HNZ Group Inc. (TSX: HNZ) (“HNZ” or the “Corporation“) and PHI, Inc. (The Nasdaq Select Global Market: PHII (voting) PHIIK (non-voting)) (“PHI“) announced today that, together with Don Wall, the Corporation’s President and CEO, they have entered into an arrangement agreement (the “Arrangement Agreement“) pursuant to which Don Wall, through a wholly-owned acquisition company (the “Canadian Purchaser” and together with PHI, the “Purchasers“), will acquire all of the issued and outstanding common and variable voting shares of the Corporation by way of a statutory plan of arrangement under Section 192 of the Canada Business Corporations Act (the “Arrangement“) for CAD$18.70 per share in cash (the “Consideration“). As part of the Arrangement, PHI will acquire from the Canadian Purchaser the portion of the Corporation’s offshore business conducted in New Zealand, Australia, the Philippines and Papua New Guinea (the “Offshore Operations“).

The Consideration represents a premium of 43.3% to the October 30, 2017 closing price of the Corporation’s common and variable voting shares on the Toronto Stock Exchange and a premium of 46.6% to the 20-day volume weighted average price of the Corporation’s common and variable voting shares on the Toronto Stock Exchange from October 2, 2017 to October 30, 2017. The Arrangement values the Corporation at approximately CAD$242.4 million, based on the number of outstanding shares of the Corporation as of October 30, 2017.

“We are pleased with the strategic review process that has led to this important transaction, which we believe to be in the best interests of the Corporation and its shareholders,” said Larry Pollock, Chairman of the Board of Directors of the Corporation.

“This transaction provides significant value and liquidity for our shareholders, as well as continuity and opportunity for our employees,” said Don Wall. “I look forward to continuing the operations of the Corporation in Canada, the U.S. and Antarctica where we will continue our brand as a well-known and respected industry participant, with an excellent safety record and reputation for providing performance excellence, innovative thinking and efficient customer service.”

“This acquisition is an important part of our plan to diversify our services and international footprint,” said Al A. Gonsoulin, Chairman and CEO of PHI, Inc. “It is rare to be able to acquire a segment of a company with whom you have such a strong working relationship as well as deep professional and personal regard. Together, PHI and HNZ bring a unique approach and skill to the discerning international customer. We look forward to what this will mean for our company and for those we serve.”

The Corporation’s board of directors (with Don Wall abstaining), after consultation with its financial and legal advisors, and following receipt of the unanimous recommendation by a Special Committee of the board of directors composed entirely of independent directors (the “Special Committee“), has unanimously approved the Arrangement and unanimously recommends that holders of the Corporation’s common and variable voting shares vote in favour of the Arrangement.  The Arrangement has also been approved unanimously by the board of directors of PHI.

INDEPENDENT VALUATION PROCESS
The Special Committee is comprised of the following independent directors: Randall J. Findlay, Mathieu Gauvin, Carmen Richard Loberg, Larry Murphy and Larry M. Pollock. The Special Committee retained TD Securities as financial advisor and KPMG as independent valuator. In arriving at its unanimous recommendation in favour of the Arrangement, the Special Committee considered several factors, including (i) a formal valuation report by KPMG, which reflected the determination that, as at October 30, 2017, subject to the assumptions, limitations and qualifications contained therein, the fair market value of the common and variable voting shares of the Corporation was between CAD$17.02 and CAD$18.85 per share, and (ii) a fairness opinion delivered by KPMG to the effect that, as at October 30, 2017, subject to the assumptions, limitations and qualifications contained therein, the Consideration is fair, from a financial point of view, to the Corporation’s shareholders (other than Don Wall). Copies of the KPMG valuation report and fairness opinion and other relevant background information will be included in the management information circular that will be mailed to the Corporation’s shareholders in connection with the special meeting of shareholders anticipated to be held by early January 2018 to approve the Arrangement.

ADDITIONAL TRANSACTION DETAILS
Consummation of the Arrangement is subject to a number of conditions including, but not limited to, the approval of at least 66 2/3% of the votes cast by all holders of the Corporation’s common and variable voting shares. The proposed transaction will also require approval by a simple majority of votes cast by disinterested holders of the Corporation’s common and variable voting shares (excluding Don Wall for purposes of such vote). The Arrangement is also subject to court approval and the satisfaction of other customary closing conditions. As the Arrangement provides for both the acquisition of outstanding common and variable voting shares of the Corporation by the Canadian Purchaser and the subsequent acquisition of the Offshore Operations by PHI, customary closing conditions are provided for the benefit of each of the Canadian Purchaser and PHI. The Arrangement, which the parties plan to complete by the end of January 2018, is not conditional on the receipt of any regulatory approvals or financing and does not require the approval of PHI shareholders.

The Arrangement Agreement contains a non-solicitation covenant on the part of the Corporation, subject to customary “fiduciary out” provisions as well as a “right to match” provision in favour of the Purchasers. A termination fee of CAD$6,500,000 would be payable to PHI and an expense reimbursement fee of up to CAD$1,000,000 would be payable to the Canadian Purchaser in certain circumstances, including in the context of a superior proposal supported by the Corporation.

Holders of approximately 19.24% of the Corporation’s outstanding common and variable voting shares, including Sentry Investments Inc. and all of HNZ’s directors and executive officers that hold shares, but excluding Don Wall, have signed voting support agreements pursuant to which they have agreed, among other things, to vote their shares in favour of the Arrangement subject to the terms and conditions of such voting support agreements. Including Don Wall, holders of approximately 23.26% of the Corporation’s outstanding common and variable voting shares have agreed to vote their shares in favour of the Arrangement.

Further details regarding the Arrangement will be contained in the management information circular to be mailed to the Corporation’s shareholders in connection with the Arrangement. The management information circular as well as the Arrangement Agreement will be made available under the Corporation’s profile at www.sedar.com.

ADVISORS
TD Securities Inc. acts as financial advisor and Fasken Martineau DuMoulin LLP serves as legal counsel to the Special Committee. McCarthy Tétrault LLP serves as legal counsel to the Corporation.  Chaffe & Associates, Inc. serves as financial advisor to PHI and Blake, Cassels & Graydon LLP and Jones Walker, LLP serve as legal counsel to PHI. Mission Capital Group Inc. serves as financial advisor to Don Wall and Burnet, Duckworth & Palmer LLP serves as legal counsel to Don Wall and the Canadian Purchaser.