Discovery Air Inc.
TSX : DA.A

Discovery Air Inc.
Clairvest Group Inc.
TSX : CVG

Clairvest Group Inc.

March 24, 2017 14:12 ET

Discovery Air and Clairvest Enter Into Definitive Agreement for Going Private Transaction

TORONTO, ONTARIO--(Marketwired - March 24, 2017) -

  • Equity privatization transaction unanimously recommended by a Special Committee of the Board of Directors of Discovery Air Inc. comprised of four independent directors, and unanimously approved by Discovery Air Inc.'s board of directors, excluding directors not eligible to vote;
  • Cash consideration of $0.20 per share to be paid to public shareholders of Discovery Air Inc.;
  • Transaction will provide liquidity to public shareholders;
  • Unsecured convertible debentures to remain outstanding/listed and treated in accordance with their terms;
  • Following closing, Discovery Air Inc. will be wholly-owned by certain funds and affiliates of Clairvest Group Inc. and certain management shareholders of Discovery Air Inc.; and
  • Over 90% of the shareholders of Discovery Air Inc. have indicated their intent to vote in favour of the equity privatization transaction at the special meeting of shareholders held to consider such transaction, the implication of which is (i) minority approval under securities laws is not required and (ii) the result of the special meeting of shareholders is assured.

Discovery Air Inc. ("Discovery Air" or the "Corporation") (TSX:DA.A) and Clairvest Group Inc. (TSX:CVG) announced today that the Corporation and certain funds managed by Clairvest Group Inc. (collectively "Clairvest") have entered into a definitive agreement (the "Arrangement Agreement") which will result in Clairvest, along with certain management shareholders of the Corporation (the "Rolling Shareholders" and, together with Clairvest, the "Purchaser Group"), acquiring all the issued and outstanding shares in the capital of the Corporation by way of a plan of arrangement (the "Arrangement") pursuant to the Canada Business Corporations Act.

Pursuant to the terms of the Arrangement, Clairvest will indirectly acquire from the shareholders of the Corporation (the "Corporation Shareholders") all of the issued and outstanding Class A shares (the "Class A Shares") and Class B shares (the "Class B Shares", and together with the Class A Shares, the "Corporation Shares") of Discovery Air not already held by the Purchaser Group for $0.20 per Corporation Share (the "Cash Consideration"). The total transaction Cash Consideration is approximately $1.5 million.

Jacob (Koby) Shavit, the President and CEO of Discovery Air Inc. stated "the proposed transaction is a logical evolution for Discovery Air given our current ownership structure. Our management team and employees look forward to continuing to work with Clairvest as we maintain our ongoing focus on delivering skillful and efficient specialty aviation and logistics services to our customers."

The members of the Purchaser Group, acting jointly and in concert, currently own over 90% of the Corporation Shares and have indicated their intent to vote in favour of the Arrangement at the special meeting of Corporation Shareholders held to consider the Arrangement, as further described below.

The Arrangement will provide holders of the Corporation Shares (other than the Purchaser Group and their affiliates) (the "Public Shareholders") with liquidity and the opportunity to realize immediate and certain value for their Corporation Shares. On the basis of, among other things, the valuation and fairness opinion provided by the special committee's financial advisor, Capital Canada Limited, the special committee and disinterested members of the Corporation's board of directors (the "Board") believe that the Cash Consideration to be received by the Public Shareholders pursuant to the Arrangement is fair, from a financial point of view, and that the Arrangement is in the best interests of the Corporation.

The Arrangement will enhance the Corporation's ability to meet future financing needs in an efficient and timely manner, which will allow the Corporation to reduce the risks associated with its business, improving the operations and future prospects of the Corporation.

The special committee also determined that it is unlikely that a competing offer for equal or greater consideration could emerge given the Corporation's ownership structure together with the fact that Clairvest advised the Corporation, and subsequently publicly announced, that it has no interest in selling its holdings in the Corporation. The Arrangement will not result in a change in the effective control of the Corporation, which would have resulted had any third party acquirer effected a similar transaction, including associated implications for and potential costs arising from the Corporation's contractual commitments.

Transaction Details

Unanimously recommended to the Corporation Shareholders by all of the independent directors of the Corporation, the Arrangement will be completed by way of a plan of arrangement pursuant to the Canada Business Corporations Act through which Public Shareholders will receive the Cash Consideration.

Fairness Opinion and Formal Valuation

The special committee of the Board has unanimously recommended that Corporation Shareholders approve the Arrangement. The special committee received a formal valuation from its financial advisor, Capital Canada Limited, valuing the Corporation Shares at a range of nil to $0.07. The special committee also received a fairness opinion from Capital Canada Limited that the Cash Consideration to be received by the Public Shareholders pursuant to the Arrangement is fair, from a financial point of view, to the Public Shareholders.

Process of Approval

The Arrangement is subject to, among other things, the approval by 66 2/3% of the votes cast by Corporation Shareholders at a special meeting of Corporation Shareholders to be held to approve the Arrangement. As the Purchaser Group holds over 90% of the Corporation Shares and have indicated their intent to vote in favour of the Arrangement at the special meeting, minority approval under securities laws is not required. The Arrangement is also subject to receipt of court and any necessary regulatory approvals. On closing of the Arrangement, it is anticipated that the Corporation Shares will be de-listed from the Toronto Stock Exchange ("TSX").

The Arrangement is expected to close once all of the approvals have been obtained, which is expected to occur no later than June 2017. Certain holders of Corporation Shares who are directors, officers or employees of the Corporation have entered into voting and support agreements (the "Voting and Support Agreements") pursuant to which they have agreed, among other things, to vote in favour of the Arrangement and, in lieu of receiving the Cash Consideration, to exchange their Corporation Shares on a one-for-one basis for shares in, and continue as shareholders of, the successor entity to the Corporation.

Secured and Unsecured Debentures

Discovery Air's outstanding senior secured convertible debentures in an initial aggregate principal amount of $70,000,005 issued by the Corporation on September 23, 2011, and the 8.375% convertible unsecured subordinated debentures issued by the Corporation pursuant to a convertible debenture indenture dated as of May 12, 2011, as amended by a first supplemental convertible debenture indenture dated as of November 27, 2014 (the "Listed Debentures", and together, the "Debentures"), will be treated in accordance with their terms. The Listed Debentures will not be de-listed from the TSX and, as such, the Corporation will remain a reporting issuer subsequent to the completion of the Arrangement. The Debentures will remain outstanding in accordance with their terms and will not be included in the Arrangement.

Corporation Shareholders and other interested parties are advised to read the materials relating to the proposed Arrangement that will be filed with or furnished to securities regulatory authorities in Canada when they become available, as they will contain important information. Additional details regarding the Arrangement will be disclosed in the Management Information Circular to be mailed to Corporation Shareholders and filed in due course. Anyone may obtain copies of these documents when available free of charge under the Corporation's profile on the System for Electronic Document Analysis and Retrieval at www.sedar.com.

This announcement is for informational purposes only and does not constitute an offer to purchase, a solicitation of an offer to sell the shares of the Corporation or a solicitation of a proxy.

Early Warning Report Filed for Clairvest

Clairvest has filed an updated early warning report in connection with entering into the Voting and Support Agreements and the Arrangement Agreement. A copy of the report can be obtained under the Corporation's profile at www.sedar.com, or by contacting the Director, Investor Relations and Marketing for Clairvest at (416) 925-9270.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements made in this press release are forward-looking statements. These statements include, without limitation, statements relating to the proposed equity privatization of the Corporation pursuant to the Arrangement, approval of the Arrangement by shareholders and regulatory authorities and the timing thereof, the subsequent ownership structure of the Corporation, the Cash Consideration, the expected timing and impact of the Arrangement, certain strategic, operational and financial benefits expected to result from the Arrangement, the Corporation's business outlook, objectives, plans and strategic priorities, and other statements that are not historical facts.

Forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements. As a result, we cannot guarantee that any forward-looking statement will materialize and we caution you against relying on any of these forward-looking statements. For a description of relevant assumptions and risks, please consult the Corporation's 2016 Annual Information Form dated April 28, 2016 and the Corporation's 2016 Third Quarter MD&A dated December 7, 2016, all filed with the Canadian provincial securities regulatory authorities (available at sedar.com) and which are also available on the Corporation's website at www.discoveryair.com. Additional details regarding the Arrangement will be disclosed in the Management Information Circular to be filed in due course.

The forward-looking statements contained in this press release describe our expectations at March 24, 2017, and, accordingly, are subject to change after such date. Except as may be required by Canadian securities laws, we do not undertake any obligation to update or revise any forward-looking statements contained in this press release, whether as a result of new information, future events or otherwise.

About Discovery Air

Discovery Air is a global leader in specialty aviation services. We deliver exceptional air combat training, medevac equipped aircraft 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).

About Clairvest

Clairvest Group Inc. is a private equity investor which invests its own capital, and that of third parties through the Clairvest Equity Partners ("CEP") limited partnerships, in businesses that have the potential to generate superior returns. In addition to providing financing, Clairvest contributes strategic expertise and execution ability to support the growth and development of its investee partners. Clairvest realizes value through investment returns and the eventual disposition of its investments.

Contact Information

  • Discovery Air Inc.
    Sheila Venman
    Investor Relations
    866-903-3247
    Sheila.venman@discoveryair.com

    Clairvest Group Inc.
    Maria Klyuev
    Director, Investor Relations and Marketing
    (416) 925-9270
    (416) 925-5753 (FAX)