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Press release from CNW Group

Exchange Income Corporation Signs LOI to Acquire the business of Bearskin Airlines

Wednesday, September 15, 2010

Exchange Income Corporation Signs LOI to Acquire the business of Bearskin Airlines11:30 EDT Wednesday, September 15, 2010 - Acquisition valued at $32.5 million; Enables Exchange's expansion into Ontario WINNIPEG, Sept. 15 /CNW/ - Exchange Income Corporation (TSX:EIF) (the "Corporation"), announced today that it has signed a letter of intent to acquire the airline operations and assets of Bearskin Airlines, a privately-owned commuter airline providing passenger service in Ontario and Manitoba. The acquisition is valued at $32.5 million and will be funded through the issuance of the Corporation's common shares and debt financing. The acquisition is expected to be immediately accretive to Exchange's earnings per share and distributable cash per share. Pending final due diligence and satisfaction of typical conditions, the transaction is expected to close in the fourth quarter. "The acquisition of the business of Bearskin Airlines will help to accelerate the next phase of our growth and is strategic on a number of levels," said Mr. Mike Pyle, President and CEO of Exchange Income Corporation.  "Most notably, it allows our Aviation segment to expand its operations into select markets in north western Ontario that are generally under-served, including Thunder Bay, Sioux Lookout, Kenora, and Dryden.  Equally important, it complements a number of our existing routes in Manitoba, providing opportunities for increased synergies and efficiencies for all of our Aviation segment subsidiaries.  We look forward to welcoming Bearskin staff into our operations and providing continued quality, reliable service to customers across local communities in northern Manitoba and Ontario." Harvey Friesen, President and Cliff Friesen, Executive VP, and principals of Bearskin stated, "We're very proud of the growth and development of Bearskin over the last 47 years. The quality of our people and operations has taken us to new heights and we see the sale to Exchange Income Corporation as the natural progression to further growth. Their track record with their other aviation companies was a key driver in our decision to sell. It is a rare combination to find a buyer that has the access to capital that EIC brings yet still enables us to keep our core culture and values that have driven this company to its current level of success. We're looking forward to continuing as President and Executive VP overseeing Bearskin in its next chapter of growth." Acquisition Highlights -- The purchase price is $32.5 million. -- 10% of the purchase price will be paid through the issuance of Exchange Income Corporation common shares; the balance will be financed using the Corporation's senior credit facility. -- Bearskin was founded in 1963 and offers more than 100 scheduled flights daily to 17 destinations. -- In 2009, Bearskin generated $47 million in revenue. -- Bearskin's base of operations are in Sioux Lookout and Thunder Bay in Ontario and Winnipeg in Manitoba. -- Bearskin owns and operates 14 Fairchild Metro aircraft, each with capacity for 19 passengers. -- Bearskin's major hubs include Thunder Bay and Sudbury in Ontario, and Winnipeg in Manitoba. "Consistent with our traditional acquisition criteria, Bearskin was identified because it operates in defensible markets with attractive margins," said Mr. Adam Terwin, Chief Financial Officer of Exchange Income Corporation.  "We expect that the transaction will be immediately accretive to our key financial metrics, including EBITDA, cash flows, earnings per share and distributable cash.  To sustain this performance, we plan to make no changes to the labour force and retain key members of Bearskin management through long-term employment contracts." About Exchange Income CorporationExchange Income Corporation is a diversified acquisition-oriented company, focused on opportunities in the industrial products and transportation sectors which are ideally suited for public markets except for their size. The strategy of the Corporation is to invest in profitable, well-established companies with strong cash flows operating in niche markets in Canada and/or the United States. The Corporation is currently operating in two niche business segments: aviation and specialty manufacturing. The aviation segment consists of Perimeter Aviation LP, Keewatin Air LP and Calm Air International LP, and the specialty manufacturing segment consists of Jasper Tank Ltd., Overlanders Manufacturing LP, Water Blast Manufacturing LP, and Stainless Fabrication, Inc.  For more information on Exchange Income Corporation, please visit www.exchangeincomecorp.ca. Additional information relating to the Corporation, including all public filings, is available on SEDAR (www.sedar.com). For further information: <br/> <table border="0" valign="top"><tr><td align="left">Mike Pyle                                                            </td> <td align="left">Joe Racanelli</td></tr> <tr><td align="left">President and CEO                                             </td> <td align="left">Investor Relations</td></tr> <tr><td align="left">Exchange Income Corporation                            </td> <td align="left">The Equicom Group</td></tr> <tr><td align="left">(204) 982-1850                                                   </td> <td align="right">Phone: (416) 815-0700 Ext. 243</td></tr> <tr><td align="left"><a href="mailto:mpyle@eig.ca">mpyle@eig.ca </a>                                                    </td> <td align="left"><a cr="true" href="mailto:jracanelli@equicomgroup.com">jracanelli@equicomgroup.com</a></td></tr></table>