairvest with an option, subject to certain conditions described below, to convert the outstanding balance under the Revolving Credit Facility into common shares ("DAD Shares") of DA Defence at a conversion price (the "Conversion Price") to be determined on the basis of the value of the DA Defence business, after the application of certain agreed upon adjustments between Clairvest and the Corporation, as determined by an independent and qualified valuator pursuant to Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). In the event Clairvest elects to exercise the Conversion Feature, its exercise is subject to the prior satisfaction of all of the following conditions (the "Conversion Conditions"): (i) if required under applicable securities law, approval of the Corporation's shareholders of the Conversion Feature and a unanimous shareholders' agreement (the "Shareholders' Agreement") in respect of DA Defence, in each case, in accordance with the requirements of applicable securities laws (including MI 61-101 and the TSX Company Manual); (ii) receipt of all necessary approvals in connection with the Conversion Feature and the Shareholders' Agreement under applicable securities laws (including M1 61-101 and under the TSX Company Manual); (iii) the Shareholders' Agreement shall be entered into on or immediately prior to the time of conversion. In the event Clairvest seeks to exercise the Conversion Feature and shareholder approval is required pursuant to applicable securities laws, the Corporation, acting at the direction of a special committee of independent directors, will retain a valuator to prepare a formal valuation in accordance with MI 61-101.

A material change report will be filed less than 21 days before the closing date of the transaction. This shorter period is reasonable and necessary in the circumstances to allow the Corporation to obtain financing for working capital.

The Revolving Credit Facility is a "related party transaction" within the meaning of MI 61-101. The Corporation is not required under MI 61-101 to obtain a formal valuation in respect of the Revolving Credit Facility and will be relying upon the exemption from the minority approval requirement in section 5.7(f) of MI 61-101 as a result of (i) the Revolving Credit Facility being provided on reasonable commercial terms that are not less advantageous to the Corporation than if the Revolving Credit Facility was obtained from an arm's length party and (ii) the Revolving Credit Facility not containing any equity component; provided that, as described above, if the Conversion Feature is exercised by Clairvest such exercise is contingent on the Conversion Conditions which include, among other things, satisfying the requirements of MI 61-101 and the TSX Company Manual.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This news release includes forward-looking statements (as defined in applicable securities laws) regarding Discovery Air and/or its subsidiaries (including DA Defence) that relate to, among other things: the proposed use of proceeds of the Revolving Credit Facility; the Conversion Feature; the terms, conditions and timing of draws under the Revolving Credit Facility; and, the shareholder and regulatory approval process if the Conversion Feature is exercised. Forward-looking statements by definition are based on assumptions and, as a result, are subject to risks and uncertainties. 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.

ABOUT DISCOVERY AIR AND ITS SUBSIDIARIES

Discovery Air Inc. is a global leader in specialty aviation services. We deliver exceptional air combat training; medevac equipped aircraft services; airborne firefighting services; air charter services; helicopter operations; and transport and logistics support to ensure operational readiness, health, safety, and vital lifelines for our clients and the communities we serve.

Discovery Air's Class A common voting shares and unsecured convertible debentures trade on the Toronto Stock Exchange (symbols DA.A and DA.DB.A, respectively).

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