Exchange Income Corp. buys East Coast aerospace firm

Hey there, time traveller!
This article was published 13/11/2014 (3962 days ago), so information in it may no longer be current.

ON the heels of the sale of its American cell-tower company, Winnipeg-based Exchange Income Corp. has doubled down on its aerospace/aviation division with the $246-million acquisition of a major East Coast aerospace company called Provincial Aerospace Ltd. (PAL).

The St. John’s, N.L.-based company is one of the largest private-company employers in the province with about 900 people and operates one of the largest independent regional airlines in Eastern Canada.

It’s also in the maritime search and rescue business and provides that service for the Canadian government on both the east and west coasts. It also does maintenance, repair and overhaul for international clients on maritime surveillance aircraft as well as producing some of its own proprietary technology.

PAL has international operating bases in Christ Church, Barbados; Port of Spain, Trinidad & Tobago; Curacao, Netherlands Antilles; and Abu Dhabi, United Arab Emirates and owns 10 hangars at St. John’s International Airport, Halifax International Airport and Goose Bay Airport, with a further domestic operating base in Comox, B.C.

PAL has annual revenue of about $185 million.

“This is a transformative deal for our company,” said Exchange Income Corp. CEO Mike Pyle. “It’s the biggest deal we have ever done, and it puts us in the aerospace business bigger than we were with Regional One.”

Pyle was referring to the Florida company it owns that has a growing after-market business in used planes and parts.

The Winnipeg-based company also owns most of the regional airlines that operate in Manitoba, including Perimeter Air and Calm Air International.

PAL will continue to operate independently under current management at its headquarters in St. John’s.

In a statement, company CEO Brian Chafe says the deal will allow PAL to pursue large-scale contracts, including Canada’s fixed-wing search and rescue fleet.

PAL operates Provincial Airlines, which provides scheduled, charter and cargo services in Newfoundland and Labrador, New Brunswick, Nova Scotia and Quebec.

Last month, EIC sold the U.S. operations of its cell-tower construction company, WesTower, for $200 million, which included about $15 million in profit.

The PAL deal will not require additional capital to be raised. EIC is funding the acquisition with the issuance of $12 million of common shares to the vendors and the company’s available cash resources from its currently un-utilized credit facility representing approximately $234 million.

Pyle raved about the excellence of PAL’s management team, which is expected to remain in place.

He said the deal will immediately become profitable to EIC and will lower its payout ratio.

EIC was to release third-quarter financial results Wednesday evening.

Investors were anticipating more good news as EIC shares had one of their busiest trading days ever Tuesday, and shares were up close to seven per cent by mid-afternoon.

The deal is expected to close by the end of this year or early next year, pending regulatory approval.

martin.cash@freepress.mb.ca