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Press release from CNW Group

Exchange Income Corporation to acquire Westower Communications for $79 million and enters into a new $235 million long- term debt facility

Wednesday, March 09, 2011

Exchange Income Corporation to acquire Westower Communications for $79 million and enters into a new $235 million long- term debt facility19:07 EST Wednesday, March 09, 2011NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES- Acquisition will triple the size of Exchange's manufacturing segment - WINNIPEG, March 9 /CNW/ - Exchange Income Corporation (TSX:EIF) (the "Corporation" or "Exchange"), announced today that it has signed a letter of intent to acquire the operations and assets of Westower Communications, a privately-owned company that designs, builds, maintains and services wireless phone and other communications towers throughout North America. The acquisition is valued at CDN $79 million.The Company also announced that it has entered into a new long-term debt facility with its syndicate of banks. The facility has been increased in size from $106 million to $235 million. The increased facility reflects the Company's strong performance and includes reduced borrowing costs and a more flexible covenant package."We believe the time is ripe for us to execute the next phase of our growth strategy," said Mr. Mike Pyle, President and CEO of Exchange. "In particular, our strong balance sheet, proven acquisition model, and ready access to capital effectively position us to take advantage of existing market conditions and enhance the growth of our company. We have been very cautious in our manufacturing segment during the economic turmoil over the last three years, focusing our attention on minimizing costs and improving efficiencies. Westower provides the opportunity to again grow this segment of our business."Mr. Pyle added, "Consistent with our acquisitions track record, we have identified a company that operates as a leader in a niche market, generates positive cash flow and is expected to produce results that are immediately accretive to each of our key financial metrics, including revenue, EBITDA, and earnings per share. With continued demand for its products and services expected in the coming years as a result of ongoing investments by telecom carriers in network and infrastructure upgrades, we believe that Westower is an ideal target company and will nicely complement our existing manufacturing segment subsidiaries."Adam Terwin, Exchange's CFO, commented, "The vendor will be taking approximately 15% of the purchase price in shares of our company, and we will fund the rest from our credit facilities. The recent exercise of warrants and conversion of convertible debentures has significantly de-levered our balance sheet, and the Westower acquisition will enable us to put that capital back to work. Even after this transaction closes, we will be well below our previously stated target of secured debt of two times EBITDA. We have also increased our bank facility at this time to ensure we have access to capital to fund future acquisitions."Pending final due diligence and satisfaction of typical conditions, including regulatory approval, the acquisition is expected to close early in the second quarter.Acquisition HighlightsThe purchase price is $79 million.Approximately 15% of the purchase price will be paid through the issuance of common shares; the balance will be financed using the Corporation's senior credit facility.The purchase price represents a multiple of approximately 4.8 times the average EBITDA generated over the past three years.In 2010, Westower generated approximately $200 million in revenue.Westower was founded in 1990 and has amongst the largest market share in its industry in both Canada and the U.S.Westower has 24 regional offices, three manufacturing facilities and a total of 750 employees throughout North America.Westower's current management team will be retained through long-term contracts.Westower's operations will report directly to Darwin Sparrow, Vice President of Exchange's Manufacturing Segment.About Exchange Income Corporation Exchange 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, Calm Air International LP, and Bearskin Lake Air Service 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).Caution Concerning Forward-Looking StatementsCertain statements in this news release contain forward-looking information and are based on current expectations of the Corporation. Such forward-looking statements include statements with respect to the proposed acquisition of Westower Communications and the future financial results of the Corporation. There can be no assurance that the proposed acquisition of Westower Communications or the expected financial results will occur.  The Corporation does not assume any obligation to update or revise such forward-looking statements to reflect actual events or new circumstances, except as expressly required by applicable securities laws.  The Toronto Stock Exchange has neither approved nor disapproved the contents of this press release.For further information: Mike Pyle Joe RacanelliPresident and CEO Investor RelationsExchange Income Corporation TMX Equicom(204) 982-1850 Phone: (416) 815-0700 Ext. 243mpyle@eig.ca jracanelli@equicomgroup.com