Discovery Air Inc. (“Discovery Air” or the “Corporation”) announced today that it has completed its previously announced transaction to repay approximatelyÂ $13.2 millionÂ in aggregate debt owed by the Corporation to a senior officer of Discovery Air and a senior officer of Great Slave Helicopters Ltd. (“Great Slave”, a wholly-owned subsidiary of the Corporation) (the “Related Parties”).
The debt repayment and debt-for-equity conversion (the “Transaction”) repaid indebtedness of the Corporation arranged prior to Discovery Air’s acquisition of Great Slave inÂ June 2006. Under the agreements entered into with the two Related Parties (the “Agreements”), the Transaction was funded with a cash payment in respect of principal of approximatelyÂ $2.9 millionÂ in the aggregate together with the issue from treasury and transfer to the Related Parties of 10,352,000 Class A common shares of the Corporation in the aggregate. Based on theÂ $0.43Â closing price of Discovery Air’s Class A common shares as atÂ March 31, 2011Â (the day before the Agreements were executed), the Class A common shares issued under the Transaction are valued at approximatelyÂ $4.5 million. The Transaction is expected to result in a pre-tax gain of approximatelyÂ $5.8 millionÂ to the Corporation.
The President and CEO of Discovery Air,Â Dave Jennings, commented “We areÂ pleased to have concluded this transaction, which is one of the components in our plan to overhaul and simplify our capital structure. The effect will be to reduce consolidated interest and total debt outstanding, increase shareholder equity and, as a result, reduce leverage in the Corporation’s capital structure.”
Related Party Transaction
The Transaction represented a “related party transaction” under National Instrument 61-101 -Â Protection of Minority Security Holders in Special Transactions (“NI 61-101”) because the parties included a senior officer of Discovery Air and a senior officer of Great Slave. The Directors of the Corporation, who voted unanimously in favour of the Transaction at a Board of Directors’ meeting held onÂ April 1, 2011, determined that exemptions from formal valuation and minority approval requirements available under NI 61-101 applied to the Transaction because neither the fair market value of the subject matter of, nor the fair market value of the consideration for the Transaction, exceeded 25 percent of the Corporation’s market capitalization as of the date of the Agreements. Factors considered by the Board of Directors in reviewing the Transaction included the value ascribed to the treasury shares to be issued by Discovery Air at closing (beingÂ $1.00Â per Class A Share – a 133% premium to the closing market price of the Corporation’s shares onÂ March 31, 2011) and the reduction in consolidated debt service requirements and consolidated leverage achieved by the Transaction.
On closing of the Transaction, the Related Parties, Adam Bembridge andÂ Ian Campbell, now directly and indirectly hold 23,451,427 shares and 23,450,582 shares in Discovery Air, respectively, compared with 18,275,427 and 18,274,582 shares prior to closing of the Transaction. The respective shareholdings of the Related Parties each represent 16.1% of the issued and outstanding shares of Discovery Air, compared to 13.5% each prior to closing.Â The Class A Shares acquired by the Related Parties are being held for investment purposes only.Â Depending on market and other conditions, the Related Parties may, from time to time in the future, increase or decrease their ownership, control or direction over, or exercise their current right to acquire additional Class A Shares or other securities of Discovery Air through market transactions, private agreements or otherwise.
ABOUT DISCOVERY AIR
Founded in 2004, Discovery Air Inc. is a specialty aviation services company operating acrossÂ CanadaÂ and in select locations internationally. With over 130 aircraft, it is one of the largest air operators inÂ Canada, employing more than 600 flight crew, maintainers and support staff to deliver a variety of air transport, maintenance and logistics solutions to its government, airline and business customers. The Corporation’s subsidiaries include: 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; Discovery Air Technical Services, which provides a range of maintenance, repair, overhaul, modification, engineering and certificationÂ services; Great Slave Helicopters, the second-largest VFR helicopter operator in the country; Air Tindi, the largest fixed-wing aircraft charter provider based in NorthernÂ Canada; Discovery Mining Services, which supplies all-weather exploration camps as well as expediting and logistics support services; and Discovery Air Innovations, the innovation arm of Discovery Air that identifies and captures large, new market opportunities
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 endedÂ January 31, 2011, available atÂ 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 theÂ TorontoÂ Stock Exchange (Symbols DA.A and DA.DB respectively).
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