Bearskin Airlines sold for $32.5M.

• Position: NEWS

It's a business relationship that's been two decades in the making.

But more than a few heads were turned when iconic Bearskin Airlines signed a letter of intent to sell its operations and assets to Exchange Income Corporation (EIC) of Winnipeg in a $32.5-million deal.

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EIC will fund the deal through debt financing of the privately owned regional airline, headquartered in Sioux Lookout and Thunder Bay.

Ten per cent of the purchase price will be paid through the issuance of shares in EIC.

Bearskin owners Harvey and Cliff Friesen, president and executive vice-president respectively will continue in their current roles after the acquisition is finalized, which is expected in early December, pending Transport Canada approval.

EIC president and CEO Mark Pyle has known the Friesens for 20 years as their former banker.

"We've had discussions over time as they've seen what we've done with the other airlines. We've gone back and forth, and talked about it for a couple of years."

Talks turned serious in the last few months.

Pyle and EIC will bankroll the Friesens while giving them full autonomy to run the airline and investigate potential new markets to expand into Minneapolis, as well as other parts of Ontario.

"This is an ability for that company to continue to do what it's done in the past but perhaps do it better and faster."

Founded in 1963, Bearskin generated $47 million in revenue last year.

Pyle said Bearskin has been a successful business and the sale shouldn't significantly change their day-to-day operations. "I think they viewed us as a good steward of their assets."

Pyle said acquisitions in aviation tend to have a poor track record as new management tends to change the business. But their other airlines have grown because they've been left under their original ownership.

"Our model is so much different, we're buying companies to hold them."

Pyle said EIC, a $300-million company with only 12 employees, doesn't bring any special expertise in airline management but they can access the market and fund good opportunities.

"We have a lot of respect for Cliff, Rick and Harv and the whole management team, and I expect we'll look at different expansion opportunities in near future," said Pyle.

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