THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
CALGARY, Alberta, May 01, 2024 (GLOBE NEWSWIRE) — FluroTech Ltd. (TSXV: TEST.H) (“FluroTech”), to be renamed Consolidated Aerospace Finance Corporation (“CAFC”) pursuant to the Name Change hereinafter described, and Great Slave Helicopters 2018 Ltd. (“GS Heli”) are pleased to announce that further to the news releases dated April 19, 2024 and March 11, 2024, the parties, along with 15915074 Canada Inc. (“FinanceCo” or the “Company”), a wholly owned subsidiary of FluroTech (the “Parties”), have agreed to terms with Research Capital Corporation (“RCC”) with respect to terms of the Offering (as defined below).
RCC has agreed to act as the lead agent and sole bookrunner (the “Lead Agent”), on behalf of a syndicate of agents, including CIBC World Markets Inc., ATB Capital Markets Inc. and Canaccord Genuity Corp. (collectively, the “Agents”), in connection with a best-efforts basis, private placement offering of subscription receipts of FinanceCo (the “Subscription Receipts”) at a price of C$4.00 per Subscription Receipt for aggregate gross proceeds of up to C$22,000,000 (the “Offering”), pursuant to an agreed upon term sheet dated May 1, 2024
Each Subscription Receipt will entitle the holder thereof, without payment of any additional consideration and without further action on the part of the holder, upon the satisfaction of the Escrow Release Conditions (as defined herein) to receive one common share of the Company (an “Underlying Share” or “Underlying Shares”).
As previously announced, the Parties entered into a definitive agreement dated April 19, 2024 (the “Definitive Agreement”) in respect of the proposed acquisition of GS Heli by FluroTech (the “Transaction”). It is intended that the Transaction will constitute a Reverse Takeover transaction of FluroTech, as such term is defined in Policy 5.2 (“Policy 5.2”) of the TSX Venture Exchange (the “TSXV”). Additionally, it is intended that the Transaction will constitute a “Reactivation” under the policies of the TSXV and that upon completion of the Transaction (the “Closing”) and satisfaction of all conditions of the TSXV, FluroTech as it exists upon completion of the Transaction (the “Resulting Issuer”) will have its listing transferred from the NEX board of the TSXV (“NEX”) to the TSXV. The Transaction is expected to be completed in Q2 2024.
About GS Heli
GS Heli is a privately held corporation existing under the Canada Business Corporations Act (the “CBCA”). Headquartered in Yellowknife, Northwest Territories, GS Heli is a helicopter company with a long-standing reputation for safety, a diverse range of specialized services and logistical support. GS Heli has over 36 years of successful operations, a fleet of single and twin-engine turbine helicopters and a team of experienced professionals that continue to meet the needs of its customers in the public and private sectors. The only shareholder that holds a controlling interest both directly and indirectly in GS Heli is Mr. Pat Campling.
Following the Closing, the Resulting Issuer will operate in the aviation industry, addressing the needs of helicopter aviation in the Northwest Territories, Yukon, Nunavut, Saskatchewan, Alberta, Northwest Ontario and British Columbia. With the largest local helicopter support infrastructure in northern Canada, CAFC anticipates it will significantly expand the demand for its services, drawing on a senior executive team and board that bring experience in key target markets from aviation and aircraft sectors and its strong partnerships with First Nations throughout the Northwest Territories, Nunavut, British Columbia and Alberta.
Transaction Highlights – Consolidated Aerospace Finance Corporation
Scalable Consolidation Strategy
- Following the Transaction, CAFC intends to focus on a disciplined roll-up strategy of accretive acquisitions of businesses in the aerospace sector
- Fragmented aviation and aerospace industry is poised for consolidation by experienced operators and supported by trends of retiring business owners accelerating succession plans
- Enhancing shareholder returns through prudent use of leverage
Compelling Investment Opportunity
- FluroTech’s initial transaction shall be the acquisition of GS Heli, a provider of specialized helicopter aviation services and logistical support
- Attractive acquisition multiple based on $65 million acquisition price
Focus on Operational Efficiency to Drive Re-Rating in the Public Markets
- Acquire businesses at EV/EBITDA multiples based on trailing EBITDA and taking into account required annual maintenance capex and its effect on free cash flow, and seek to achieve a premium multiple by re-rating in the public markets
- Focus on driving margin expansion utilizing deep domain operational experience in the aviation and aerospace industry to streamline acquired company operations
- Opportunity to establish future quarterly dividend from portion of free cash flow from operations
World Class Leadership Team
- Distinguished team of aviation industry leaders with proven track record of aerospace acquisition execution capabilities in the public and private markets
Summary Transaction Terms
In consideration for acquiring all of the issued and outstanding shares of GS Heli, the former holders of GS Heli Shares (“GS Heli Shareholders”) will receive an aggregate acquisition price of $65,000,000, subject to customary adjustments (the “Purchase Price”). The Purchase Price is expected to be satisfied through: (i) the net proceeds of the Offering, including the Agents’ Option (as defined below); (ii) $35,000,000 in senior debt (the “Bank Financing”); and (iii) $8,000,000 of the Purchase Price shall be satisfied through the exchange of GS Heli Shares for 2,000,000 Resulting Issuer Shares (as defined below) at the deemed price per share on the closing date of the Transaction. In connection with the Transaction, FluroTech entered into a term sheet for $35,000,000 in senior debt and $5,000,000 revolving facility.
Financing Details
In connection with the Transaction it is intended that, among other things: (i) the Subscription Receipts will be converted into Underlying Shares; (ii) all the outstanding common shares of the Company (including the Underlying Shares) (each, a “Company Share”), will ultimately be exchanged for Common Voting Shares of the Resulting Issuer (defined below) (the “Resulting Issuer Shares”) on a basis of one Resulting Issuer Share (on a post-consolidation basis) following completion of the consolidation of the Company Shares on the basis of one Company Share for every 26.67 pre-consolidation Company Shares (the “Consolidation”), and (iii) FluroTech shall change its name to “Consolidated Aerospace Finance Corporation” (the “Name Change”). Each Resulting Issuer Share will have a deemed price of $4.00 at closing of the Transaction.
FinanceCo and FluroTech will grant to the Agents an option (the “Agents’ Option”) to offer up to an additional number of Subscription Receipts equal to 15% of the Subscription Receipts raised in the Offering, at any time up to 48 hours prior to the closing of the Offering.
The net proceeds of the Offering will be used for the acquisition of GS Heli and related transaction costs and expenses.
The gross proceeds of the Offering, less the expenses of the Agents and 50% of the Agents’ cash commission, will be deposited and held by a licensed Canadian trust company or other escrow agent (the “Escrow Agent”) mutually acceptable to the Agents and the Company in an interest bearing account (the “Escrowed Funds”) pursuant to the terms of a subscription receipt agreement to be entered into on the Closing Date among the Company, the Lead Agent, the Escrow Agent and, if reasonably required by the Lead Agent, FluroTech. The Escrowed Funds (less any remaining costs and expenses of the Agents) will be released from escrow to the Company upon satisfaction of the following conditions (collectively, the “Escrow Release Conditions”) no later than the 120th day following the Closing Date, or such other date as may be mutually agreed to in writing between the Company and the Lead Agent (the “Escrow Release Deadline”), including:
| (i) | the completion, satisfaction or waiver of all conditions precedent to the Transaction in accordance with the Definitive Agreement, to the satisfaction of the Agents; |
| (ii) | the receipt of all required shareholder and regulatory approvals, including, without limitation, the conditional approval of the TSXV for the Listing and the Transaction, approval of the Name Change and completion of the Consolidation; |
| (iii) | the Resulting Issuer securities issued in exchange for the Underlying Shares not being subject to any statutory or other hold period in Canada; |
| (iv) | the representations and warranties of the Company contained in the agency agreement to be entered into in connection with the Offering being true and accurate in all material respects, as if made on and as of the escrow release date; and |
| (v) | the Company and the Agents having delivered a joint notice and direction to the Escrow Agent, confirming that the conditions set forth in (i) to (iv) above have been met or waived. |
As a condition precedent to the execution by the Lead Agent of the joint notice and direction referred to in (v) above, the chief executive officer of the Company (or such other officers as may be acceptable to the Agents, acting reasonably) will certify to the Agents that the Escrow Release Conditions (other than that set out in (v) above) have been satisfied.
If (i) the satisfaction of the Escrow Release Conditions does not occur on or prior to the Escrow Release Deadline, or such other date as may be mutually agreed to in writing among the Company, Flurotech and the Agents, or (ii) the Company has advised the Agents or the public that it does not intend to proceed with the Transaction (in each case, the earliest of such times being the “Termination Time”), then all of the issued and outstanding Subscription Receipts shall be cancelled and the Escrowed Funds shall be used to pay holders of Subscription Receipts an amount equal to the issue price of the Subscription Receipts held by them (plus an amount equal to a pro rata share of any interest or other income earned thereon). If the Escrowed Funds are not sufficient to satisfy the aggregate purchase price paid for the then issued and outstanding Subscription Receipts (plus an amount equal to a pro rata share of the interest earned thereon), it shall be the Company’s and Flurotech’s sole responsibility and liability to contribute such amounts as are necessary to satisfy any such shortfall.
In connection with, and as a condition to, the completion of the Transaction, the Resulting Issuer Shares (including those issued in exchange for the Underlying Shares and issuable pursuant to the warrants and options of the Resulting Issuer) will be listed on the TSXV (the “Listing”).
The securities to be issued under the Offering will be offered by way of private placement in each of the provinces of Canada and such other jurisdictions as may be determined by FinanceCo, Flurotech and the Agents, in each case, pursuant to applicable exemptions from the prospectus requirements under applicable securities laws.
The Offering is expected to close on or about the week of May 27, 2024 (the “Closing Date”), or such other date as agreed upon between FinanceCo, Flurotech and the Agents and will be subject to certain conditions set out in the agency agreement of the Offering.
In connection with the Offering, the Agents will receive an aggregate cash commission equal to 7.0% of the gross proceeds from the Offering, including in respect of any exercise of the Agents’ Option, subject to a reduction for orders on a “president’s list”. Upon the satisfaction or waiver (to the extent waiver is permitted) of the Escrow Release Conditions, the Agents will also be issued broker warrants equal to 7.0% of the number of Subscription Receipts sold under the Offering, including in respect of any exercise of the Agents’ Option (the “Broker Warrants”), subject to a reduction for orders on a “president’s list”. Each Broker Warrant shall be exercisable to acquire one Resulting Issuer Share at an exercise price of C$4.00 per Resulting Issuer Share for a period of 24 months following the satisfaction or waiver of the Escrow Release Conditions.
The securities described herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, and accordingly, may not be offered or sold within the United States except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities requirements or pursuant to exemptions therefrom. This press release does not constitute an offer to sell or a solicitation to buy any securities in any jurisdiction.
Proposed Management and Directors of Resulting Issuer
The following sets out the names and backgrounds of all persons who are expected to be the officers and directors of the Resulting Issuer.
Michael Rodyniuk, President, CEO and Director
Michael is a distinguished aviation industry leader. His experience in leadership roles includes President & CEO positions at Canadian North Airlines, West Wind Aviation, Wasaya Airways and an executive Vice Chairman at Hawaii Island Air, Rodyniuk brings a proven track record of success to CAFC. His served as SVP & Airport COO at Winnipeg Airports Authority, Director of Revenue at WestJet, and VP & COO at Exchange Income Corporation. Rodyniuk is a graduate of the University of Manitoba’s Asper School of management with an MBA, as well as a graduate of Mount Royal University (College). Michael Rodyniuk and Michael Swistun are former colleagues, working together building the Aviation division of another publicly traded company. Rodyniuk is certified by the Canadian Institute of Corporate Directors as an ICD.D.
Michael Swistun, Chief Investment Officer and Director
Michael, a former capital markets executive with Exchange Income Corp. and Wellington West Capital will lead the Company’s Investment review and strategic operations. Michael is a chartered financial analyst, and most recently served as the secretary to the Economic Development Board of the Prov. of Manitoba. Michael served as CEO of ASBEX Inc., based in Ottawa, where he led a speciality trade contractor during its transition of ownership. Previously served as the managing director of FMI Capital Advisories Inc., where he worked closely with construction company owners on financial advisory, mergers and acquisitions, valuations and ownership transfer issues. Prior to these roles, Swistun served as director of acquisitions for Winnipeg-based Exchange Income Corporation where he led the company’s acquisition efforts in the aerospace and manufacturing and distribution industries throughout North America. Swistun has a bachelor of commerce in finance and marketing from the Asper School of Business as the University of Manitoba.
James O’Brien, Chief Legal Officer/VP Corporate Development, Corporate Secretary and Director
A former M&A partner at MLT Aikins for 12 years representing a broad range of clients and regularly advising on various corporate matters focusing on the sale and acquisition of businesses across a wide array of industries including agriculture, manufacturing, aviation, transport and healthcare. Founder of a Canadian real estate asset management firm focused on the development of multi-family housing. Current board member/chair of the audit committee of a NASDAQ-listed public company.
Pat Campling, Director
Pat is an aviation executive from Northern Saskatchewan with over 43 years of aviation experience and comes from a long line of aviation pioneers and innovators, being the son of the late Pat Campling Sr., the founder of La Ronge Aviation. Pat is the former CEO and accountable executive of Great Slave Helicopters. Prior to his role as CEO of Great Slave Helicopters, Pat was the co-founder of Trans West Air and served as interim chief executive of Saskatchewan-based group West Wind Aviation.
Ravi Latour, Director
Ravi is a Partner at Borden Ladner Gervais LLP (“BLG”) and is the Regional Group Manager for BLG Calgary’s Corporate & Capital Markets Group. Ravi has extensive experience in a broad range of securities and corporate law matters, acting for issuers, underwriters, agents, private equity, venture capital and investors in corporate finance and mergers & acquisition matters, including going public transactions, plans of arrangements, and restructurings. Ravi is a member of BLG’s Environmental, Social & Governance (ESG) leadership team, a member of BLG’s M&A Steering Committee, US and UK Strategy Committees and the Co-Chair of the firm’s Race Action Committee. He is consistently recognized as a leading lawyer in Canada, including most recently in the 2024 edition of The Canadian Legal Lexpert® Directory (Corporate Mid-Market, Private Equity, Corporate Commercial Law and Energy – Oil & Gas categories), the 2024 edition of Best Lawyers in Canada® (Corporate Law), the 2023 edition of the Lexpert Special Edition: Technology & Health Sciences, the 2023 edition of the Lexpert Special Edition: Finance and M&A and as a Lexpert Rising Star: Leading Lawyer Under 40, among other notable recognition and awards. Ravi graduated from the University of Manitoba with a Juris Doctor degree in 2012 and was admitted to the Alberta bar in 2013.
Sid Dutchak, Director
Sid has a background in corporate and commercial law from Saskatchewan, transitioned to Calgary in 1992 as CEO of a publicly traded company. He was previously Saskatchewan’s Attorney General and Chairman of Saskatchewan Mining Development Corp. (now Cameco Corp.). In Calgary, Sid has focused on managing public companies, serving in senior roles across various exchanges in Canada and the USA. He’s skilled in structuring public companies and organizing financings and has been a key player in private and public startup ventures. He holds a B.Law from the University of Saskatchewan and is honored with the Queen’s Counsel designation for his legal and public service achievements.
Finder’s Fees
Upon closing of the Transaction, FluroTech proposes to pay a fee to certain finders, being Michael Rodyniuk, Michael Swistun and James O’Brien who found and facilitated the Transaction, in efforts to align the interests of the shareholders and the management team of the Resulting Issuer. Mr. Rodyniuk is a Non-Arm’s Length Party to FluroTech and Mr. Swistun and Mr. O’Brien are Non-Arm’s Length Parties to the Resulting Issuer. The proposed finder’s fee shall be equal to 5% in the aggregate of the Transaction value, satisfied by way of issuing Resulting Issuer Shares at the issue price of the Subscription Receipts, and is subject to approval of the TSXV and if applicable, disinterested shareholder approval.
Trading Halt
In accordance with TSXV Policy 5.2, the common shares of FluroTech are currently halted from trading and are expected to remain halted pending closing of the Transaction and listing of the Resulting Issuer on the TSXV.
About FluroTech
FluroTech was incorporated under the Business Corporation Act (Alberta) on May 24, 2018. FluroTech is currently inactive with limited operations and the common shares of FluroTech are currently listed on the NEX. FluroTech has no commercial operations and no assets other than cash, operating losses and is a reporting issuer in the provinces of Alberta and British Columbia.
Additional Information
Additional information concerning the Transaction and any connected transactions of FinanceCo, GS Heli and the Resulting Issuer will be provided in subsequent news releases and in FluroTech’s management information circular or filing statement to be prepared and filed in connection with the Transaction, which will be available under FluroTech’s SEDAR+ profile at www.sedarplus.ca.
All information contained in this press release with respect to FinanceCo and GS Heli was supplied by or from the respective party for inclusion herein, without independent review by the other party, and each party and its directors and officers have relied on the other party for any information concerning the other party.
Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable pursuant to TSXV requirements, majority of the minority shareholder approval, the satisfaction or waiver of all conditions precedent in the Definitive Agreement and closing conditions customary to transactions of this nature. Where applicable, the Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.
Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.
The TSX Venture Exchange Inc. has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release.
For further information contact:
FluroTech Ltd.
c/o BLG LLP
Centennial Place, 520 3 Ave SW Suite 1900
Calgary, AB T2P 0R3
Attention: Michael Rodyniuk, President & CEO
E-mail: mrod@cafincorp.com
The investor presentation related to this Offering can be accessed under FluroTech’s profile at www.sedarplus.ca.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
Cautionary Note Regarding Forward Looking Information
This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as “may”, “should”, “anticipate”, “will”, “estimates”, “believes”, “intends” “expects” and similar expressions which are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward looking statements and information concerning: the Transaction; the proposed structure by which the Transaction is to be completed; that the Transaction will constitute the “Reactivation” of FluroTech under the policies of the TSXV; satisfaction of the Purchase Price (including the Bank Financing); the payment and approval of the Finder’s Fees; and the closing of the Offering. FluroTech cautions that all forward-looking statements are inherently uncertain, and that actual performance may be affected by a number of material factors, assumptions and expectations, many of which are beyond the control of FluroTech, including expectations and assumptions concerning FluroTech, the Transaction, the timely receipt of all required TSXV and regulatory approvals and exemptions (as applicable) and the satisfaction of other closing conditions in accordance with the terms of the Definitive Agreement. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of FluroTech. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.
The forward-looking statements contained in this press release are made as of the date of this press release, and FluroTech does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by securities law.
This press release refers to certain non-GAAP measures, including “EBITDA”, and to certain operating metrics in the industry. Management uses these non-GAAP measures, including industry metrics, to analyze operating performance and results, and therefore may be considered useful information by investors. These non-GAAP measures, including industry metrics, are furnished to provide additional information, do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. They should not be considered in isolation nor as a substitute for measures of performance prepared in accordance with GAAP. In this press release “EBITDA” is defined to mean net income (loss) before interest expense (net), income tax expense (recovery) depreciation and amortization and share based compensation.
THIS PRESS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES, AND DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO SELL ANY OF THE SECURITIES DESCRIBED HEREIN IN THE UNITED STATES. THESE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS UNLESS REGISTERED OR EXEMPT THEREFROM.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction.
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