Canada Jetlines Ltd. (JET: TSX-V; JETMF: OTCQB) (the “Company” or “Jetlines”) is pleased to provide an update on the status of the $7 million financing (the “InHarv Offering”) with InHarv Partners Ltd. (“InHarv”), on behalf of InHarv ULCC Growth. The TSX Venture Exchange (“TSXV”) is requiring that the Company obtain shareholder approval for the Offering. The Company has submitted the InHarv Offering for shareholder approval at its upcoming Annual General and Special Meeting scheduled for Wednesday, June 26, 2019 (the “AGM”). Assuming shareholder approval for the InHarv Offering, InHarv and the Company intend to close the InHarv Offering as soon as possible after the AGM. For further information regarding the InHarv Offering please refer to the Company’s press release dated March 28, 2019 and May 15, 2019, or the Information Circular (defined below).
The AGM will be held at Fasken Martineau DuMoulin LLP located at 2900 – 550 Burrard Street, Vancouver, BC Canada, V6C 0A3 on Wednesday, June 26, 2019 at 10:00 a.m. (Vancouver Time). In addition to the approval of the InHarv Offering, the Company will also be submitting certain other financing, regulatory and executive compensation matters to shareholders for approval. An information circular (the “Information Circular”) detailing the matters submitted to the shareholders for approval at the AGM is available on SEDAR at www.sedar.com.
On November 27, 2018, the Company entered into a subscription agreement with SmartLynx Airlines SIA (“SmartLynx”) pursuant to which SmartLynx would purchase 22,727,272 subscription receipts at a price of $0.33 per Subscription Receipt, for aggregate gross proceeds of $7.5 million. On December 27, 2018, the Company announced that it had closed the SmartLynx Private Placement and that the $7.5 million subscription funds, together with any interest earned thereon, are held in escrow pending satisfaction or waiver of the escrow release conditions.
A control position will potentially result from the conversion of the subscription receipts acquired by SmartLynx. As a result, and as required by the policies of the TSXV, shareholders will be asked at the AGM to approve, by way of ordinary resolution, the creation of a control position resulting from the subscription for 22,727,272 subscription receipts by SmartLynx. For further information regarding the SmartLynx Offering please refer to the Company’s press release dated November 27, 2018, December 27, 2018, and April 30, 2019, and the Information Circular.
Article and By-Law Amendments
On November 3, 2016, the Honourable Marc Garneau, Minister of Transport granted the Company an unprecedented exemption from the 25 per cent foreign voting interest limit in the Canada Transportation Act (“CTA”) and be permitted the Company and its subsidiaries to have up to an aggregate of 49 per cent foreign voting interests Subsequent to granting the exemption order, on June 27, 2018, Minister Garneau announced that, following the Royal Assent of the Transportation Modernization Act, new rules for airline ownership have officially come into force (the “CTA Amendments”). These changes increased foreign voting interest limits from 25 per cent to 49 per cent of voting interests for all Canadian air carriers. A single international investor (individually or in affiliation) cannot hold more than 25 per cent of the voting interests of a Canadian air carrier, and no combination of international air carriers can own more than 25 per cent of a Canadian carrier (individually or in affiliation).
As the CTA Amendments are now in force, the Board determined that it was appropriate to address the changes to the new limitations on voting control by non-Canadians under the CTA Amendments by effecting amendments to the Articles and By-Law No. 1 of the Company. The amendments to the Articles and By-Law No. 1 will require Shareholder approval, which the Company intends to obtain at the AGM. For further information please refer to the Information Circular.
The closing of the InHarv Offering is conditional the satisfaction of conditions to closing contained in the Subscription Agreement. These conditions include, among other things, approval of the TSX Venture Exchange for the Offering, shareholder approval and the receipt of all other necessary consents, approvals and authorizations required by either party.