Chorus Aviation Inc.

Decision

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Exemption from the extension take up requirements in subsection 2.32(4) of National Instrument 62-104 Take-Over Bids and Issuer Bids -- an issuer conducting an issuer bid requires relief from the requirement not to extend its issuer bid if all terms and conditions are met unless the issuer first takes up all securities validly deposited and not withdrawn under the issuer bid -- requested relief granted, subject to conditions.

Applicable Legislative Provisions

National Instrument 62-104 Take-Over Bids and Issuer Bids, ss. 2.32(4) and 6.1.

May 14, 2025

IN THE MATTER OF
THE SECURITIES LEGISLATION OF NOVA SCOTIA AND ONTARIO
(the Jurisdiction)

AND

IN THE MATTER OF
THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS
IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF
CHORUS AVIATION INC.
(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that, in connection with the proposed purchase by the Filer of a portion of its issued and outstanding Class A Variable Voting Shares and Class B Voting Shares (the Shares) pursuant to an issuer bid commenced on April 14, 2025 (the Offer), the Filer be exempt from the requirement set out in subsection 2.32(4) of National Instrument 62-104 -- Take-Over Bids and Issuer Bids (NI 62-104) that the Offer not be extended if all the terms and conditions of the Offer have been complied with or waived unless the Filer first takes up all of the Shares deposited under the Offer and not withdrawn (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Nova Scotia Securities Commission is the principal regulator for this application (the Principal Regulator);

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System (MI 11-102) is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Québec, Newfoundland and Labrador, Prince Edward Island, New Brunswick, Nunavut, Yukon and the Northwest Territories (the Passport Jurisdictions, and together with Ontario and Nova Scotia, the Jurisdictions); and

(c) the decision is the decision of the Principal Regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 -- Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a corporation governed by the Canada Business Corporations Act and is in good standing.

2. The registered and head office of the Filer is in Dartmouth, Nova Scotia.

3. The Filer is a reporting issuer in each of the Jurisdictions. The Filer is not in default of any requirement of the securities legislation of any of the Jurisdictions (Legislation).

4. The authorized share capital of the Filer consists of an unlimited number of Shares and up to 80,750,000 Preferred Shares, issuable in series. As at April 4, 2025, 26,523,017 Shares were issued and outstanding and there were no Preferred Shares outstanding.

5. The Shares are listed and posted for trading on the Toronto Stock Exchange (the TSX) under the symbol "CHR".

6. The board of directors of the Filer (Board) believes that the Offer is an advisable use of the Filer's financial resources given its available cash resources, its ongoing cash requirements and access to capital markets, as well as the fact that the Filer believes the recent trading price of its Shares is not fully reflective of the value of the Filer's business and future prospects. After giving effect to the Offer, the Filer believes that it will continue to have sufficient financial resources and working capital to conduct its ongoing business and operations and the Offer is not expected to preclude the Filer from pursuing its foreseeable business opportunities or the future growth of the Filer's business. The Offer allows the Filer to return up to $25,000,000 to holders of Shares (each, a Shareholder and collectively, Shareholders) who elect to tender their Shares while at the same time increasing the equity ownership of Shareholders who elect not to tender. Based on careful consideration of a number of factors that are described in the Circular (as defined herein), the Board determined that the Offer is in the best interests of the Filer and authorized and approved on April 4, 2025 the making of the Offer, its final pricing, the Offer, including the Circular and related documents, and the delivery of thereof to security holders.

7. The Filer commenced the Offer on April 14, 2025. The issuer bid circular dated April 14, 2025 prepared and filed by the Filer in connection with the Offer (the Circular) specifies that the Filer proposes to purchase for cancellation, by way of a modified "Dutch auction" procedure in the manner described below, up to $25,000,000 in value of its Shares (the Maximum Purchase Amount) at a purchase price of not less than $17.50 and not more than $21.00 per Share (the Price Range).

8. The Offer is made only for the Shares and not for any convertible securities. Pursuant to subsection 2.8(b) of NI 62-104, the Filer also sent the Offer to Purchase in respect of the Offer and Circular to each registered holder of convertible securities that, before the expiry of the deposit period of the Offer, are convertible into Shares. Such convertible securities may, at the option of the holder, be converted for Shares in accordance with the terms of such convertible securities prior to the expiry of the deposit period of the Offer. Shares issued upon the conversion of the convertible securities may be tendered to the Offer in accordance with the terms of the Offer.

9. The Filer expects to fund the purchase of Shares pursuant to the Offer, including all related fees and expenses, from cash on hand. The Offer is not conditional upon the receipt of any financing.

10. Holders of Shares (the Shareholders) wishing to tender to the Offer may do so in one of the following ways:

(a) auction tenders in which the tendering Shareholders specify the number of Shares being tendered at a price (the Auction Price) of not less than $17.50 and not more than $21.00 per Share in increments of $0.05 per Share (the Auction Tenders); or

(b) purchase price tenders in which the tendering Shareholders do not specify a price per Share, but rather agree to have a specified number of Shares purchased at the Purchase Price (as defined below) to be determined by the Auction Tenders (the Purchase Price Tenders).

11. Shareholders who tender Shares without making a valid Auction Tender or Purchase Price Tender will be deemed to have made a Purchase Price Tender.

12. A Shareholder may make both Auction Tenders and Purchase Price Tenders, but not in respect of the same Shares. If a Shareholder wishes to deposit Shares in separate lots at a different price for each lot, that Shareholder must complete a separate letter of transmittal (and, if applicable, a notice of guaranteed delivery) for each price at which the Shareholder is depositing Shares.

13. Any Shareholder who beneficially owns fewer than 100 Shares at the close of business on the Expiration Date (an Odd Lot Holder) and tenders all such Shares pursuant to an Auction Tender at a price at or below the Purchase Price, or pursuant to a Purchase Price Tender, will be considered to have made an odd lot tender.

14. Promptly following the Expiration Date, taking into account the number of Shares deposited pursuant to Auction Tenders and Purchase Price Tenders and the prices specified by Shareholders depositing Shares pursuant to Auction Tenders, the Filer will determine a single price per Share (the Purchase Price) (which will be not less than $17.50 and not more than $21.00 per Share) that it will pay for Shares validly deposited pursuant to the Offer and not withdrawn. The Purchase Price will be the lowest price per Share that enables the Corporation to purchase the maximum number of Shares validly deposited and not properly withdrawn pursuant to the Offer having an aggregate purchase price not exceeding the Maximum Purchase Amount. For the purpose of determining the Purchase Price, Shares deposited pursuant to a Purchase Price Tender will be deemed to have been deposited at a price of $17.50 per Share (which is the minimum price per Share under the Offer).

15. If the aggregate purchase price for Shares validly deposited and not withdrawn pursuant to Auction Tenders at Auction Prices at or below the Purchase Price and Purchase Price Tenders would result in an aggregate purchase price exceeding $25,000,000, then such deposited Shares will be purchased as follows:

(a) first, the Filer will purchase all Shares tendered at or below the Purchase Price by Odd Lot Holders at the Purchase Price; and

(b) second, the Filer will purchase Shares at the Purchase Price on a pro rata basis according to the number of Shares deposited or deemed to be deposited at a price equal to or less than the Purchase Price by the depositing Shareholders, for an aggregate purchase price of the Maximum Purchase Amount (as defined below) less the aggregate purchase price of the Shares purchased from Odd Lot Holders. All Auction Tenders and Purchase Price Tenders will be subject to adjustment to avoid the purchase of fractional Shares.

16. Until expiry of the Offer, all information about the number of Shares tendered and the prices at which such Shares are tendered will be required to be kept confidential by the depositary and the Filer until the Purchase Price has been determined.

17. All Shares purchased by the Filer pursuant to the Offer (including Auction Tenders tendered at a price below the Purchase Price) will be purchased at the Purchase Price, payable in cash. All payments to Shareholders will be subject to deduction of applicable withholding taxes.

18. Shares validly deposited by a Shareholder pursuant to an Auction Tender will not be purchased by the Filer pursuant to the Offer if the Auction Price per Share specified by the Shareholder is greater than the Purchase Price.

19. Certificates or direct registration system (DRS) advices for all Shares not purchased under the Offer (including Shares not purchased as a result of proration), or properly withdrawn before the Expiration Date, will be returned (in the case of certificates representing Shares all of which are not purchased) or replaced with new certificates or DRS advices representing the balance of Shares not purchased (in the case of certificates or DRS advices representing Shares of which less than all are purchased), promptly after the Expiration Date or termination of the Offer or the date of withdrawal of the Shares, without expense to the Shareholder. In the case of Shares tendered through book-entry transfer into the account of TSX Trust Company, as the Filer's depositary, at CDS, the Shares will be credited to the appropriate account maintained by the tendering Shareholder at CDS without expense to the Shareholder.

20. Shareholders who do not accept the Offer will continue to hold the same number of Shares held before the Offer and their proportionate ownership of Shares will increase following completion of the Offer, subject to the number of Shares purchased under the Offer.

21. On April 4, 2025, the last full trading day prior to the announcement of the Offer, the closing price of the Shares on the TSX was $18.70 per Share. On April 11, 2025, the last full trading day prior to the commencement of the Offer, the closing price of the Shares on the TSX was $18.46 per Share.

22. As of April 4, 2025, there were 26,523,017 Shares issued and outstanding and, accordingly, the Offer is for a maximum of approximately 5.39% of the total number of issued and outstanding Shares if the Purchase Price is determined to be $17.50 (which is the minimum price per Share under the Offer). If the Purchase Price is determined to be $21.00 (which is the maximum price per Share under the Offer), the Offer is for a maximum of approximately 4.49% of the total number of issued and outstanding Shares. The Offer is not conditional upon any minimum number of Shares being properly deposited under the Offer.

23. To the knowledge of the Filer, after reasonable inquiry, as at April 4, 2025 the only person who beneficially owned, or controlled or directed, directly or indirectly, more than 10% of the voting rights attached to all outstanding voting securities of the Filer (on a non-diluted basis) was BSI Dragonfly Holdings LP.

24. The Offer is scheduled to expire at 5:00 p.m. (Toronto time) on May 20, 2025 (Expiration Date).

25. If all the terms and conditions of the Offer have been complied with or waived by the Filer by the Expiration Date but the aggregate Purchase Price of the Shares validly tendered and not withdrawn pursuant to Auction Tenders and Purchase Price Tenders is less than the Maximum Purchase Amount, the Filer may wish to extend the Offer. The Filer will not extend the Offer if, all the terms and conditions of the Offer have been complied with or waived by the Filer by the Expiration Date and the aggregate Purchase Price of the Shares validly tendered and not withdrawn pursuant to Auction Tenders and Purchase Price Tenders is equal to or greater than the Maximum Purchase Amount.

26. Pursuant to subsection 2.32(4) of NI 62-104, an issuer may not extend an issuer bid if all the terms and conditions of the issuer bid have been complied with or waived unless the issuer first takes up all securities deposited under the issuer bid and not withdrawn.

27. As the determination of the Purchase Price requires that all Auction Prices and the number of Shares deposited pursuant to both Auction Tenders and Purchase Price Tenders be known and taken into account, in the event the Offer is extended, the Filer will be unable to take up the Shares deposited and not withdrawn under the Offer as of the Expiration Date prior to extending the Offer because the Purchase Price will not and cannot be known as additional Auction Tenders and Purchase Price Tenders may be made during the extension period that will impact the calculation of the Purchase Price. Accordingly, the Exemption Sought is required in connection with an extension of the Offer to enable the Filer to make a final determination regarding the Purchase Price, taking into account all Shares tendered prior to the Expiration Date and those tendered during any extension period.

28. Shares deposited pursuant to the Offer, including those deposited prior to the Expiration Date, may be withdrawn by the Shareholder at any time prior to the expiration of any extension period in respect of the Offer.

29. The Filer is relying on the "liquid market exemption" set out in subsection 3.4(b) of Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special Transactions (MI 61-101) from the formal valuation requirements applicable to issuer bids under MI 61-101 (the Liquid Market Exemption).

30. There is a "liquid market" for the Shares, as such term is defined in MI 61-101, as of the date the Offer was publicly announced because, in accordance with section 1.2 of MI 61- 101:

(a) there is a published market for the Shares (the TSX);

(b) during the 12-month period before the date the Offer was announced:

(i) the number of outstanding Shares was at all times at least 5,000,000 (excluding Shares beneficially owned, or over which control and direction was exercised, by related parties and securities that were not freely tradeable);

(ii) the aggregate trading volume of Shares on the TSX was at least 1,000,000 Shares;

(iii) there were at least 1,000 trades in the Shares on the TSX; and

(iv) the aggregate value of the trades in the Shares on the TSX was at least $15,000,000; and

(c) the market value of the Shares on the TSX, as determined in accordance with MI 61-101, was at least $75,000,000 for March 2025 (the calendar month preceding the calendar month in which the Offer was publicly announced).

31. In addition, the Filer has voluntarily obtained a liquidity opinion (the Liquidity Opinion) in accordance with section 1.2 of MI 61-101 from Scotia Capital confirming that, (a) a liquid market (as defined in MI 61-101) for the Shares exists; and (b) it is reasonable to conclude that, following the completion of the Offer in accordance with its terms, there will be a market for holders of Shares who do not tender their Shares to the Offer that is not materially less liquid than the market that existed at the time of the making of the Offer. A copy of the Liquidity Opinion is attached to the Circular.

32. Based on the maximum number of Shares that may be purchased under the Offer and the Liquidity Opinion, the Board determined that it is reasonable to conclude that, following completion of the Offer, there will be a market for holders of Shares who do not tender to the Offer that is not materially less liquid than the market that existed at the time of the making of the Offer.

33. The Circular:

(a) discloses the mechanics for the take up of, and payment for, deposited Shares;

(b) explains that, by tendering Shares under an Auction Tender at the lowest price in the Price Range or by tendering Shares under a Purchase Price Tender, a Shareholder can reasonably expect that the Shares so tendered will be purchased at the Purchase Price, subject to proration and other terms of the Offer as specified herein;

(c) discloses that the Filer has applied for relief from the requirement under section 2.32(4) of NI 62-104, that the Offer not be extended if all the terms and conditions of the Offer have been complied with or waived unless the Filer first takes up all Shares deposited under the Offer and not withdrawn;

(d) sets out the manner in which an extension of the Offer will be communicated to Shareholders and the public;

(e) discloses that Shares deposited pursuant to the Offer may be withdrawn any time prior to the expiration of any extension period in respect of the Offer;

(f) discloses the facts supporting the Filer's reliance on the Liquid Market Exemption and provides a copy of the Liquidity Opinion; and

(g) contains the disclosure prescribed by the Legislation for issuer bids.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Principal Regulator to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:

(a) Shares validly deposited under the Offer and not withdrawn are taken up and paid for, or dealt with, in the manner set out in the Circular and described above;

(b) the Filer is eligible to rely on the Liquid Market Exemption; and

(c) the Filer will issue and file a press release announcing receipt of the Exemption Sought promptly, and in any case, no later than one (1) business day following receipt of the Exemption Sought.

DATED at Halifax, Nova Scotia, this 14th day of May, 2025.

NOVA SCOTIA SECURITIES COMMISSION

"Valerie Seager"
Chair