Canada Jetlines Ltd. (JET: TSX-V; JETMF: OTCQB) (the “Company” or “Jetlines”) is pleased to announce that SmartLynx Airlines SIA (“SmartLynx”) and Jetlines have amended the escrow release conditions associated with the $7.5 million subscription receipt financing that was completed in December 2018 (the “SmartLynx Offering”). The escrow release conditions have been amended to match the funding conditions that are subject to the pending financing with the Korean special purpose fund led and established by InHarv Partners Ltd. (“InHarv”) (see press release of March 28, 2019 for further details). The amended escrow release conditions will provide funds to Jetlines at an earlier date than previously agreed.
Under the amended terms with SmartLynx, the gross proceeds of the SmartLynx Offering will be released after Jetlines achieves certain milestones as described below. $5.25 million (70%) of the proceeds shall be released upon the Company raising additional funds (the “Funding Milestone”) from a subsequent financing by June 30, 2019 (such completion date subject to waiver by SmartLynx). The Funding Milestone will be calculated by adding the amount of $3.85 million realized through the exercise of previously issued warrants since November 1, 2018 and the final amount committed under the InHarv financing at closing, and subtracting that total number from $40 million. In addition, the Company will be required to receive from the Canada Transportation Agency an order allowing it to sell tickets for airline travel. Jetlines intends to apply for this order in time to receive it in September 2019, approximately three months ahead of first flight.
The remaining $2.25 million (30%) of the proceeds shall be released upon the receipt by Jetlines Operations of its air operator certificate from Transport Canada.
Executive Chairman, Mark Morabito stated, “I would like to thank the SmartLynx group for their continued support of Jetlines. This amendment follows on their recent agreement to lease two Airbus A320 aircraft to Jetlines in order to allow for its planned December 17, 2019 start-up date. These amended escrow release terms will provide significant additional operational flexibility as funds will be available at an earlier date prior to start of operations and will allow Jetlines to better manage its capital. The terms will also be consistent with the funding conditions associated with the InHarv financing and together will provide the additional certainty of funding to the remaining investors that Jetlines is targeting to complete the remaining financing to launch airline operations.”
For further details on the SmartLynx Offering, please refer to the press release dated December 27, 2018.