YELLOWKNIFE, NT, April 18 /CNW/ - Discovery Air Inc. ("Discovery Air" or
the "Corporation") announced today that it has entered into an
agreement (the "Agreement") to repay approximately $13.5 million 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
The proposed debt repayment and debt-for-equity conversion (the
"Transaction") will repay indebtedness of the Corporation arranged
prior to Discovery Air's acquisition of Great Slave in June 2006. Under
the Agreement, the Transaction will be funded with a cash payment of
approximately $3.2 million in the aggregate together with the issue
from treasury and transfer to the Related Parties of approximately
10,300,000 Class A common shares of the Corporation. Based on the $0.43
closing price of Discovery Air's Class A common shares as at the day
before the Agreement, the Class A common shares to be issued under the
Transaction are valued at approximately $4.5 million. The Transaction
is expected to result in a pre-tax gain of $5.5 million to the
Closing of the Transaction remains subject to Toronto Stock Exchange
("TSX") approval and shareholder approval (if required by the TSX).
Discovery Air intends to close the transaction described herein by
April 29, 2011 (the "Planned Closing Date"), subject to receipt of all
necessary approvals including the approval of the Toronto Stock
The Planned Closing Date would be less than 21 days from the date of
this material change report. Under NI 61-101, Discovery Air is required
to disclose why it feels it is necessary or desirable to close the
transaction prior to the 21st day from first disclosure of the proposed
transaction. In this case, management of Discovery Air believes it is
in the Corporation's best interest to book this transaction before
month-end in order to realize the balance sheet benefits of the
transaction and accelerate reduction of its fiscal 2012 interest
expense, both commensurate with its overall recapitalization planning.
"We are very pleased to have reached this agreement in principle,"
commented Dave Jennings, President and CEO of Discovery Air. "This
transaction is an important part of our plan to recapitalize Discovery
Air in a way that better supports its operations and growth. The
transaction reduces consolidated interest expense and total debt
outstanding, increases shareholder equity and helps reduce the leverage
in the Corporation's capital structure. It also represents a very
tangible expression of confidence in Discovery Air's future prospects.
We intend to continue working to overhaul and simplify our capital
Related Party Transaction
The Transaction is a "related party transaction" under National
Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("NI 61-101") because the parties include 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 on April 1, 2011, have determined that
exemptions from formal valuation and minority approval requirements
available under NI 61-101 apply 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, exceeds 25 percent of the
Corporation's market capitalization as of the date of the Agreement.
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 (being $1.00 per Class A Share - a
133% premium to the closing market price of the Corporation's shares on
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 and
Ian Campbell, will 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 at closing will each represent 16.1% of
the issued and outstanding shares of Discovery Air on a fully-diluted
basis, compared to 13.5% each prior to closing.
ABOUT DISCOVERY AIR
Founded in 2004, Discovery Air Inc. is a specialty aviation services
company operating across Canada and in select locations
internationally. With over 130 aircraft, it is one of the largest air
operators in 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 certification services; Great Slave Helicopters, the
second-largest VFR helicopter operator in the country; Air Tindi, the
largest fixed-wing aircraft charter provider based in Northern Canada;
and 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
ended January 31, 2010, available at 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 the Toronto Stock
Exchange (Symbols DA.A and DA.DB respectively).
SOURCE Discovery Air Inc.
For further information:
Toll Free (866) 903 3247
Rolf S. Dawson
Vice President, Corporate Finance & Administration
867-873-5350, Ext. 304