CHC Helicopter buys Schreiner Aviation
FROM CANADIAN PRESSD
ec. 1, 2003. 02:49 PM
ST. JOHN'S, Nfld. — CHC Helicopter Corp. is buying a Netherlands-based competitor in a $129 million deal the Newfoundland company says will create the "undisputed" leader in helicopter services to the global oil and gas industry.
Newfoundland-based CHC said today the all-cash deal to acquire Schreiner Aviation Group will give it another 50 helicopters and fixed-wing aircraft serving the offshore oil and gas industry in Europe, Africa and Asia.
In announcing the acquisition, CHC said Schreiner has annual revenue of 100 million euros, or $155 million. CHC expects the debt-financed purchase will add immediately to earnings per share.
The deal also fits CHC's strategy of expanding its international business beyond the company's lucrative operations in the North Sea, giving it a presence in several countries where it isn't currently operating, said chairman and CEO Craig Dobbin.
"Even though things are going very well in the North Sea, which is our main area of commerce, this really gives us a heads-up internationally," Dobbin said in an interview from CHC's headquarters in St. John's.
Schreiner operates in many offshore growth areas where CHC doesn't do business, including the Netherlands, Nigeria, Chad, Cameroon and Indonesia. However, it was the three west African countries, where oil and gas activity is growing, that were most attractive to CHC, Dobbin said.
Particularly exciting was Nigeria, where "demand far outstrips the ability for the service operators to be able to cope," Dobbin said.
"It's a hot, hot market," he added.
Dobbin said the deal makes CHC, together with Schreiner, the world's "undisputed" leader and largest provider of heavy and medium helicopter services to the global offshore oil and gas industry, with aircraft operating in 30 countries and about 3,000 employees worldwide.
CHC's core business is in providing helicopter services to the world's offshore oil and gas companies. About two-thirds of CHC's more than $720 million in annual revenue is generated by offshore helicopter services, with the remainder coming from air ambulance, search and rescue, onshore work and repair and overhaul services.
Jo Mark Zurel, CHC's chief financial officer, said Schreiner's largely institutional investors were looking to exit the helicopter business, partly because they weren't prepared to spend the capital the business needs to expand and meet growing demand.
"Schreiner is at a time in their history right now where a lot of their customers are looking for upgraded aircraft, newer aircraft," Zurel said. "They were owned by financial shareholders who were not in a position to invest in new aircraft. So for CHC, where a lot of our growth right now is coming from upgrading the fleet and providing more modern helicopters, this provides a lot of opportunity for us to take their business and grow it.
"Timing wise, it was very good."
The deal with Schreiner will add nearly 600 more employees — mostly based in the Netherlands — to CHC, bringing its total workforce to 3,000. Another 570 workers are at a minority-owned Nigerian business of Schreiner where it provides aircraft maintenance and expertise.
CHC president Sylvain Allard said there will be "some restructuring" once the Schreiner operations are fully integrated into the business, though no immediate changes are anticipated.
Allard said the deal also provides cost savings through cheaper insurance, based on CHC's better safety record which he believes should allow for better rates at Schreiner. Also, Schreiner's helicopter maintenance work, previously outsourced, can be handled in-house by existing CHC operations, Allard said.
Shares in CHC (TSX: FLY.A) gained 75 cents to $28.75 in trading today on the Toronto stock market.
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