-Acquisition provides revenue and cash flow diversification within
Exchange's aviation segment
WINNIPEG, Feb. 28, 2013 /CNW/ - Exchange Income Corporation (TSX: EIF)
(the "Corporation"), announced today that it has signed a stock
purchase agreement to acquire all of the shares of Regional One, Inc.,
a privately-owned US company that is a leading provider of aircraft and
engine aftermarket parts to regional airline operators around the
world. The acquisition is valued at approximately US $80 million,
subject to adjustments for taxes, 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 the
Corporation's earnings per share and free cash flow per share. The
closing of the transaction is subject to receipt of regulatory
approvals and other standard conditions. The transaction is expected to
close by April 1, 2013.
"The acquisition of Regional One will provide product and geographical
diversification of revenue and cash flow within our aviation segment
and is strategic on a number of levels," said Mr. Mike Pyle, President
and CEO of Exchange Income Corporation. "Most notably, it provides a
proxy for vertical integration into one of the major expense categories
of our aviation segment. Equally important, it can generate offsetting
cash flow to mitigate price increases in aircraft and parts. We look
forward to welcoming Regional One into our operations."
Doron Marom, the founder of Regional One stated, "I am very proud of the
significant growth and development of Regional One since its inception
in 2004. The quality of our people and operations has enabled Regional
One to become a leader in the regional aircraft and engine aftermarket
parts industry and we see the sale to Exchange Income Corporation as
the natural progression to further growth. The Corporation's track
record with their other 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 Exchange Income Corporation brings yet still enables us to
keep our core culture and values that have driven Regional One to its
current level of success. I'm looking forward to continuing to be the
CEO and oversee Regional One in its next chapter."
The purchase price is approximately US $80 million, subject to
adjustments for taxes, which is based on an EBITDA multiple that is
within the range of prior acquisitions by the Corporation.
25% 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. This transaction contains
earn out provisions which are contingent on Regional One achieving
certain performance milestones in order for the maximum purchase price
to be paid.
Regional One was founded in 2004 and has three main revenue streams
being (i) direct sales of parts, aircraft, engines and other related
equipment to regional airlines; (ii) consignment sales of customers'
surplus parts inventory; and (iii) leasing of aircraft, engines and
equipment to regional airlines.
Regional One operates out of a 60,000 square foot office and warehouse
facility in Miami, Florida.
Regional One has customers worldwide.
Over the last 5 years Regional One has had annual average growth of 25%.
In 2011, Regional One generated US $31.6 million in revenue.
"Consistent with our traditional acquisition criteria, Regional One 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 free cash flow. To sustain this
performance, we have retained key members of Regional One management
through long-term employment contracts."
Exchange will host a conference call today, February 28, 2013, at 10:00
am eastern to discuss its financial results for the three and 12-month
periods ended December 31, 2012. The Corporation's management will also
review the acquisition of Regional One.
All interested parties can join the conference call by dialing
1-888-231-8191 or 647-427-7450. Please dial in 15 minutes prior to the
call to secure a line. The conference call will be archived for replay
until Thursday, March 7, 2013 at midnight. To access the archived
conference call, please dial 1-855-859-2056 and enter the encore code
A live audio webcast of the conference call will be available at www.exchangeincomecorp.ca and www.newswire.ca. Please connect at least 15 minutes prior to the conference call to
ensure adequate time for any software download that may be required to
join the webcast. An archived replay of the webcast will be available
for 365 days.
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
the operations by Perimeter Aviation, Keewatin Air, Calm Air
International, Bearskin Lake Services and Custom Helicopters, 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
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).
The statements contained in today's press release that are
forward-looking are based on current expectations and are subject to a
number of uncertainties and risks, and actual results may differ
materially. These uncertainties and risks include, but are not limited
to, the dependence of the Corporation on the operations and assets
currently owned by it, the degree to which its subsidiaries are
leveraged, the fact that cash distributions are not guaranteed and will
fluctuate with the Corporation's financial performance, dilution,
restrictions on potential future growth, competitive pressures
(including price competition), changes in market activity, the
cyclicality of the industries, seasonality of the businesses, poor
weather conditions, and foreign currency fluctuations, legal
proceedings, commodity prices and raw material exposure, dependence on
key personnel, and environmental, health and safety and other
regulatory requirements. Further information about these and other
risks and uncertainties can be found in the disclosure documents filed
by the Corporation with the securities regulatory authorities,
available at www.sedar.com.
SOURCE: Exchange Income Corporation
For further information:
President and CEO
Exchange Income Corporation
The Equicom Group Inc.
Phone: (416) 815-0700 Ext. 243