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Discovery Air Announces New Revolving Credit Facility from Clairvest

/EINPresswire.com/ -- TORONTO, ONTARIO--(Marketwired - Jun 5, 2017) - Discovery Air Inc. ("Discovery Air" or the "Corporation") (TSX:DA.A) announced today that its subsidiary, Discovery Air Defence Services Inc. ("DA Defence"), has entered into a subordinated credit agreement with certain funds or co-investors (such lenders, collectively "Clairvest") of Clairvest Group Inc., the controlling shareholder of the Corporation, providing for a revolving subordinated credit facility in the aggregate principal amount of up to $13,000,000 (the "Revolving Credit Facility"). All borrowings under the Revolving Credit Facility are secured on a subordinated basis, bear interest at a rate of 12% per annum, compounded, payable quarterly, and maturing on July 31, 2017, subject to acceleration in the event of certain refinancing transactions and extensions by Clairvest, acting reasonably. Proceeds from the Revolving Credit Facility will be used for general corporate purposes, including, without limitation, support of certain growth initiatives and for business development activities at certain affiliates.

The Revolving Credit Facility is in addition to an existing credit facility between DA Defence and Clairvest for a principal amount of $25,000,000, originally to come due on June 30, 2017 (the "Original DADS Credit Facility" and, together with the Revolving Credit Facility, the "DADS Credit Facilities"). A copy of the credit agreement for each of the DADS Credit Facilities will be available on the system for electronic document analysis and retrieval (SEDAR).

The Revolving Credit Facility also contains an optional conversion feature (the "Conversion Feature"), which provides Clairvest with an option, subject to the condition described below, to convert the outstanding balance (or a portion thereof) under the DADS Credit Facilities, together with up to $18,400,000 principal amount of the Corporation's senior secured convertible debentures, into common shares of DA Defence at a conversion price to be determined on the basis of the value of the DA Defence business, after the application of certain agreed upon adjustments between Clairvest and the Corporation. In the event Clairvest elects to exercise the Conversion Feature, its exercise is subject to the prior satisfaction of certain conditions, including the following condition (the "Conversion Condition"): if required under Applicable Securities Law (as defined in the Revolving Credit Facility), the Corporation shall have obtained a "formal valuation" (as defined in Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101")) of DA Defence in accordance with the applicable requirements of Applicable Securities Laws (including MI 61-101). In the event Clairvest seeks to exercise the Conversion Feature, and a "formal valuation" is required under Applicable Securities Laws, the Corporation, acting at the direction of a special committee (the "Special Committee") of the board of directors of the Corporation (the "Board"), will retain a valuator to prepare a formal valuation in accordance with MI 61-101. The Conversion Condition is in addition to the conversion conditions in the Original DADS Credit Facility, as more fully described in the press release of the Corporation dated December 20, 2016, announcing the Original DADS Credit Facility.

A material change report will be filed less than 21 days before the closing date of the transaction. This shorter period is reasonable and necessary in the circumstances to allow the Corporation to obtain financing for working capital.

The Revolving Credit Facility is a "related party transaction" within the meaning of MI 61-101. The Corporation is not required under MI 61-101 to obtain a formal valuation in respect of the Revolving Credit Facility and will be relying upon the exemption from the minority approval requirement in section 5.7(f) of MI 61-101 as a result of (i) the Revolving Credit Facility being provided on reasonable commercial terms that are not less advantageous to the Corporation than if the Revolving Credit Facility was obtained from an arm's length party; and (ii) the Revolving Credit Facility not containing any equity component; provided that, as described above, if the Conversion Feature is exercised by Clairvest, such exercise is contingent on the Conversion Condition satisfying the requirements of MI 61-101.

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This news release includes forward-looking statements (as defined in applicable securities laws) regarding Discovery Air and/or its subsidiaries (including DA Defence) that relate to, among other things: the proposed use of proceeds of the Revolving Credit Facility; the Conversion Feature; the terms, conditions and timing of draws under the Revolving Credit Facility; and, the regulatory approval process if the Conversion Feature is exercised. Forward-looking statements by definition are based on assumptions and, as a result, are subject to risks and uncertainties. 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.

ABOUT DISCOVERY AIR AND ITS SUBSIDIARIES

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 unsecured convertible debentures trade on the Toronto Stock Exchange (symbol DA.DB.A).

Discovery Air Inc.
Paul Bernards
Chief Financial Officer
Paul.bernards@discoveryair.com
866-903-3247

Distribution channels: Aviation & Aerospace