Volatus Aerospace Secures $15 Million in Financing from Major Institutional Investors

Rhea-AI Summary

Volatus Aerospace (TSXV:FLT.V)(OTCQX:TAKOF) has secured $15 million in financing from major institutional investors. The funding comprises $7.5 million from Investissement Québec as a secured convertible debenture and $7.5 million from Export Development Canada (EDC) as a term loan. This financing will enable Volatus to expand operations and accelerate development of aerial solutions in key industries.

The company plans to relocate its head office to Québec and develop new activities there, including AI-based aerial solutions and unmanned delivery projects. Volatus intends to use the proceeds for debt repayment, inventory financing, capital expenditures, and working capital needs. The financing is expected to help Volatus achieve near-term profitability goals and support growth initiatives.

Positive

• Secured $15 million in financing from major institutional investors
• Expansion of operations and acceleration of aerial solutions development
• Relocation of head office to Québec, potentially benefiting from local industrial clusters and R&D support
• Repayment of existing $6 million senior loan
• Potential for near-term profitability and growth initiatives

Negative

• High interest rates on new financing (12.5% on debenture, Prime+8% on term loan)
• Potential dilution for existing shareholders due to convertible debenture
• Increased debt load with new financing

Investissement Québec and Export Development Canada (EDC) each provide $7.5M

TORONTO, ON / ACCESSWIRE / October 21, 2024 / Volatus Aerospace Inc. (TSXV:FLT.V)(OTCQX:TAKOF) (Frankfurt:A3DP5Y/ABBA.F) ("Volatus" or the "Company") is pleased to announce the successful closing of a total of $15 million in combined funding from Investissement Québec and Export Development Canada ("EDC") (together, the "New Financing").

This New Financing will allow Volatus to expand its operations and accelerate the development of its aerial solutions across key core industries such as oil and gas, energy utilities, public safety, and infrastructure. The total funding is comprised of $7.5 million from Investissement Québec in the form of a secured convertible debenture (the "Debenture") and $7.5 million from EDC in the form of a term loan (the "Term Loan").

This New Financing provides a strong foundation for Volatus to secure and advance its growth strategy. "We are honored to have the support of both Investissement Québec and Export Development Canada," said Glen Lynch, CEO of Volatus. "These financings will enable the Company to achieve our near-term profitability goal and reinforce our base from which to resume our internal and external growth initiatives".

The Debenture, with a term of five years, will be senior secured and convertible at the holder's option into Volatus common shares (the "Common Shares") at a Conversion Price of $0.202 per Common Share ($0.36 Volatus referenced share price prior to the DDC Merger, adjusted). The Debenture will bear interest at a rate of 12.5% per annum until its maturity date on October 21, 2029 (the "Maturity Date"). The interest portion for the first three-year period will be initially non-cash interest, and capitalized semi-annually, and convertible, at the holder's option at the then market price of the Common Shares as permissible by securities regulations and the rules of the TSX Venture Exchange (the "TSXV"), while the interest portion for the last two years will be payable, semi-annually, in cash until the Maturity Date, unless the Debenture is otherwise converted at the Conversion Price, at any time and at the holder's option before the Maturity Date.

Volatus has committed to move back its head office to Québec and further develop identified future new activities based in Québec. These include longer-term developmental initiatives such as AI-based aerial solutions as well as unmanned delivery and cargo developmental projects. The Company has already begun scoping such initiatives. The Company felt that Québec's unique industrial clusters, strengths and ecosystems in many areas such as aerospace, AI, air freight and cargo, as well as its R&D support programs, further supports this move to Quebec.

"Investissement Québec is proud to support Volatus's growth. This investment will enable the company not only to relocate its head office and most of its operations to Québec, but also to optimize its research and development initiatives and advance its artificial intelligence projects. This financing operation clearly reflects our desire to actively contribute to the development of strategic sectors of our economy," said Bicha Ngo, President and CEO of Investissement Québec.

The Term Loan from Export Development Canada (EDC) will be senior secured and non-convertible with an interest rate of Prime+8% and a term of four years with a balloon payment of up to $4.5M at the end of the fourth year on 21^st October 2028.

"In collaboration with Investissement Québec, we are pleased to support Volatus with debt financing to help the Company advance the development of its cutting-edge aerial solutions," said Guillermo Freire, Senior Vice-President, Mid-Market Group. "Through its innovative technologies, Volatus is shaping the future of aerospace operations for the benefit of an array of sectors, and we look forward to seeing the impact of their continued growth."

The Company intends to use the net proceeds from the offering towards repayment of existing debt, financing inventory, capital expenditures, working capital needs of the Company directly associated with its export contract, and general corporate purposes. A currently outstanding senior loan of approximately $6 million provided by a major Canadian bank will be repaid from the proceeds of the New Financing. EDC and IQ will share proportionally in the senior security ranking. Certain existing aircraft-related financing debt will remain secured in priority to such loans.

Rabaska Partners acted as exclusive advisor to the Company. Various legal and other advisory expenses are expected to total approximately $1.5M.

The Debenture will not be listed on a public stock exchange. The Debenture and the Common Shares issuable upon conversion or redemption of the Debenture are subject to a statutory hold period of four months plus a day from the date of issuance of the Debenture in accordance with applicable securities legislation and policies of the TSXV. Additionally, the Common Shares issuable upon the conversion or redemption of the Debenture will not be listed on a U.S. public stock exchange and have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration.

The New Financing marks a significant milestone for Volatus as it continues to expand its presence in the global aerial solutions market. The Company remains focused on leveraging these funds to drive sustainable growth and advance its technology offerings.

About Volatus Aerospace Inc.
Volatus is a leader in innovative global aerial solutions for intelligence and cargo. With over 100 years of combined institutional knowledge in aviation, Volatus provides solutions for a wide array of industries, including oil and gas, energy utilities, public safety, and infrastructure. The Company is committed to enhancing operational efficiency, safety, and sustainability through cutting-edge aerial technologies.

For more information, visit www.volatusaerospace.com

About Investissement Québec
Investissement Québec's mission is to play an active role in Québec's economic development by stimulating business innovation, entrepreneurship and business acquisitions, as well as growth in investment and exports. Operating in all of the province's administrative regions, Investissement Québec supports the creation and growth of businesses of all sizes with investments and customized financial solutions. It also assists businesses by providing consulting services and other support measures, including technological assistance available from Investissement Québec - CRIQ. In addition, through Investissement Québec International, Investissement Québec prospects for talent and foreign investment, and assists Québec businesses with export activities.

About Export Development Canada (EDC)
Export Development Canada (EDC) is a financial Crown corporation dedicated to helping Canadian businesses make an impact at home and abroad. EDC has the financial products and knowledge Canadian companies need to confidently enter new markets, reduce financial risk and grow their business as they go from local to global. Together, EDC and Canadian companies are building a more prosperous, stronger and sustainable economy for all Canadians.

For more information and to learn how we can help your company, call us at 1-800-229-0575 or visit www.edc.ca

Contact Details
Abhinav Singhvi, CFO
abhinav.singhvi@volatusaerospace.com
+1 833-865-2887

Media Contact
Danielle Gagne
Head of Marketing and Communications
Danielle.gagne@volatusaerospace.com

FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Such forward-looking information includes, but is not limited to, information with respect to our objectives and the strategies to achieve these objectives, as well as information with respect to our beliefs, plans, expectations, anticipations, assumptions, estimates and intentions, including, without limitation, statements concerning the anticipated use of net proceeds from the New Financing. This forward-looking information is identified by the use of terms and phrases such as "may", "will", "would", "should", "could", "expect", "intend", "estimate", "anticipate", "plan", "foresee", "believe", and "continue", as well as the negative of these terms and similar terminology, including references to assumptions, although not all forward-looking information contains these terms and phrases. Forward-looking information is provided for the purposes of assisting the reader in understanding the Company and its business, operations, prospects, and risks at a point in time in the context of historical trends, current condition and possible future developments and therefore the reader is cautioned that such information may not be appropriate for other purposes. Forward-looking information is based upon a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those that are disclosed in, or implied by, such forward-looking information. These risks and uncertainties include, but are not limited to, risks related to the New Financing and the following risk factors which are discussed in greater detail under "Risk Factors" in the Company's circular document available on SEDAR+ at http://www.sedarplus.ca.

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.

TSXV: FLT.V

SOURCE: Volatus Aerospace Inc.

View the original press release on accesswire.com

FAQ

How much financing did Volatus Aerospace (TAKOF) secure and from whom?

Volatus Aerospace secured $15 million in financing, with $7.5 million from Investissement Québec and $7.5 million from Export Development Canada (EDC).

What are the terms of the convertible debenture issued by Volatus Aerospace (TAKOF)?

The convertible debenture has a 5-year term, 12.5% annual interest rate, and is convertible into common shares at $0.202 per share. Interest is capitalized for the first three years and payable in cash for the last two years.

How does Volatus Aerospace (TAKOF) plan to use the new financing?

Volatus plans to use the financing for debt repayment, inventory financing, capital expenditures, working capital needs associated with export contracts, and general corporate purposes.

What strategic move is Volatus Aerospace (TAKOF) making as part of this financing deal?

Volatus has committed to relocate its head office to Québec and develop new activities there, including AI-based aerial solutions and unmanned delivery projects.