The North West Company has entered into an agreement to acquire North Star Air (Ontario) (Thunder Bay) for approximately CAD31 million (USD22.7 million) plus closing expenses.

A unit of Cargo North (Thunder Bay), NSA is a privately-held airline that was founded in 1997. It operates a fleet of eleven PC-12s and Cessna (single turboprop) Grand Caravan 208Bs providing cargo and passenger services, primarily within northwestern Ontario, from bases at Thunder Bay, Pickle Lake, and Red Lake.

The Canadian multinational grocery and retailer said in a disclosure issued Friday that it will pay for the acquisition in cash, financed through existing credit facilities. North West added that it also expects to make immediate follow-on investments of approximately CAD14 million (USD10.2 million) for additional aircraft and hub capacity.

In connection with the acquisition and in order to hold licenses necessary to operate an air carrier, North West said it is required to comply with Canadian ownership rules under the Canada Transportation Act. As such, it will be seeking shareholder approval to create a variable voting share structure similar to that of other Canadian airlines subject to these regulations at its Annual General and Special Meeting of Shareholders on June 14, 2017.

Closing of the acquisition, which is expected to occur in June, is subject to North West shareholder approval of the proposed variable voting share structure, Toronto Stock Exchange approval, and other closing conditions.

Following this announcement, the Exchange Income Corporation (EIC) has confirmed its Calm Air (MO, Thompson) unit will cease providing North West with freighter services throughout Manitoba and in the Kivalliq region of Nunavut.

"EIC has received notice from North West that it will be transitioning the freight service to its new subsidiary in 90 days and as such, at that time we will cease our relationship as a supplier to North West," EIC said in a separate statement.