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 LLPCentennial Place, 520 3 Ave SW Suite
1900Calgary, AB T2P 0R3Attention: Michael Rodyniuk, President &
CEOE-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.
FluroTech (TSXV:TEST.H)
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FluroTech (TSXV:TEST.H)
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