FluroTech and GS Heli Announce Execution of Definitive Agreement

Calgary, Alberta--(Newsfile Corp. - April 19, 2024) - FluroTech Ltd. (TSXV: TEST.H) ("FluroTech" or the "Company"), to be renamed Consolidated Aerospace Finance Corporation ("CAFC") pursuant to the Name Change hereinafter described, and Great Slave Helicopters 2018 Ltd. ("GS Heli") are pleased to announce that further to the news release dated March 11, 2024, the parties, along with 15915074 Canada Inc. ("Subco"), a wholly owned subsidiary of FluroTech, have entered into a definitive agreement dated April 19, 2024 (the "Definitive Agreement") pursuant to the proposed acquisition of GS Heli by FluroTech (the "Transaction"). It is intended that the Transaction will constitute a "Change of Business" of FluroTech, as such term is defined in Policy 5.2 ("Policy 5.2") of the TSX Venture Exchange (the "TSXV"). Additionally, it is intended that the Transaction will constitute a "Reactivation" under the policies of the TSXV and that upon completion of the Transaction (the "Closing") and satisfaction of all conditions of the TSXV, FluroTech as it exists upon completion of the Transaction (the "Resulting Issuer") will have its listing transferred from the NEX board of the TSXV ("NEX") to the TSXV. The Transaction is expected to be completed in Q2 2024.

About GS Heli

GS Heli is a privately held corporation existing under the Canada Business Corporations Act (the "CBCA"). Headquartered in Yellowknife, Northwest Territories, GS Heli is a helicopter company with a long-standing reputation for safety, a diverse range of specialized services and logistical support. GS Heli has over 36 years of successful operations, a fleet of single and twin-engine turbine helicopters and a team of experienced professionals that continue to meet the needs of its customers in the public and private sectors. The only shareholder that holds a controlling interest both directly and indirectly in GS Heli is Mr. Pat Campling.

Following the Closing, the Resulting Issuer will operate in the aviation industry, addressing the needs of helicopter aviation in the Northwest Territories, Yukon, Nunavut, Saskatchewan, Alberta, Northwest Ontario and British Columbia. With the largest local helicopter support infrastructure in northern Canada, CAFC anticipates it will significantly expand the demand for its services, drawing on a senior executive team and board that bring experience in key target markets from aviation and aircraft sectors and its strong partnerships with First Nations throughout the Northwest Territories, Nunavut, British Columbia and Alberta.

Summary of Selected Financial Information of GS Heli

	Year ended October 31, 2023 (audited)	Year ended October 31, 2022 (audited)	Year ended October 31, 2021 (unaudited)
Revenue	$49,887,608	$31,228,361	$25,771,821
Gross profit	$18,163,358	$8,431,797	$7,665,512
Net income	$5,196,517	$(225,479)	$1,247,858
Total assets	$62,192,549	$63,398,198	$51,311,489
Total liabilities	$34,896,111	$41,298,488	$23,139,765
Total current assets	$12,604,118	$9,805,090	$8,922,319
Total current liabilities	$14,639,667	$11,472,074	$8,812,230

 

Transaction Highlights - Consolidated Aerospace Finance Corporation

Scalable Consolidation Strategy

• Following the Transaction, CAFC intends to focus on a disciplined roll-up strategy of accretive acquisitions of businesses in the aerospace sector

• Fragmented aviation and aerospace industry is poised for consolidation by experienced operators and supported by trends of retiring business owners accelerating succession plans

• Enhancing shareholder returns through prudent use of leverage

Compelling Investment Opportunity

• FluroTech's initial transaction shall be the acquisition of GS Heli, a provider of specialized helicopter aviation services and logistical support

Focus on Operational Efficiency to Drive Re-Rating in the Public Markets

• Acquire businesses at EV/EBITDA multiples based on trailing EBITDA and taking into account required annual maintenance capex and its effect on free cash flow, and seek to achieve a premium multiple by re-rating in the public markets

• Focus on driving margin expansion utilizing deep domain operational experience in the aviation and aerospace industry to streamline acquired company operations

• Opportunity to establish future quarterly dividend from portion of free cash flow from operations

World Class Leadership Team

• Distinguished team of aviation industry leaders with proven track record of aerospace acquisition execution capabilities in the public and private markets

Transaction Terms

The Definitive Agreement provides for a three-cornered amalgamation (the "Amalgamation"), whereby GS Heli will amalgamate with Subco pursuant to the provisions of the CBCA and the amalgamated corporation will be a wholly-owned subsidiary of FluroTech. Pursuant to the Amalgamation, all of the issued and outstanding shares of GS Heli (the "GS Heli Shares") will be cancelled and, in consideration, the former holders of GS Heli Shares ("GS Heli Shareholders") will receive an aggregate acquisition price of $65,000,000, subject to customary adjustments (the "Purchase Price"). The Purchase Price is expected to be satisfied through: (i) the net proceeds of a concurrent financing to be completed by the Corporation; (ii) $35,000,000 in senior debt (the "Bank Financing"); and (iii) $8,000,000 of the Purchase Price shall be satisfied through the exchange of GS Heli Shares for Resulting Issuer Shares (as defined below) at the deemed price per share on the closing date of the Transaction.

In connection with the Transaction, FluroTech will: (i) initially consolidate its common shares on a 15 to 1 basis effective on April 23, 2024 (as described in greater detail below) ("Initial Consolidation"); (ii) immediately prior to Closing, FluroTech will complete a second share consolidation on an approximate 26.67 to 1 basis ("Second Consolidation", and together with the Initial Consolidation and Second Consolidation, the "Consolidation"); (iii) FluroTech shall file articles of amendment (the "Share Terms Amendment") to amend its share capital to facilitate compliance under the Canada Transportation Act; and (iv) FluroTech shall change its name to "Consolidated Aerospace Finance Corporation" (the "Name Change").

Pursuant to the Definitive Agreement, certain conditions precedent must be met prior to Closing, including, but not limited to: (i) acceptance by the TSXV and receipt of other applicable regulatory approvals; (ii) receipt of the requisite approvals for the Consolidation, the Name Change, the reconstitution of the board of directors of FluroTech (the "Board Reconstitution") and the Share Terms Amendment; (iii) the requisite approval of the GS Heli Shareholders of the Amalgamation; (iv) no material adverse change in the business, affairs, financial condition or operations of GS Heli has occurred between the date of entering into the Definitive Agreement and the Closing; and (v) with respect to the Amalgamation, FluroTech shareholders holding no more than 10% of the outstanding FluroTech common shares have exercised dissent rights. There can be no assurance that the Transaction will be completed as proposed or at all.

Pursuant to Section 4.1 of TSXV Policy 5.2, FluroTech will not be obtaining shareholder approval of the Transaction as: (i) the Transaction is not a "Related Party Transaction" and does not involve any "Non-Arm's Length Parties" (as such terms are defined in the policies of the TSXV); (ii) FluroTech is without active operations and is currently listed on the NEX; and (iii) FluroTech is not subject to, and, to the best of its knowledge will not be subject to, a cease trade order on completion of the Transaction.

If all conditions to the implementation of the Amalgamation have been satisfied or waived, FluroTech and GS Heli will carry out the Amalgamation. Upon Closing of the Transaction, it is anticipated that FluroTech will carry on the business of GS Heli, addressing the needs of helicopter aviation in the Northwest Territories, Yukon, Saskatchewan, Alberta and British Columbia, and focus on subsequent acquisition of businesses in the aviation and aerospace sector and will meet the Tier 1 Initial Listing Requirements for an Industrial Issuer, such that FluroTech will be graduated from the NEX to the TSXV.

Bridge Financing

Further to the news release of the Company dated March 11, 2024, the Company intends to close a non-brokered private placement financing of common shares ("Common Shares") at a price of CDN$0.075 per Common Share (the "Offering Price"), for minimum proceeds of CDN$500,000 and maximum aggregate gross proceeds of up to CDN$1,000,000 (the "Private Placement") on or before or before April 23, 2024 (the "Closing Date").

The net proceeds of the Private Placement will be used for purposes of funding the costs associated with completing the Transaction, including costs related to audit fees, legal fees, preparation of necessary documentation for the Transaction and due diligence costs, and for working capital and general corporate purposes. For further information, please see the Company's profile at www.sedarplus.ca.

Completion of the Private Placement is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory approvals including the approval of the TSXV. The TSXV has not approved the Offering Price or the Private Placement and as such these remain subject to change. The Common Shares will be subject to a statutory hold period of four months plus one day from the Closing Date, in accordance with applicable securities legislation.

In connection with the Private Placement, the Company intends to pay finder's fees in cash to finders for subscribers that finders introduced to the Company (the "Finder's Fees"). The Finder's Fees remains subject to acceptance by the TSXV.

Consolidation

Prior to the closing of the Private Placement, the Company intends to complete the Initial Consolidation in order to complete the Private Placement on acceptable terms to the market. The Company has 120,685,541 Common Shares currently outstanding and after the Consolidation expects to have 8,045,702 Common Shares outstanding. The record date for the Consolidation is April 19, 2024.

The Consolidation was approved by the shareholders of the Company on March 20, 2023, but remains subject to is acceptance by the TSXV.

Fractional post-Consolidation Common Shares will not be issued to shareholders. Where the Consolidation would otherwise result in a shareholder being entitled to a fractional Common Share, the number of post-Consolidation Common Shares issued to such shareholder shall be rounded up to the next greater whole number of Common Shares if the fractional entitlement is equal to or greater than 0.5 and shall be rounded down to the next lesser whole number of Common Shares if the fractional entitlement is less than 0.5. In calculating such fractional interests, all Common Shares held by a beneficial holder shall be aggregated.

Trading Halt

In accordance with TSXV Policy 5.2, the common shares of FluroTech are currently halted from trading and are expected to remain halted pending the requirements of Section 2.5 of TSXV Policy 5.2 being met.

About FluroTech

FluroTech was incorporated under the ABCA on May 24, 2018. FluroTech is currently inactive with limited operations and the common shares of FluroTech are currently listed on the NEX. FluroTech has no commercial operations and no assets other than cash, operating losses and is a reporting issuer in the provinces of Alberta and British Columbia.

Additional Information

Additional information concerning the Transaction and any connected transactions of Subco, GS Heli and the Resulting Issuer will be provided in subsequent news releases and in FluroTech's management information circular or filing statement to be prepared and filed in connection with the Transaction, which will be available under FluroTech's SEDAR+ profile at www.sedarplus.ca.

All information contained in this press release with respect to Subco and GS Heli was supplied by or from the respective party for inclusion herein, without independent review by the other party, and each party and its directors and officers have relied on the other party for any information concerning the other party.

Completion of the Transaction is subject to a number of conditions, including but not limited to, TSXV acceptance and, if applicable pursuant to TSXV requirements, majority of the minority shareholder approval, the satisfaction or waiver of all conditions precedent in the Definitive Agreement and closing conditions customary to transactions of this nature. Where applicable, 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 or filing statement 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 a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the Transaction and has neither approved nor disapproved the contents of this press release.

For further information contact:

FluroTech Ltd.
c/o BLG LLP
Centennial Place, 520 3 Ave SW Suite 1900
Calgary, AB T2P 0R3
Attention: Michael Rodyniuk, President & CEO
E-mail: mrod@cafincorp.com

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Information

This press release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as "may", "should", "anticipate", "will", "estimates", "believes", "intends" "expects" and similar expressions which are intended to identify forward-looking information or statements. More particularly and without limitation, this press release contains forward looking statements and information concerning: the Transaction; the proposed structure by which the Transaction is to be completed; the completion of the Initial Consolidation; the completion of the Name Change, the Board Reconstitution, the Share Terms Amendment and the Consolidation; that the Transaction will constitute the "Reactivation" of FluroTech under the policies of the TSXV; satisfaction of the Purchase Price (including the Bank Financing); the payment and approval of the Finder's Fees; and the closing of the Private Placement. FluroTech cautions that all forward-looking statements are inherently uncertain, and that actual performance may be affected by a number of material factors, assumptions and expectations, many of which are beyond the control of FluroTech, including expectations and assumptions concerning FluroTech, the Transaction, the timely receipt of all required TSXV and regulatory approvals and exemptions (as applicable) and the satisfaction of other closing conditions in accordance with the terms of the Definitive Agreement. The reader is cautioned that assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted as a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of FluroTech. The reader is cautioned not to place undue reliance on any forward-looking information. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

The forward-looking statements contained in this press release are made as of the date of this press release, and FluroTech does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by securities law.

This press release refers to certain non-GAAP measures, including "EBITDA", and to certain operating metrics in the industry. Management uses these non-GAAP measures, including industry metrics, to analyze operating performance and results, and therefore may be considered useful information by investors. These non-GAAP measures, including industry metrics, are furnished to provide additional information, do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. They should not be considered in isolation nor as a substitute for measures of performance prepared in accordance with GAAP. In this press release "EBITDA" is defined to mean net income (loss) before interest expense (net), income tax expense (recovery) depreciation and amortization and share based compensation.

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