Prosys Tech will acquire nine aircraft engines from Aeronautics Fund, rename to AFD Aero, and raise up to $4.75 million via a private placement. The reverse takeover requires TSX-V approval and a 40:1 share consolidation.
Prosys Tech Corporation will acquire nine aircraft engines from Aeronautics Fund SCA SICAV-RAIF, change its name to AFD Aero Corporation, and list on the TSX Venture Exchange under a reverse-takeover structure, the company announced Thursday.
The transaction, valued at a maximum $25.6 million, will be paid through the issuance of about 39.4 million post-consolidation shares at a deemed price of $0.65 each. Prosys will also consolidate its existing shares on a 40-for-1 basis and raise between $3.5 million and $4.75 million through a private placement of units. Each unit consists of one common share and a warrant exercisable at $0.75 for 18 months.
A separate $6 million revolving credit facility, secured by the engines, will be arranged with Canadian institutions, the company said. The funds will go toward acquiring new engines and maintaining the existing portfolio.
The target assets are CFM56 engines leased to operators of Airbus A320 and Boeing 737 narrow-body aircraft, the largest fleet type in service globally. AFD focuses on buying, managing and monetizing aeronautical assets – mainly engines and spare parts – through leasing, dismantling and recycling.
Laurent Biousse, AFD's co-founder and CEO, said the deal marks a milestone in AFD's development. "Montreal was the natural choice due to its position as a leading aerospace hub, the strength of its industrial and maintenance ecosystem, and its access to North American capital markets," he said in a statement. Biousse will become CEO of the resulting issuer upon closing.
The management team will also include Stephan Woestelandt as COO, Jérôme Guichard as vice-president of trading and leasing, Alain Gafundi as vice-president of asset management, Richard Marganne as vice-president of business development, and Georges Hébert and Kerrigan Turner as continuing directors. All have backgrounds in aviation, banking or capital markets.
The transaction is arm's length and subject to several conditions: completion of due diligence, the minimum private placement, the credit facility, approval from the TSX Venture Exchange, and approval by Prosys shareholders at an annual and special meeting. A request for an exemption from sponsorship will be filed with the exchange.
If completed, a maximum of 51.4 million common shares will be outstanding after the maximum private placement, with about 2.7 million shares held by current Prosys shareholders. A finder's fee of 1.97 million post-consolidation shares will be paid to arm's length parties. Up to 5.1 million options may also be issued.
"Completion of the Transaction is conditional upon, among other things, obtaining the consent of the Exchange and, if applicable, the approval of the disinterested shareholders," the company noted. "There can be no assurance that the Transaction will be completed or that it will be completed in its proposed form."
The company cautioned that trading in its securities should be considered highly speculative. Additional details will be provided in a subsequent filing statement or management proxy circular.
A shareholder meeting date has not yet been set.
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