CHC buys Schreiner for $129 million

[Mama Mangrove]

In a move long rumored to have been in the wind, Canadian Helicopter Corporation today announced in a letter of intent that it is to purchase Schreiner Airways for a cash payment of €83 million.
The first actual news that the majority of the staff of Schreiner have of their new management is the CHC web page:
CHC TO BUY SCHREINER (http://www2.ccnmatthews.com/scripts/dnrp/release.asp?d=/cnrpxml/2003/12/1/205352_1_1201200382801AM.xml&t=CHC)
How this will affect the staff and contracts is not known, but CHC and Schreiner are not in direct competition in many areas and this will now open up Schreiner's lucrative markets in the North Sea, Nigeria, Cameroon, Chad and Indonesia to CHC.

[DeltaNg]

...according to a post by Mama Mangrove on the Rumours and News section!

Anybody know anything about the implications of that?

[zalt]

http://home.businesswire.com/portal/site/google/index.jsp?

Ignoring the potential affect on CHC Europe, it will be interesting to see how the ACN operations will be tied in (if at all) with CHC Africa and CHI.

CHC issue their report on Q2 of FY04 (the current financial year) tomorrow.

Back in Oct 2002 Flight reported rumours that Schriener would be absorbed by OLOG or CHC. Flight favouring the latter as most likely - probably because of the competition law issues with an OLOG purchase of their only real competitor in Nigeria and Holland.

The same article however reported that Schriener were 'confident of its future' having been given indications that oil companies would welcome further bids for contracts in the Southern sector (perhaps I suspect specifically meaning the BP southern contract that CHC since retained).

[Mama Mangrove]

There have been rumors of this for over a year now, but as I mention in my News thread post, most of the staff know nothing about it.
Interestingly, CHC has just renewed its contract in Malabo. Schreiners were bidding against them for the contract and it makes one wonder if those doing the contract bids from CHC and Schreiner (or indeed Mobil) were aware of the impending take over?
I'd imagine the simple way would be to transfer the North Sea to CHCI and let them keep the name (rather like Helikopter Service and Scotia), and Nigeria, Cameroon and Chad to CHC Africa. The other complication is that Schreiner only owns 50% of Aero Contractors Nigeria, the rest being owned by the Ibru family (I think that's the case, as it used to be 40%, but they were trying to increase their stake after the Nigerian government relaxed the rules on foreign ownership of Nigerian companies).
Schreiner also has a 50% stake in Spain's largest helicopter operator, Helicsa. The next few months could be interesting, and possibly a bit bloody. as in Holland there is still some animosity between pilots and engineers of Schreiner and those formerly employed by KLM (then KLM/ERA).
After all the restructuring of Schreiner and the various sell-offs of different sections (like the simulator division) over the last few years, nobody should be really surprised that this has happened - it looks very much as if this is what the company was being prepared for.:sad:

[zalt]

Mama Mangrove

Last statement is very true: Trawling through my press cuttings, I see that by July this year, while Flight were reporting that Schreiner were looking to expand their medium fleet by investing up to Euro 13mn per annum (the AB139 being described as 'ideal'), they had been shedding 'non-core businesses' to focus on oil and gas support (a process that CEO Hein Verloop described them as halfway through) with the aim of 8% year on year growth (particularly in West Africa).

They lost Euro 434k in 2002.

I wonder if Heli-Union could be a candidate for absorbtion by OLOG or CHC? Any thoughts?

[leading edge]

Heli Union has been "due diligenced" by several operators over the last 3 or 4 years, including Bristow and PHI.

Heli Union wanted too much money at the time (in the region of $50m) and examination of their fleet led at least one operator to walk away because it was old and needed replacement.

LE

[Time Out]

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.


source (http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1070278315077&call_pageid=968350072197&col=968705923364)

[Mama Mangrove]

I've had some e-mails from friends in both companies and none of them seem to have received any word of what's happening. The Schreiner/ACN guys are confused as to what the future holds for them. A couple of guys who have quit one company to join the other wonder what it means for them.
For a long time Schreiner investors have lacked the capital and/or the will to invest the sums required to renew much of the company's aging fleet and maybe the influence of CHC will be a boon to Schreiner employees with more modern machinery giving them a better chance at more contracts. Some of their machinery in Nigeria is almost antique!
There are now sure to be some battles ahead because CHC will now be in a better position to go head to head with arch rival Bristow Helicopters in Nigeria and Den Helder.
Den Helder will probably need a lot of fat trimming from it if they are to compete effectively with Bristow from there, but they have the excellent hangars which they got when they took over KLM/ERA Helicopters and all the passenger facilities have recently been rebuilt.
In Nigeria, Bristow operates EC155s for Shell, but outside Nigeria Shell don't much seem to like Bristow, so CHC are sure to try for that contract when it's next up for grabs. Mobil/Exxon is using CHC in Malabo and Angola. Bristow have had no real competition for their Mobil contract in Qua Ibo Terminal, Nigeria for many years. Expect that to change now!
It looks like being an interesting year in the Southern North Sea and West Africa.

[Wozzappenin?]

Mama Mangroove,
You're quite right when you say that none of us knows what's happening. I am one of those workers and all I know is what I've seen on the CHC website newspage.
A number of us mushrooms have been saying that since the new senior management came in it looked as if the comapny was being got ready for sale. Some of us even mentioned it when we were visited by these men and just got a smile in return.
Yet another old company where the management used to know how to talk to its workers (because they knew every one of them) has now sold out to the big boys. I know who will suffer :(

[Mama Mangrove]

Anybody heard if CHC are actually going ahead with their take over of Schreiner in February? It all seems to have gone quiet.

Also, I see that Caverton Helicopters are still working on their hangar in Lagos, but there's no sign of any helicopters yet. Is anybody actually working for them? I thought they were going to start flying months ago according to the newspapers. Maybe they've also run out of money in the Nigerian way!

[Helipolarbear]

I hear: In Nigeria...the wheels turn slowly until they are greased!
;)

[Wavewatcher]

No official Schreiner announcement as of 31 January, but CHC magazine Rotortales carries a story about their new acquisition.
Done deal if you ask me.

[Mama Mangrove]

The news seems to be that the purchase is a bit delayed, but still expected to happen this month.

It also looks as if Caverton may be getting close to operating something soon. Expect their first helicopter, an A109E, to arrive in Lagos from Europe soon, though I don't think they have any pilots or engineers yet. I hear they're also looking at a premium fixed wing operation as a direct rival to ACN. Once they start operating it will be interesting to see the reaction of the 'big boys' - OLOG/Bristow and CHC/ACN.

I also hear that the Schreiner operation in Cameroon is now down to only one helicopter, from the 3 they had there last year. This is mostly due to the pipeline from Chad to Cameroon now being finished. They have failed to win any other contracts so maybe the helicopters will get transferred to Nigeria where ACN is also part of the Schreiner group.

[cpt]

To "leading Edge"
yes, it's really difficult to get real and solid informations and when things are moving all sort of rumors are going on, but by the way, where did you get these informations about Heli-Union mentionned in your 1st of Dec 03 ?
just curious, because flying for them now I'm directly involved, and like all my colleagues, I don't have the faintest idea of what is going on...

[Helibusdriver]

The acquisition of Schreiner has been finalized.
Check the home page of CHC: http://www.chc.ca. for details.

[leading edge]

cpt

I know that Heli Union was "due dligenced " a couple of years ago by 2 or 3 other companies, that's all.

Nothing recent that I am aware unless someone knows something else.

LE

[cpt]

LE,

Thanks for your answer LE, this story has actally been in the air for some years, and as you say, the " lady" probably looks like an old expensive spinster looking for a husband (buyer....) now. From here CHC is seen as a raising tidal wave , and we have the feeling it's just about time to learn how to surf :uhoh: