Discovery Air Inc. Announces Credit Update

TORONTO, Dec. 1, 2017 /CNW/ - Discovery Air Inc. ("Discovery Air" or the "Corporation") (TSX: DA.DB.A) announced today that it has  extended its operating credit  facility  with  the  Canadian  Imperial  Bank  of Commerce ("CIBC") for a term ending January 31, 2018.

Discovery Air also announced today that its subsidiary, Air Tindi Ltd. has entered into a subordinated credit agreement with Clairvest Group Inc. and its affiliates (such lender, "Clairvest"), the controlling shareholder of the Corporation, providing for a revolving subordinated credit facility in the aggregate principal amount of up to $8,000,000 (the "ATL Revolving Credit Facility"). All borrowings under the ATL Revolving Credit Facility are secured on a subordinated basis, bear interest at a rate of 12% per annum, compounded, payable quarterly, and maturing on January 31, 2018, subject to acceleration in the event of certain refinancing transactions and extensions by Clairvest, acting reasonably. Proceeds from the ATL Revolving Credit Facility were used to repay debt and for general corporate purposes.

Discovery Air further announced today that its subsidiary, Discovery Air Defence Services Inc. ("DA Defence"), has entered into a second subordinated credit agreement with Clairvest, providing for a revolving subordinated credit facility in the aggregate principal amount of up to $8,000,000 (the "Additional DADS Revolving Credit Facility" and collectively with the ATL Revolving Credit Facility, the "Additional Credit Facilities"). All borrowings under the Additional DADS Revolving Credit Facility are secured on a subordinated basis, bear interest at a rate of 12% per annum, compounded, payable quarterly, and maturing on January 31, 2018, subject to acceleration in the event of certain refinancing transactions and extensions by Clairvest, acting reasonably. Proceeds from the Additional DADS Revolving Credit Facility will be used for general corporate purposes.  The Additional DADS Revolving Credit Facility is in addition to existing credit facilities between DA Defence and lenders related to Clairvest for an aggregate principal amount of $38,000,000, to come due on February 15, 2018.

The Additional Credit Facilities are a "related party transaction" within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Corporation is not required under MI 61-101 to obtain a formal valuation in respect of the Additional Credit Facilities, since the requirement to obtain a formal valuation in section 5.4(1) of MI 61-101 does not apply to a related party transaction where an issuer enters into a credit facility with the related party. As well, the Corporation 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 Additional Credit Facilities being provided on reasonable commercial terms that are not less advantageous to the Corporation than if the Additional Credit Facilities was obtained from an arm's length party; and (ii) the Additional Credit Facilities not containing any equity component.

Discovery Air further announced today that it has amended and restated both of the aircraft loan agreements with ECN Aviation Inc. to provide, inter alia, for the repayment of an aggregate principal amount not exceeding $5,000,000 and the release of its subsidiary DA Defence from its obligations and the security provided by it in connection with each of the original aircraft loan agreements.

Additional details can be found on SEDAR at www.sedar.com.

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 Discovery Air to obtain financing for working capital. A copy of the credit agreement for each of the Additional Credit Facilities will be available on the system for electronic document analysis and retrieval (SEDAR).

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 use of proceeds of the Additional Credit Facilities, the terms, conditions and timing of draws under the Additional Credit Facilities 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 2017 Annual Information Form dated April 13, 2017, and Discovery Air's 2017 MD&A for the Three-Month and Six-Month Period ended July 31, 2017, 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. The forward-looking statements contained in this press release describe our expectations as of the date hereof, 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, 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).

SOURCE Discovery Air Inc.