Acasta Announces Term Sheet with Martello to Sell Stellwagen and Amendment to Its US$150 Million Credit Facility

Acasta Enterprises Inc. (TSX:AEF) (“Acasta” or the “Company”) announced today that it has entered into a non-binding term sheet (the “Term Sheet”) with Martello Finance Company Limited (“Martello”) with respect to the sale of its Stellwagen business unit (“Stellwagen”). Acasta has also entered into an amending agreement (the “Amending Agreement”) with the Company’s senior lenders under its US$150 million credit facility (the “Credit Facility”).

The Board of Directors of Acasta had previously established a committee of independent directors (the “Independent Committee”) which supervised the negotiation of the Term Sheet and the Amending Agreement. The Independent Committee will oversee the potential sale of Stellwagen and consider other alternatives to maximize value for the Company’s shareholders.

Term Sheet to Sell Stellwagen

The Term Sheet provides that the Company will sell Stellwagen to an affiliate of Martello, the previous owner of Stellwagen, in exchange for the cancellation of 26 million common shares of Acasta beneficially owned by Martello and others, representing approximately 27% of the issued and outstanding common shares, and the payment to Acasta of US$35 million (of which US$5 million will be paid ninety days following closing of the transaction). Acasta will retain the Stelloan loan portfolio which has a book value of approximately US$47.4 million. If definitive agreements have been signed and the transaction has not yet closed by March 1, 2018, the Term Sheet provides that on that date an affiliate of Martello will make a US$25 million down payment to Acasta in consideration for first-ranking security over the Stellwagen C295 aircraft assets and related deposits.

The Company will use the above-noted proceeds to reduce its indebtedness, including using at least US$25 million of the proceeds to satisfy its obligations under the Credit Facility, as discussed below.

The parties to the Term Sheet are in the process of negotiating definitive agreements, and there can be no assurance that a transaction will be completed. Any transaction will be subject to the requirements of Multilateral Instrument 61-101 – Protection of Minority Securityholders in Special Transactions.

Amendment to US$150 Million Credit Facility

The Amending Agreement has allowed Stellwagen to use the proceeds from the previously announced revolving credit and security agreement entered into with Morgan Stanley Asset Funding Inc. to support Stellwagen’s ongoing initiatives. Under the terms of the Amending Agreement, Acasta has paid down US$5 million of the US$120 million aggregate principal amount of indebtedness currently outstanding under the Credit Facility. In addition, Acasta has agreed to repay an additional US$25 million of the Credit Facility by March 1, 2018, which amount is expected to be funded from the proceeds contemplated by the Term Sheet described above.

In connection with the Amending Agreement, the Company has engaged an advisor to assist with its ongoing strategic review to maximize shareholder value.

Resignation of Director

Acasta also announced that Michael Young resigned as a director of Acasta. The Board of Directors thanks him for his contributions as a director.

Goodmans LLP is acting as legal advisor to Acasta. Osler, Hoskin & Harcourt LLP is acting as legal advisor to the Independent Committee. Stikeman Elliott LLP is acting as legal advisor to Martello. The Independent Committee also intends to engage an independent financial advisor.

Advisories:

Cautionary Note Concerning Forward Looking Statements

This news release may include forward looking statements. All such statements constitute forward looking information within the meaning of applicable securities law and are made pursuant to the “safe harbour” provisions of applicable securities laws. Forward looking statements may include, but are not limited to, statements about anticipated future events or results, including comments with respect to Company’s future business operations, financial performance and condition. Forward looking statements are statements that are predictive in nature, depend upon or refer to future events or conditions and are identified by words such as “will”, “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates” or similar expressions concerning matters that are not historical facts. Such statements are based on current expectations of the Company’s management and inherently involve numerous risks and uncertainties, known and unknown, including economic factors. The forward looking information contained in this news release is presented for the purpose of assisting readers in understanding the Company’s business and strategic priorities and objectives as at the periods indicated and may not be appropriate for other purposes. A number of risks, uncertainties and other factors may cause actual results to differ materially from the forward looking statements contained in this news release, including, among other factors, those referenced in the section entitled “Risk Factors” in the Company’s annual information form for the year ended December 31, 2016, a copy of which is available on the SEDAR website at www.sedar.com under the Company’s profile. Forward looking statements contained in this news release are not guarantees of future performance and, while forward looking statements are based on certain assumptions that the Company considers reasonable, actual events could differ materially from those expressed or implied by forward looking statements made by the Company. Readers are cautioned to consider these and other factors carefully when making decisions with respect to the Company and to not place undue reliance on forward looking statements. Circumstances affecting the Company may change rapidly. Except as may be expressly required by applicable law, Acasta does not undertake any obligation to update publicly or revise any such forward looking statements, whether as a result of new information, future events or otherwise. These cautionary statements expressly qualify all forward looking statements in this new release.

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Acasta Enterprises Inc.
Ian Kidson, 1-647-725-6707
Chief Financial Officer and Chief Operating Officer
www.acastaenterprises.com