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TORONTO, March 13, 2023–(BUSINESS WIRE)–Canada Jetlines Operations Ltd. (NEO: CJET) ("Canada Jetlines" or the "Company") the new, all-Canadian, leisure airline, announces that it intends to undertake a non-brokered private placement with a single arm’s length investor to raise from $1,000,020 (the "Offering") and that it has closed its previously announced $1,500,000 loan transaction.
The Offering consists of 4,762,000 units issued at $0.21 per unit (each a "Unit"). Each Unit consists of one variable voting share (each a "Share") and one half of one warrant (each whole warrant a "Warrant"). Each Warrant entitles the holder thereof to purchase an additional Share (each a "Warrant Share") for a period of 24 months after closing at a price of $0.35 per Warrant Share.
The Company intends to use the net proceeds of the Offering for general corporate and working capital purposes. The closing of the Offering is subject to customary closing conditions, including the receipt of the approval of the Neo Exchange Inc. Closing is expected to occur on or before April 15, 2023.
This news release does not constitute an offer of securities for sale in the United States. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and such securities may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements.
The Company also announces that it has closed its previously announced non-convertible term Loan Agreement for a $1,500,000 loan (the "Loan"). The terms of the Loan include:
the Loan was advanced in a single tranche on March 12, 2023 for gross proceeds of $1,500,000;
the Loan bears interest at the rate of 7.95% per annum and has a maturity date of 60 months from the date of advance;
principal and interest amounts are payable in equal monthly installments for the term of the Loan plus an additional annual 10% principal repayment;
no shares are issuable in connection with the Loan;
the lender is granted a Board nomination right to nominate an independent director for the term of the Loan;
the Company shall pay the document closing costs of the lender; and
the Loan is secured with a subordinate security interest against the Company’s credit card processor holdback funds.
The lender (Square Financial Investment Corporation) ("Lender") is a wholly owned holding company for Reg Christian, a director of the Company and travel industry veteran. The Company intends to use the net proceeds of the Offering and the Loan for general corporate and working capital purposes.
The Lender is an affiliate of a director of the Company (Reg Christian). The Lender’s participation in the Loan is considered a related party transaction within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions ("MI 61-101"). As the transaction is a non-convertible loan, the formal valuation requirements of MI 61-101 are not applicable to the transaction. The transaction is exempt from the minority shareholder approval and information circular requirements of MI 61-101 pursuant to section 5.7(1)(a) of MI 61-101, as neither the fair market value of the consideration to be issued under the transaction nor the consideration to be paid by the insiders will exceed 25% of the Company's market capitalization, and section 5.7(1)(f) of MI 61-101, as the Loan represents a loan from a related party on reasonable commercial terms that are not less advantageous to the Company than if the Loan were obtained from a person dealing at arm’s length and the Loan is not convertible or repayable in securities. The Company will not file a material change report related to this financing more than 21 days before the expected closing of the Loan as required by MI 61-101 since the details of the participation by the related parties of the Company were not settled until just prior to closing and the Company wished to close on an expedited basis for sound business reasons. The securities that will be acquired by the related parties will be acquired pursuant to an exemption from the prospectus requirement in section 2.24 of National Instrument 45-106.
Canada Jetlines has announced new markets to Las Vegas, USA and Cancun, Mexico which began operations in February and March 2023 respectively. Canada Jetlines’ flights can be booked via Jetlines.com or contact your favorite Travel Agency. Canada Jetlines will operate its growing network with a fleet of Airbus A320 aircraft.
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Cautionary Note Regarding Forward-Looking Information
This news release contains "forward-looking information" concerning anticipated developments and events that may occur in the future. Forward-looking information contained in this news release includes but is not limited to the Company’s intention to operate as a leisure airline, closing of the Offering, use of proceeds from the Offering, use of proceeds from the Loan and business of Canada Jetlines.
In certain cases, forward-looking information can be identified by the use of words such as "plans", "expects" "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved" suggesting future outcomes, or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Forward-looking information contained in this news release is based on certain factors and assumptions regarding, among other things, the receipt of financing to commence airline operations, the accuracy, reliability and success of Jetlines’ business model; the timely receipt of governmental approvals; Jetlines concluding a definitive agreement for aircraft to commence airline operations; the timely commencement of operations by Jetlines and the success of such operations; the legislative and regulatory environments of the jurisdictions where Jetlines will carry on business or have operations; the impact of competition and the competitive response to Jetlines’ business strategy; and the availability of aircraft. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include risks related to, the ability to obtain financing at acceptable terms, the impact of general economic conditions, domestic and international airline industry conditions, the failure of the Company to conclude definitive agreements to acquire aircraft, supply chain disruptions causing delays in expected timelines, the impact of the global uncertainty created by COVID-19, future relations with shareholders, volatility of fuel prices, increases in operating costs, terrorism, pandemics, natural disasters, currency fluctuations, interest rates, risks specific to the airline industry, the ability of management to implement Jetlines’ operational strategy, the ability to attract qualified management and staff, labour disputes, regulatory risks, including risks relating to the acquisition of the necessary licenses from regulatory agencies, and the additional risks identified in the "Risk Factors" section of the Company's reports and filings with applicable Canadian securities regulators. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information is made as of the date of this news release. Except as required by applicable securities laws, the Company does not undertake any obligation to publicly update any forward-looking information.
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