Cougar for sale?

[Steve76]

Rumour....and only rumour, has it that Cougar are in financial trouble and up for sale. If this is so who is in the market for their slice of the pie?. .What will happen to the S92 order?

[paco]

It's long been known that Cougar is looking for a new business partner, preferably someone with a background in aviation, to replace somebody with a major shareholding. This was reported in Helicopters International as being VIH, but I understand they have since pulled out.

If it is another helicopter company, it would not be in their interest to dissolve Cougar into their own empire, firstly because the oil companies like the competition, and secondly, the expertise and the low offshore limits, plus the 9002 certification, would not automatically pass to the new outfit - they would only stay with Cougar and its current AOC if it was kept as a separate entity.

phil

[VIKING9]

So, is it true ?:o

[Brother]

Cougar has been for sale since November 2001. VIH have been the main suitor looking to buy around 70% of the stock. Unfortunately Cougar's asset base is small and the mainstay of their fleet (3 Super Pumas) are all leased from CHC. The aircraft were leased from Helikopter Service but the CHC buyout put Cougar in the unfortunate position of leasing their aircraft from their main competitor who would, I am sure, Love to see them go away.

While their operations are technically very good, there has long been industry rumors that their profitability is marginal and their contract rates low. Unless a knight in shining armor comes along, the future of the S92 would have to be in doubt.

B

[zalt]

Time has moved on and (as of Feb 14 this year) Vancouver Island Helicopters actually does now own Cougar.

A rumour I've heard is that under this new management the fleet replacement plans are being reconsidered with EC225 now being favoured (alleged reasons including "experience of better product support on 332Ls than 61s" and "better non-aux tank radius of 225 over S92").

The fact the company placed S-92 orders 45 months ago in 2000 expecting delivery in 26 months (see http://www.cougar.ca/news.html) may also be a factor!

This could explain why the lead S-92s are now going to Louisiana not Halifax.

Now maybe this isn't true (or just an exercise to frighten a few $100k in price cuts). Maybe there are firm S-92 delivery dates next year for Cougar (and maybe CHC are continuing the lease of the Ls at a reasonable price in the meantime!).

[widgeon]

Is it not also true that the Codfather owns the hangar they operate out of ? . Interesting proxy fight for Vector , the Codson's company ,going on right now .

[zalt]

widgeon

While only of remote relavence to Cougar and VIH - very interesting indeed:

From National Post 15 Nov:

"Directors of a tiny aerospace firm are trying to pare back a $35-million obligation to senior executives that critics say threatens to destroy the company.

The board of Vector Aerospace Corp. -- which includes former premiers David Peterson, of Ontario, and Frank Moores, of Newfoundland -- has admitted to shareholders it cannot afford the executive severances and pension provisions that could be triggered after a proxy vote led by dissenting shareholders later this month."

The amount of funding required to pay or to provide for the payment of these obligations exceeds the current financial resources of the corporation," said a management proxy circular for the Nov. 28 vote. It said efforts begun in September to renegotiate the entitlements for the three executives -- Mark Dobbin, chairman and chief executive, Paul Conway, president and chief operating officer, and Max Parsons, chief financial officer -- have been fruitless.

Vector has been the subject of an intense proxy war in which a group of shareholders aims to replace the board. After narrowly losing a vote at the firm's annual meeting in May, the dissident group, which includes Northstar Aerospace and I.M.P. Group, says it now has enough shares to install its own board.

St. John's-based Vector was spun out in mid-1998 from CHC Helicopter Corp., a company owned by Mr. Dobbin's father, Craig Dobbin. The company has lost money in its last two fiscal years and its stock, which first traded at $8.50 per share closed yesterday up 4¢ at $2.25, giving it a market capitalization of $64.1-million.

Vector's proxy outlined how a change of control at the firm -- which the board agrees has already happened -- triggers a requirement for a "retirement compensation arrangement" to be set up to cover the cost of a supplementary pension plan for the executives."

http://www.nationalpost.com/financialpost/story.html?id=0B5EAF83-900B-455C-9AB2-8A5DD71ECC9F

And from Toronto Star today:

"A new board of directors representing unhappy major shareholders took the controls of Vector Aerospace Corp. yesterday, shortly after the old board fired Vector's top three executives and resigned after losing a power struggle.

Colin Watson, former president and chief executive of Spar Aerospace and a member of the new board, has been named Vector's new president and CEO. Randal Levine has been appointed chief financial officer of the St. John's-based aircraft maintenance company.

Watson and Levine replace two of the three Vector executives, including former chairman and CEO Mark Dobbin, who were fired Thursday by the old board in a move designed to cut termination payouts by about $10 million.

The old board said the three former top executives still stand to collect about $14 million.

Early yesterday, Donald Jackson, chairman of rival Northstar Aerospace Inc. and a leader of the dissident group, told shareholders at a special meeting that the old board had resigned and he had taken over as Vector's chairman.

Shares in Vector traded as high as $2.45 yesterday, shortly after the Toronto Stock Exchange opened. They closed at $2.25, up 7 cents from Thursday. Northstar closed at $2.60, down 10 cents.

Earlier, Jackson said the old board dissolved itself yesterday after a tabulation of proxy votes showed 80 per cent in favour of a new board.

Jackson said he doesn't regard the board change as a takeover by Northstar, saying the dissident shareholders had been unhappy with Vector's stock price and management.

Shares dove from more than $5 to barely $1 in September and October, 2002, about the time Vector announced it wouldn't meet profit expectations due to a $21-million write-off of its Sigma division in Croydon, England. The stock has not been higher than $3 since.

The former executive team and board led by Dobbin, a member of the same family that controls CHC Helicopters of St. John's, had argued they had a plan to fix Vector's problems.

Key to the plan outlined in May was the sale of Vector's fixed-wing division, its largest source of revenue.

But Jackson said "if they had plans to do that, they had six months to put it into effect."

The new board includes Watson, Jackson and Ken Rowe, chair of Halifax-based IMP Group, a major shareholder in Vector and a driving force behind efforts to remove the old management team.

Also on the new seven-man board are Robert Deluce, promoter of Regional Airlines Holdings Inc.; Gordon Cummings; Robert Luba and Robert Radford. The old board dismissed Dobbin, chief operating officer Paul Conway and chief financial officer Max Parsons."

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1070061305233&call_pageid=968350072197&col=969048863851

Doesn't inspire much faith in the Dobbins clan.

[widgeon]

Yes and with several contracts up for renewal it cannot be good for them. CHC only gave ACRO a one year contract to maintain the VFR fleet components. I heard a rumour that they were already breaking ground on a facility in Richmond to take over some of Acro's work.