Chorus Aviation Inc. completes acquisition of Voyageur Airways

HALIFAX, May 1, 2015 /CNW/ - Chorus Aviation Inc. ('Chorus') (TSX: CHR.B CHR.A) today announced that it has successfully closed its acquisition of 519222 Ontario Limited, a holding company that owns Voyageur Airways Limited and its related companies ('Voyageur'), a leading provider of specialized aviation services with international operations. The acquisition was first announced on March 12, 2015.

The purchase price, on a cash free/debt free basis, represents a total enterprise value of approximately $80 million and is subject to certain post-closing working capital adjustments. Utilizing cash on hand, Chorus paid $47.0 million and issued $8.0 million in Chorus Class B Voting Shares to Max Shapiro, sole owner of Voyageur. Approximately $25 million in deferred cash payments will be paid in separate installments over the next 36 month period.  The $80 million purchase price is supported by the appraised value of Voyageur's owned aircraft, real estate and working capital.

The $80 million purchase price represented an attractive multiple of approximately 4.7 times 2014's adjusted EBITDA¹, and is immediately accretive to Chorus' consolidated earnings and free cash flow¹. 

Voyageur, a Transport Canada approved air operator, is an integrated provider of specialized aviation services, including contract flying operations both internationally and domestically, and offers advanced engineering and maintenance capabilities. Voyageur was founded almost 50 years ago in 1968, and is a private company headquartered at its 200,000 square foot facility in North Bay, Ontario.  The company primarily operates within two aviation services sectors:

• Specialized contract flying operations. The company operates medical, logistical and humanitarian flights serving blue chip clients comprised primarily of government entities and international non-governmental organizations. Voyageur has a total of 18 aircraft of which 13 are owned and 5 leased with the majority being Bombardier Dash 8-300 and CRJ-200 aircraft. Voyageur currently operates in Canada, Africa and Central Asia.
• Specialized engineering and advanced maintenance operations. As a certified Design Approval Organization by Transport Canada, the company has developed a number of Supplemental Type Certificates for modifications and improvements for Bombardier regional aircraft. The company is an 'approved maintenance organization' under Transport Canada, United States Federal Aviation Administration and European Aviation Safety Agency regulations. The company has full in-house design engineering and aircraft modification capabilities for special mission integration and support requirements along with parts sales and manufacturing. The company also has storage and parking capabilities for up to 65 regional aircraft at its North Bay facility.

Voyageur also operates a small fixed-base operation at the North Bay airport providing services such as aircraft fueling, ground handling and aircraft hangar and storage facilities.

The company has a track record of strong financial performance with solid revenue and consistent free cash flow generation.  For the last fiscal year ended December 31, 2014, Voyageur generated adjusted EBITDA¹ of approximately $16.9 million.

RBC Capital Markets acted as exclusive financial advisor to Chorus on the transaction, and Osler, Hoskin and Harcourt LLP acted as legal advisor to Chorus.  Gowling, Lafleur, Henderson LLP acted as legal advisor to Voyageur.

¹ Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
EBITDA is defined as earnings before net interest expense, income taxes, and depreciation and amortization and is a non-GAAP financial measure.  Adjusted EBITDA (net income before net interest expense, income taxes, depreciation and amortization and other items such as asset impairment and foreign exchange gains or losses) is a non-GAAP financial measure used by Chorus, and commonly by other regional airlines in the industry, as a supplemental financial measure of operational performance. Management believes Adjusted EBITDA assists investors in comparing Chorus' performance on a consistent basis without regard to depreciation and amortization, which are non-cash in nature and can vary significantly depending on accounting methods and factors such as historical cost. Adjusted EBITDA should not be used as an exclusive measure of cash flow because it does not account for the impact of working capital growth, capital expenditures, debt repayments and other sources and uses of cash, which are disclosed in the statement of cash flows, forming part of the financial statements.  

Free Cash Flow
Free cash flow is a non-GAAP financial measure used as an indicator of financial strength and performance.  Free cash flow is defined as cash flows from operating activities, as reported in accordance with GAAP, less total capital expenditures and dividends.

Forward Looking Statements

Certain statements in this news release may contain statements which are forward-looking. These forward-looking statements are identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will", "would", and similar terms and phrases, including references to assumptions. Such statements may involve but are not limited to comments with respect to strategies, expectations, planned operations or future actions. The information presented herein concerning Voyageur has been provided by Voyageur.

Forward-looking statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and other uncertain events. Forward-looking statements, by their nature, are based on assumptions, including those described below, and are subject to important risks and uncertainties. Any forecasts or forward-looking predictions or statements cannot be relied upon due to, amongst other things, changing external events and general uncertainties of the business. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements to differ materially from those expressed in the forward-looking statements. Results indicated in forward-looking statements may differ materially from actual results for a number of reasons, including without limitation, risks relating to the airline industry and in particular international operation of airlines in developing countries and areas of unrest, loss of customers, airline leasing, energy prices, general industry, market, credit, and economic conditions, competition, insurance issues and costs, supply issues, war, terrorist attacks, epidemic diseases, environmental factors, acts of God, employee relations, labour negotiations or disputes, pension issues, currency exchange and interest rates, managing growth, changes in laws, adverse regulatory developments or proceedings in countries in which Chorus and its subsidiaries operate or will operate, pending and future litigation, actions by third parties. The forward-looking statements contained in this discussion represent Chorus' expectations as of May 1, 2015, and are subject to change after such date. However, Chorus disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulations.

There can be no assurance that the anticipated strategic benefits and operational, competitive and cost synergies from the acquisition will be realized, that representations made are accurate or that recourse will be available therefor.

About Voyageur
Voyageur's current operations are comprised of the following:

• Aircraft Charter
• Air Ambulance
• Maintenance and Specialized Engineering
• Special Mission Aircraft
• Spares Support
• Airport Services

www.voyageurairways.com

About Chorus
Headquartered in Halifax, Nova Scotia, Chorus was incorporated on September 27, 2010 and is a dividend-paying holding company with various interests including Jazz Aviation Holdings Inc. and Chorus Aviation Holdings II Inc. Chorus Aviation Holdings II Inc. is a holding company to facilitate diversification of Chorus' business.

Chorus is traded on the Toronto Stock Exchange under the trading symbols of CHR.A and CHR.B.

For more information, visit www.chorusaviation.ca

SOURCE Chorus Aviation Inc.