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This article was published 12/1/2012 (1991 days ago), so information in it may no longer be current.
Exchange Income Corp. is diversifying from fixed-wing aviation into the helicopter business.
The Winnipeg-based owner of a handful of regional and northern airlines has agreed to acquire Custom Helicopters of St. Andrews for $29 million.
Owned by Jim Hawes and his son, Brian, the company operates 24 helicopters from bases in St. Andrews, Thompson, Gillam and Garden Hill and has about 60 employees.
Mike Pyle, CEO of Exchange Income, said Thursday the company was careful about entering the helicopter sector.
"The helicopter business is very hard because the maintenance requirements are so high because of the very nature of how those things fly," Pyle said.
Exchange owns Perimeter, Keewatin, Calm Air and Bearskin airlines and is familiar with the value of top-notch maintenance protocols in the aviation industry.
Pyle said they saw the same level of quality and internal operating excellence at Custom Helicopter as in their fixed-wing operations.
"We've worked hard at it," said Jim Hawes, who founded the company in The Pas in the mid-1970s.
The Hawes and all Custom Helicopter's staff will continue working for the company as part of the Exchange Income deal.
Custom Helicopters does business throughout the North, servicing the mining and Manitoba Hydro sectors, and does a lot of business in isolated northern communities. Brian Hawes said both companies know each other well.
"We're next-door neighbors in Thompson and we have been flying side by side for a long time," he said.
Pyle said there are opportunities to grow the market, including in the medevac sector.
"There are lots of opportunities with First Nations," he said. "The level of crossover (between the two companies) is amazing."
Perimeter has fostered strong relationships with First Nations communities throughout the North, and Pyle said he believes leveraging that association will lead to more opportunities of which Custom Helicopter is not currently taking advantage.
There are also infrastructure advantages in the Far North, where Calm Air and Keewatin airlines have facilities that Custom Helicopters will now be able to share.
"The final piece is on the medical front," Pyle said. "We believe we are industry leaders in the air ambulance activities, particularly with Keewatin. We'll take that medical expertise and put it on the helicopter."
Additionally, there is growing mining activity in the North, and as a leading and longstanding helicopter operator, Brian Hawes said that business should grow.
The deal requires regulatory approval and is expected to close in the first quarter this year.
Of the acquisition price, $24.7 million will be paid in cash and about $4.3 million, or 15 per cent of the total, will be paid in Exchange Income shares.
"We believe that market conditions are favourable for us to begin to deploy some of the more than $200 million we have available to support our disciplined acquisition strategy," Pyle said in a statement.
Custom Helicopters' financial results were not disclosed, but Pyle said the acquisition will immediately add to Exchange's profitability.
In addition to the aviation business, Exchange has a portfolio of specialty manufacturing businesses, including Jasper Tank, Overlanders Manufacturing, Water Blast Manufacturing, Stainless Fabrication and WesTower Communications.
The latter recently signed a contract with AT& T in the United States that is worth about $300 million over the next three years.
Exchange shares (TSX: EIF) closed up 35 cents to $26.15, a new 52-week high.