Canada Jetlines (Toronto Pearson) has terminated an amalgamation agreement with Vancouver-based capital-pool company, Inovent Capital Inc, just months before its planned third quarter launch date. The agreement included a proposed CAD50 million (USD40 million) Initial Public Offering on the TSX Venture Exchange.

According to the Canadian press, the start-up's president and chief commercial officer Dave Solloway defended the move stating that Jetlines management had decided not to renew their agreement with Inovent, which had expired at the end of last month. Solloway added that the decision to break with the investment firm came after Jetlines was approached by an interested third party but could not engage with them because of an exclusivity agreement with Inovent.

Inovent, however, has rejected the start-up's termination notice claiming Jetlines "has committed numerous material and significant breaches" of their agreement, signed in September last year.

"The serious nature and extent of Jetlines’ various breaches blocked and undermined Inovent’s significant efforts to complete the transactions contemplated under the Agreement, resulting in significant damages to Inovent," it said.

Among its claims, Inovent alleges that Jetlines conducted an unauthorized private placement of its shares at a price of CAD0.50 (USD0.40) while the investment firm was trying to raise money “at as much as 300% higher than that.”

Jetlines management, however, has rejected Inovent's claims as "without merit" adding that it believes that it acted with "appropriate care, diligence and skill at all times."

The ULCC says it is still intent on raising CAD50 million (USD40 million) via other investors for use in launching operations in July of this year using a pair of leased B737 Classic aircraft initially. Much to Inovent management's anger, Jetlines this week unveiled its planned route network in a move airline management said was aimed at "whetting the public's appetite."

With its fleet of 16 aircraft in place - expected in mid-2018 - Jetlines plans to establish three Canadian hubs with Vancouver International and Winnipeg International serving the country's western provinces while Hamilton, ON serves its east. International flights will be offered to Anchorage Ted Stevens, California, Nevada, Hawaii, Florida, Mexico, the Bahamas, and Jamaica.