Acasta Enterprises Inc. (TSX:AEF) (“Acasta” or the “Company”) announced today that it has entered into a non-binding term sheet (the “Term Sheet”) with Martello Finance Company Limited (“Martello”) with respect to the sale of its Stellwagen business unit (“Stellwagen”). Acasta has also entered into an amending agreement (the “Amending Agreement”) with the Company’s senior lenders under its US$150 million credit facility (the “Credit Facility”).

The Board of Directors of Acasta had previously established a committee of independent directors (the “Independent Committee”) which supervised the negotiation of the Term Sheet and the Amending Agreement. The Independent Committee will oversee the potential sale of Stellwagen and consider other alternatives to maximize value for the Company’s shareholders.

Term Sheet to Sell Stellwagen

The Term Sheet provides that the Company will sell Stellwagen to an affiliate of Martello, the previous owner of Stellwagen, in exchange for the cancellation of 26 million common shares of Acasta beneficially owned by Martello and others, representing approximately 27% of the issued and outstanding common shares, and the payment to Acasta of US$35 million (of which US$5 million will be paid ninety days following closing of the transaction). Acasta will retain the Stelloan loan portfolio which has a book value of approximately US$47.4 million. If definitive agreements have been signed and the transaction has not yet closed by March 1, 2018, the Term Sheet provides that on that date an affiliate of Martello will make a US$25 million down payment to Acasta in consideration for first-ranking security over the Stellwagen C295 aircraft assets and related deposits.

The Company will use the above-noted proceeds to reduce its indebtedness, including using at least US$25 million of the proceeds to satisfy its obligations under the Credit Facility, as discussed below.

The parties to the Term Sheet are in the process of negotiating definitive agreements, and there can be no assurance that a transaction will be completed. Any transaction will be subject to the requirements of Multilateral Instrument 61-101 – Protection of Minority Securityholders in Special Transactions.

Amendment to US$150 Million Credit Facility

The Amending Agreement has allowed Stellwagen to use the proceeds from the previously announced revolving credit and security agreement entered into with Morgan Stanley Asset Funding Inc. to support Stellwagen’s ongoing initiatives. Under the terms of the Amending Agreement, Acasta has paid down US$5 million of the US$120 million aggregate principal amount of indebtedness currently outstanding under the Credit Facility. In addition, Acasta has agreed to repay an additional US$25 million of the Credit Facility by March 1, 2018, which amount is expected to be funded from the proceeds contemplated by the Term Sheet described above.

In connection with the Amending Agreement, the Company has engaged an advisor to assist with its ongoing strategic review to maximize shareholder value.

Resignation of Director

Acasta also announced that Michael Young resigned as a director of Acasta. The Board of Directors thanks him for his contributions as a director.

Goodmans LLP is acting as legal advisor to Acasta. Osler, Hoskin & Harcourt LLP is acting as legal advisor to the Independent Committee. Stikeman Elliott LLP is acting as legal advisor to Martello. The Independent Committee also intends to engage an independent financial advisor.