Gama Aviation Regulatory News (GMAA)

18th October, 2023.

The information contained within this announcement is deemed to constitute inside information as stipulated under Article 7 of the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018.

Gama Aviation Plc (AIM: GMAA)("Gama Aviation" or the "Company" or "Group")

Gama Aviation agrees to sell Jet East for US$131m.

Gama Aviation Plc (the "Company") today announces that it has conditionally agreed to sell the Group's US MRO Business, Gama Aviation (Eng) Inc. ("GAEI"), trading as Jet East ("Jet East"), to West Star Aviation Enterprises, LLC ("West Star Aviation") for a value of approximately US$131 million on a cash free/debt free basis with normalised working capital ("Disposal").

Deal highlights

· The deal ascribes an enterprise value of US$131 million to the Group's US MRO business.

· Net proceeds from the sale of Jet East are approximately US$100 million.

· The sale is contingent on Shareholder approval at a General Meeting which is to take place at 9:00am on 3 November 2023 and the transaction is expected to be completed shortly thereafter.

· Irrevocable undertakings to vote in favour equivalent to 50.3% of the issued share capital (sufficient to pass the resolution) have been received.

· Directors of the Company will review the capital requirements of the Group, and such constraints on returning funds to Shareholders as may apply, and expect to return net proceeds to Shareholders envisaged to be not less than 55 pence per share on a fully diluted basis including options.

· The sale will materially benefit the Group's stakeholders.

Marwan Khalek, Group Chief Executive, Gama Aviation Plc commented;

"After interest from several parties, we are delighted to have agreed the sale of Jet East to West Star Aviation. I believe the new owner will be an excellent guardian of our valued strategic relationships and, importantly, the people that deliver critical services to our customers every day.

"The Board and I have long since believed that the Group has significant underlying value and the resultant proceeds from this transaction clearly affirm this perspective. Collectively we will now consider how the net proceeds of the transaction will be deployed to further the strategic ambitions of the Group, support the continued hard work of our talented teams as well as rewarding the loyalty and support of our Shareholders from this significant value realisation event.

"This deal provides Gama Aviation the appropriate capital to allow us to capture the tremendous opportunities we have in our Special Mission, Technology & Outsourcing and Business Aviation strategic business units. It is an exciting new chapter for us all as we celebrate our 40th anniversary as a business.

"Finally, I would like to thank the entire Jet East team for their considerable efforts and achievements under the leadership of Stephen Maiden. We wish them continued success as they embark on their own new chapter."

Background and Rationale to the Disposal of Jet East

The Group first provided aircraft maintenance services in the United States in 2012. In January 2021 - following the 2020 disposal of its US aircraft management business to WheelsUp - the Company announced the acquisition of Jet East (a US full-service business aviation aircraft maintenance provider). The aggregate consideration payable by the Group was up to US$11.9 million, including the assumption of debt. The transaction structure also involved the management team of Jet East participating in a shadow equity scheme.

The activities of Jet East were combined with the existing maintenance activities of the Group in the US, with the resulting entity trading as Jet East. In 2020, the existing US MRO business generated $38.6 million of revenues and in the same period the Jet East business generated $28.2 million of revenues.

Jet East has subsequently performed strongly, benefitting from a highly committed management team, a complementary nationwide network of operations, strong customer relationships and cost savings from rationalisation of operations. There has also been considerable investment totalling some US$25 million to enable growth including setting up new facilities in Millville, Las Vegas and Statesville.

Jet East reported revenues of US$79.2 million in 2021 and adjusted EBIT of US$(8.0) million. In 2022, Jet East reported revenues of US$118.2 million (49% constant currency growth) and adjusted EBIT of US$1.3 million. In H1 2023 Jet East reported revenues of US$70.7 million (27% growth compared with H1 2022) and adjusted EBIT of US$0.9 million.

In Q4 2022, the Company was approached by The Sterling Group, a US private equity group which owns West Star Aviation (a provider of maintenance, repair, and overhaul ("MRO") services to the business aviation industry) about the possibility of acquiring Jet East in order to combine it with West Star Aviation. Following a period of negotiation and due diligence on Jet East, the Disposal for a transaction value of US$131 million has been agreed between the Company and The Sterling Group.

Net Proceeds

The net proceeds of the Disposal to be received by the Company are expected to be approximately US$100 million, after (i) repayment of third-party debt obligations of Jet East together with transaction costs (such third-party debt obligations of Jet East plus transaction costs totaling approximately US$24.0 million); and (ii) amounts due to Jet East management under the shadow equity scheme (totaling US$7.7 million). The Group does not expect to pay material taxes on the Disposal.

As previously reported, as at 21 September 2023, the Group had cash balances of US$9.1 million and as at 30 June 2023 net debt (exclusive of lease obligations) of US$12.1 million including US$12.5 million of indebtedness in Jet East) after successful re-financing of the Group's medium term loans and revolving credit facility as previously reported. Going forward, as a result of the Disposal, the Company will not benefit from the anticipated positive results of Jet East and will not be able to recover certain central costs previously allocated to Jet East. The Group also has a number of forthcoming financial commitments which will require capital expenditure and usage of cash, including those required to mobilise the recently won air ambulance and offshore helicopter special mission contracts.

Immediately following completion of the Disposal, the Company is expected to have gross cash balances of approximately US$99 million and net cash (exclusive of lease obligations) of approximately US$88 million. This net cash balance is expected to decline in future months reflecting the operating cash outflows (including the impact of the loss of recovery of cost allocation to Jet East) and other financial commitments.

Following completion, the Directors of the Company will review the current and future capital requirements of the Group, and such constraints on returning funds to shareholders as may apply, and expect to return a substantial proportion of the net proceeds to Shareholders which is expected to be not less than 55 pence per share on a fully diluted basis including options. Further details of the amount and method of such return will be sent to Shareholders in due course.

Shareholder Approval

In view of the size of the Disposal relative to the existing size of the Company, the Disposal constitutes a fundamental disposal pursuant to Rule 15 of the AIM Rules for Companies. Consequently, it is conditional on the approval of more than 50 per cent. of Shareholders voting at the General Meeting to be held on 3 November 2023.

For the Disposal to proceed, the Company requires Shareholder approval. A shareholder circular ("the Circular") in relation to the proposed Disposal will be issued today. The Circular will be sent to the Company's Shareholders (other than those who have elected or who have been deemed to have elected for notification by electronic communication).

Further to this the Circular will be available on the Company's website: www.gamaaviation.com/investors/reports-and-presentations/

The Circular contains further information on the Disposal and a notice convening the General Meeting of the Company to be held at 9:00 am. on 3 November 2023 at Gama Aviation Plc, First Floor, 25 Templer Avenue, Farnborough, Hampshire, GU14 6FE.

The Directors of the Company have received irrevocable undertakings from holders of 32,182,743 Ordinary Shares in aggregate (equivalent to 50.3 per cent. of the issued share capital and total voting rights of the Company) to vote in favour of the Disposal. As the level of these undertakings exceeds 50 per cent. of the issued share capital and total voting rights of the Company the resolution is expected to be passed and the Disposal is expected to complete shortly following the General Meeting.

Dial Partners LLP is acting is Lead Financial Adviser to the Company on the sale.

Contacts

Gama Aviation Plc

Marwan Khalek, Chief Executive Officer

Michael Williamson, Chief Financial Officer

Tel: +44 1252 984 515

Dial Partners LLP, Lead Financial Adviser

Angus Russell, Partner

Sandor de Jasay, Managing Director

Tel: +44 207 098 7098

WH Ireland, Nominated Adviser and Broker

James Joyce, Director

Tel: +44 207 220 1666

Camarco (PR)

Ginny Pulbrook or Geoffrey Pelham-Lane

Tel: +44 (0) 203 757 4992

Gama Aviation - Notes to Editors

Founded in 1983 with the simple purpose of providing aviation services that equip its customers with decisive advantage, Gama Aviation Plc (LSE AIM: GMAA) is a highly valued global partner to blue chip corporations, government agencies, healthcare trusts and private individuals.

The Group has three global divisions: Business Aviation (Aircraft Management, Charter, FBO & Maintenance), Special Mission (Air Ambulance & Rescue, National Security & Policing, Infrastructure & Survey, Energy & Offshore); and Technology & Outsourcing (Flight Operations, FBO, CAM software, Flight Planning, CAM & ARC services).

More details can be found at: http://www.gamaaviation.com/

ENDS