Canada Jetlines Ltd. (JET: TSX-V; JETMF: OTCQB) (the “Company” or “Jetlines”) announces that it has entered into a letter of intent (the “LOI”) with Global Crossing Airlines (“GLOBALX”) with respect to a business combination of Jetlines and GLOBALX (the “Transaction”). GLOBALX is a developing United States based charter airline and is financially backed by two Miami based private-equity firms.

GLOBALX is a Delaware corporation in the pre-revenue stage with its head office located at Miami International Airport. GLOBALX plans to operate a US 121 charter airline using the Airbus A320-200 aircraft. GLOBALX business model includes the intention to provide ACMI and wet lease contracts to airlines operating within and to the United States and develop aircraft interchange with leading European charter/tour operators GLOBALX is currently in regulatory certification and is led by an operating team with a combined 140 years’ experience – including the former head of maintenance for two major US based A320 LCC carriers, and two retired Principal FAA inspectors with specific experience in the new Safety Management Systems and Quality Assurance.

In addition to the core business of GLOBALX, the combined entity (“Resulting Issuer”) will continue with an operating plan for Canada. This includes continuing to advance the Air Operator Certificate for Jetlines through the continued refinement of the Jetlines operating manuals and maintained in submission ready status. The Resulting Issuer also intends to initially operate charter operations in concert with major tour operators from Canadian cities to major leisure destinations in the United States. It is intended that GLOBALX aircraft will be used to operate these flights – branded as Jetlines, operated by GLOBALX.

Jetlines has determined that the Transaction provides the best opportunity at the present time to maximize value for the Company. The current intra-Canadian airline market is in a state of flux with consolidation ongoing at the major carriers, as well as at least three currently operating or planned market entrants in the Ultra-Low Cost Carrier segment. There is also no certainty regarding when the Canadian Competition Bureau will complete its investigation into WestJet and Swoop, or what the results of that investigation may be. The Transaction provides Jetlines with an opportunity to fly cross border with support from strategic partners who can provide lift, crews, marketing, sales, and capitalization. It also preserves the longer-term opportunity to continue with an intra-Canadian airline operation.

Mr. Mark Morabito commented, “While Jetlines made significant progress in building out a management team, advancing the airline licensing process, establishing systems, securing routes and obtaining financing commitments, ultimately current market conditions necessitated a change in strategy. The GLOBALX plan preserves Jetlines strategy long term and provides a more immediate opportunity to commence airline operations. I am resigning from Jetlines at this time in order to facilitate the GLOBALX transaction and its plans to restructure management.”

The Transaction is subject to the execution of a definitive transaction documents, approval of the TSX Venture Exchange (the “Exchange”), approval of the Jetlines and GLOBALX shareholders and other conditions customary for a transaction of this nature. There can be no assurance that the Transaction will be completed as proposed or at all.

Transaction Highlights

LAW

The following are the highlights of the terms and conditions of the LOI:

  • The Transaction is subject to the parties executing definitive transaction documents on or before January 30, 2020 (the “Transaction Documents”) and the final structure of the Transaction is to be determined upon the receipt of securities, tax and financial advice.
  • GLOBALX has outstanding the following securities: 500 shares, nil warrants and nil stock options.
  • The exchange ratio for the Transaction will (subject to adjustment for the Bridge Loan (defined below)) result in existing shareholders of Jetlines holding 49% of the common and variable voting shares of the Resulting Issuer (“Resulting Issuer Shares”) and shareholders of GLOBALX holding 51% of the Resulting Issuer Shares.
  • The Transaction is subject to the following key conditions:
  • the parties will execute the Transaction Documents by January 30, 2020;
  • Jetlines will consolidate its share capital of a 10:1 basis and change its name to Global Crossing Airlines Group;
  • the parties will complete due diligence investigations, each to their own satisfaction, prior to executing the Transaction Documents;
  • GLOBALX shall designate a proposed team of officers, directors and board committee members of the Resulting Issuer which will be set out in the Transaction Documents;
  • the Transaction will have received approval of the Exchange and all necessary regulatory, corporate and shareholder approvals; and
  • receipt of a report of a sponsor in respect of the Transaction or waiver from the sponsorship requirement by the Exchange.
  • GLOBALX will provide Jetlines with a secured bridge loan for up to $300,000 (the “Bridge Loan”). The Bridge Loan will be advanced in tranches of $100,000 based on a budget agreed to between Jetlines and GLOBALX. Each $100,000 advanced will increase the ownership interest of GLOBALX shareholders in the resulting issuer by approximately 0.56%. If the full $300,000 of the Bridge Loan is advanced, the percentage interest of Jetlines shareholders and GLOBALX shareholders in the Resulting Issuer shall be 47.35% and 52.65% respectively.
  • Prior to the closing of the Transaction, GLOBALX may receive commitments for financing for up to $20,000,000, to be raised in a series of tranches.

Additional Information

Full details of the Transaction will be included in the Definitive Agreement and Management Information Circular to be filed with the regulatory authorities and mailed to Jetlines shareholders in accordance with applicable securities laws. The Transaction is being conducted entirely at arm’s length. The name of the Resulting Issuer will be “Global Crossing Airlines Group”

Additional information as required will be provided by way of a subsequent news release. Trading in the common shares of the Company on the Exchange will remain halted until such time as the requirements of the Exchange are met.

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 Unites 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.

Completion of the Transaction is subject to a number of conditions, including Exchange acceptance and disinterested shareholder approval. 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 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 Jetlines should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

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