Exchange Income Corporation Announces Amendment to Debentures to Remove the Corporation's Cash Conversion Option

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WINNIPEG, July 26, 2013 /CNW/ - Exchange Income Corporation (TSX: EIF) (the "Corporation") announced today that it has amended the terms of its 7 Year 5.50% Convertible Unsecured Subordinated Debentures due September 30, 2019 (the "September 2012 Debentures") and its 7 Year 5.35% Convertible Unsecured Subordinated Debentures due March 31, 2020 (the "March 2013 Debentures") to remove the option of the Corporation to pay cash to the holders of such debentures who have exercised the conversion privilege attached to such debentures.

The September 2012 Debentures and the March 2013 Debentures are convertible into Common Shares at the option of the holder.  Section 5.12 of each of the trust indentures relating to the September 2012 Debentures (the "September Trust Indenture") and the March 2013 Debentures (the "March Trust Indenture"), respectively, provided for a "cash conversion option" in favour of the Corporation, which permitted the Corporation, upon the exercise of the conversion right attaching to the September 2012 Debentures or the March 2013 Debentures, to pay cash to the holder of such debentures in lieu of Common Shares.

The other series of debentures of the Corporation do not provide for a cash conversion option.  International Financial Reporting Standards require that the cash conversion option be treated as an "embedded derivative".  As the Corporation does not intend to exercise the cash conversion option relating to the September 2012 Debentures and the March 2013 Debentures, the Corporation determined that accounting for the cash conversion option as an embedded derivative unnecessarily complicates the accounting treatment of such debentures in the Corporation's financial statements.

Pursuant to supplemental trust indentures, the Corporation amended the September Trust Indenture and the March Trust Indenture to remove the cash conversion option and other consequential amendments.  As the amendments do not affect the rights of the indenture trustee or the holders of the September 2012 Debentures or the March 2013 Debentures, the amendments did not require the approval of the holders of such debentures.  Copies of the supplemental indentures are available for review at www.sedar.com.

About Exchange Income Corporation 

The 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 the operations by Perimeter Aviation, Keewatin Air, Calm Air International, Bearskin Lake Air Service, Custom Helicopters and Regional One, and the specialty manufacturing segment consists of the operations by Jasper Tank, Overlanders Manufacturing, Water Blast Manufacturing, Stainless Fabrication and WesTower Communications. For more information on the Corporation, please visit www.ExchangeIncomeCorp.ca.

Additional information relating to the Corporation, including all public filings, is available on SEDAR.

SOURCE: Exchange Income Corporation

For further information:

Mike Pyle
President & CEO
Exchange Income Corporation 
Phone: (204) 982-1850 
mpyle@eig.ca

Joe Racanelli
Investor Relations
The Equicom Group Inc.
Phone: (416) 815-0700 Ext. 243
jracanelli@equicomgroup.com


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