Discovery Air Inc.
TSX : DA.A

Discovery Air Inc.

November 30, 2006 08:03 ET

Discovery Air Inc. Announces Private Placement of Convertible Debentures

TORONTO, ONTARIO--(CCNMatthews - Nov. 30, 2006) -

Not for distribution to U.S. newswire services or for dissemination in the United States of America.

Discovery Air Inc. (the "Company") (TSX:DA.A) is pleased to announce that it has entered into an agreement with a syndicate of underwriters led by GMP Securities L.P. pursuant to which the underwriters have agreed to purchase, on an underwritten private placement basis, $25.0 million principal amount of 8.75% convertible unsecured subordinated debentures ("Convertible Debentures"). The underwriters have been granted an over-allotment option to purchase an additional $3.75 million principal amount of Convertible Debentures at any time up to 30 days after the date of closing of the offering.

The Convertible Debentures will mature on December 31, 2011 and will accrue interest at the rate of 8.75% per annum payable in arrears on a semi-annual basis. The Convertible Debentures may be converted into Class A common shares in the capital of the Company at the holder's option at any time prior to the close of business on the earlier of the maturity date and the last business day prior to the date specified for redemption. The conversion price will be $2.05 for each Class A common share, subject to adjustment in certain circumstances.

The Convertible Debentures will be direct, unsecured obligations of the Company, subordinated to other long term indebtedness of the Company for borrowed money and ranking equally with all other unsecured subordinated indebtedness.

The Convertible Debentures will not be redeemable before December 31, 2009. On or after December 31, 2009 and prior to December 31, 2010 the Convertible Debentures will be redeemable by the Company on not more than 60 days and not less than 30 days prior notice at a price payable equal to $1,000 per Convertible Debenture plus accrued and unpaid interest, provided that the weighted average trading price of the Class A common shares of the Company on the TSX during the 20 consecutive trading days ending five trading days preceding the date on which the notice of redemption is given is not less than 125% of the conversion price. On or after December 31, 2010 and prior to the Maturity date, the Convertible Debentures will be redeemable by the Company on not more than 60 days and not less than 30 days prior written notice at par plus accrued interest.

The net proceeds of this Offering shall be used to finance the acquisition of Air Tindi Ltd. by the Company.

The offering is scheduled to close on December 19, 2006 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 and closing of the acquisition of Air Tindi Ltd. prior to, or simultaneously with, the closing of the offering.

The Convertible Debentures will not be offered for sale outside of Canada.

DA's Class A common shares trade on the Toronto Stock Exchange under the symbol DA.A.

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