TORONTO, ONTARIO--(Marketwired - Sept. 8, 2016) - Discovery Air Inc. ("Discovery Air" or the
"Company") (TSX:DA.A) announced today that it has entered into a definitive transaction agreement (the
"Transaction Agreement") with MAG Aerospace Corp. ("MAG"), and certain subsidiaries of MAG and
Clairvest (as defined below) (collectively, the "Buyer Group") to sell its fire services business (the
"DAFS Disposition") operated by its subsidiary Discovery Air Fire Services Inc. ("DAFS"). The
total transaction consideration is approximately $15.38 million, subject to certain post-closing purchase price adjustments (the
"Purchase Price").
Jacob (Koby) Shavit, the President and CEO of Discovery Air, said, "MAG is an excellent home for our valued DAFS employees and
customers and will allow the Company to focus on its strategic growth plans while reducing its indebtedness."
Following the closing of the DAFS Disposition, Discovery Air will continue to operate its other core businesses, being: (i)
Discovery Air Defence Services Inc., the prime supplier of airborne training services to the Canadian Department of National
Defence and to the German Air Force, with growing operations in the United States; (ii) Great Slave Helicopters Ltd., one of the
largest helicopter operators in Canada, which conducts airborne geographical and environmental surveying, fire suppression and
oil and gas exploration in most parts of Canada, as well as internationally; (iii) Air Tindi Ltd., a commercial fixed-wing
charter company that provides scheduled and charter passenger and cargo services as well as medevac equipped aircraft services
primarily in northern Canada; and (iv) Discovery Mining Services Ltd., an exploration industry supply and expediting company
serving the needs of customers operating throughout Canada. It is expected that, following the completion of DAFS Disposition,
Discovery Air will increase its operational and growth focus on these businesses. Proceeds from the DAFS Disposition will be used
to reduce the Company's indebtedness.
Transaction Agreement
The Transaction Agreement contemplates, among other things: a pre-closing reorganization; the satisfaction or waiver of
applicable closing conditions, including receipt of required regulatory approvals; post-closing indemnifications; and the
entering into of various ancillary agreements on closing, including in respect of transition services and non-competition. The
DAFS Disposition is expected to close once all of the required approvals, including regulatory approvals and minority shareholder
approval of the DAFS Disposition, have been obtained, and all other conditions have been satisfied or waived (as applicable),
which is expected to occur by November 30, 2016 but in any event not later than January 31, 2017. The Transaction Agreement will
be filed on the System for Electronic Document Analysis and Retrieval at www.sedar.com, and its terms will be further described in the management information circular to be
filed in due course.
Board Recommendation, Fairness Opinion and Formal Valuation
The special independent committee of Discovery Air's board of directors has unanimously recommended that Discovery Air
shareholders approve the DAFS Disposition, which recommendation has been unanimously approved by Discovery Air's board of
directors (excluding directors not eligible to vote). The special committee received a fairness opinion and formal valuation from
Capital Canada Limited indicating that the consideration offered under the Transaction Agreement is fair from a financial point
of view to the Company and its minority shareholders.
Minority Shareholder of Approval and Related Party Transaction
Multilateral Instrument 61-101 - Protection of Minority Shareholders in Special Transactions ("MI
61-101") requires that the DAFS Disposition be subject to "minority approval" (as defined in MI 61-101) of every class
of "affected securities" (as defined in MI 61-101) of the Company, in each case voting separately as a class, subject to receipt
of any exemptive relief in respect of such requirements. Therefore, at a special meeting, shareholders of the Company will be
asked to vote to approve the DAFS Disposition, which will require the affirmative vote of not less than a majority of the votes
attached to the Company's common shares, present in person or represented by proxy, excluding for this purpose votes attached to
common shares of the Company held by persons described in items (a) through (d) of Section 8.1(2) of MI 61-101.
The DAFS Disposition is subject to "minority approval" because it is a "related party transaction" since Clairvest is a
shareholder of both Discovery Air and certain Buyer Group entities. As at August 31, 2016, to the best of the knowledge of the
Company, Clairvest owns, controls or directs, directly or indirectly, 64,539,293 Class A common shares and 1,883,313 Class B
common shares of Discovery Air (representing approximately 81% of all issued and outstanding common shares of Discovery
Air).
Voting and Support Agreements
In addition, pursuant to certain voting and support agreements, each director and officer of Discovery Air eligible to
participate in the "minority approval" will agree to, among other things, vote in favour of the DAFS Disposition.
Management Information Circular and Further Information
Discovery Air shareholders are advised to read the materials relating to the DAFS Disposition that will be filed with
securities regulatory authorities in Canada, including the notice of meeting, the Transaction Agreement and the management
information circular, when they become available, as they will contain important information respecting the DAFS Disposition and
the special meeting of shareholders of the Company. Anyone may obtain copies of these documents when available, free of charge,
under Discovery Air's profile on SEDAR at www.sedar.com. This announcement is
for informational purposes only and does not constitute a solicitation of a proxy. As of the date of this announcement, the
Company has not retained a proxy solicitation firm.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements made in this press release are forward-looking statements (as defined in applicable securities laws). These
statements include, without limitation, statements relating to the DAFS Disposition, approval of the DAFS Disposition by majority
of the minority shareholders of Discovery Air, the Purchase Price, the expected timing and impact of the DAFS Disposition,
obtaining the required regulatory and shareholder approvals, certain strategic, operational and financial benefits expected to
result from the DAFS Disposition, the execution of voting and support agreements, Discovery Air's business outlook, objectives,
plans and strategic priorities, the business outlook, objectives, plans and strategic priorities with respect to the core
businesses, and other statements that are not historical facts.
Forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on
assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially
from our expectations expressed in or implied by such forward-looking statements. As a result, we cannot guarantee that any
forward-looking statement will materialize and we caution you against relying on any of these forward-looking statements. For a
description of relevant assumptions and risks, please consult Discovery Air's 2016 Annual Information Form dated April 28, 2016,
and Discovery Air's 2016 First Quarter MD&A dated April 30, 2016, all filed with the Canadian provincial securities
regulatory authorities (available at www.sedar.com) and which are also
available on Discovery Air's website at www.discoveryair.com.
Additional details regarding the DAFS Disposition will be disclosed in the management information circular to be filed in due
course.
The forward-looking statements contained in this press release describe our expectations at September 8, 2016, and,
accordingly, are subject to change after such date. Except as may be required by Canadian securities laws, we do not undertake
any obligation to update or revise any forward-looking statements contained in this press release, whether as a result of new
information, future events or otherwise.
About Discovery Air
Discovery Air is a global leader in specialty aviation services. We deliver exceptional air combat training, medevac equipped
aircraft services, airborne fire 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 Fire Services Inc. currently provides, and has provided for almost three decades, aerial fire surveillance,
airspace and aircraft management, and air transport services in support of the Ontario government's forest fire management
program. As well, DAFS' provides court-related air transport services to a variety of provincial government agencies which
operate in northwestern Ontario (carried on by DAFS' charter division, Walsten Air).
Discovery Air's Class A common voting shares and unsecured convertible debentures trade on the Toronto Stock Exchange (symbols
DA.A and DA.DB.A, respectively).
About MAG
MAG Aerospace, headquartered in Woodbridge, VA, is a leader in providing and enabling global situational awareness to make the
world smaller and safer. Private equity backed by the Clairvest Group, MAG Aerospace delivers manned aerial surveillance
(Airborne ISR), unmanned aircraft systems (UAS), and aviation training services to federal, global, and commercial customers
around the world. For more information, visit www.magaero.com.