What's happening in CHC?
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There really doesnt appear to be too many options left on the table for CHC. Maybe only one. Looking at the financials from the last 2 years shows a series of investors giving a cash float in the hope it will keep CHC going long enough for measures to take effect and turn a profit. Some very approximate maths can easily show (with a limited accuracy) as to how long this float would last. The fact remains that since investments from CDR and others CHC has continued to have a considerably higher running cost than profit (negative cashflow). They have made significant attempts to stem this, through restructuring and reducing the workforce by approx 12 % (significantly more in some parts of the world). Contracts have continued to dwindle and profit vs cost ratio deteriorate. The main financial handicap further is the long term lease agreements and so far inability to re-negotiate this, as well as maintenance agreements. Unless these are scrapped CHC will simply not be able to pay. They are now on the absolute last line of credit and under the present situation it is hard to imagine any more forthcoming or any way this is going to do more than buy time for re-negotiation. If leasing agreements, collective agreements and the heli-one agreements are not overhauled the credit will soon disappear. When that is gone it is fairly simple. No cash, no credit = no payment of creditors, agreements, lessors, employees. This is a bankrupt situation, however not necessarily the end. My knowledge of US bankruptcy regulations is not enough to understand the likely implications of this. I can imagine however that all present agreements are void and there is a clause for legal re-negotiation and restructure. The CHC financial statements publicly available in the last 12 months appear to be quite transparent and whilst not showing all the fine detail, show enough to work out the cost structure and credit structure. The only question that was slightly unclear was exactly when the credit would run out and I think it looks like that has just been answered with a window of the the next 3-6 months. Longer than I initially expected.
I heard this week that CHC maybe going into Chapter 11. It could be good for them as C11 has plenty of provisions within it to rid CHC of some ongoing aircraft lease commitments for idle aircraft which are hurting them. I guess the complexity is that if the aircraft are leased from yourself (Heli One) chapter 11 may not help. However, surplus aircraft owned by Milestone and Waypoint could possibly be returned.
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Is the First Reserve Equity Firm acquisition of CHC the same story as Phones4U collapse in UK?!
Why aren't the British middle-classes staging a revolution? - Telegraph
Valued at $3.7bn on 22 Feb 2008, concluded just as the bubble burst ........
Why aren't the British middle-classes staging a revolution? - Telegraph
Valued at $3.7bn on 22 Feb 2008, concluded just as the bubble burst ........
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Chapter 11 is a purely US regulatory law, allowing for protection from creditors, based on the concept that it is better for all parties for a company to recover and pay it's creditors, rather than dissolve and everybody losing.
The question that has to be resolved is the effects of a Chapter 11 filing in the Cayman Islands, as this is the group domicile. Additionally, the global aspects of the organization have to be addressed, with the specific laws for each relevant company. I posed this question some time ago, as I don't understand the complexities of an international action such as this.
Chapter 11 does allow for Labour and other contracts to be completely renegotiated, in the interests of maintaining the continued business operations and activities of the organization. In this instance, employees would probably choose to be employed with reduced pay and benefits, rather than be thrown out of work, in the middle of a massive downturn in the industry. Likewise; leasing companies and others would probably prefer the long term survival of the group, to having a vast inventory of non producing assets (including very recent S&LB deals) and a shake up that would probably cause a severe adjustment to the marketability, demand and rates for their aircraft. A buyer's market is not in their interests.
As 26500 accurately observes, this company is bleeding massive amounts of money and there is a very definable and calculable absolute zero here.
To put this in perspective, review the financials and try to find the quarter or the year when profits ever came close to the current losses. EBITAR numbers are in the low dual digits if you are lucky. Recovery from the current situation would take decades based upon the typical earnings, and that is without ever considering the cost of the ever increasing cost of servicing debt.
Having been involved in a number of Chapter 11 and other bankruptcies, I don't envy the hard work ahead of this management team. Their discipline and ordered approach should be commended.
The question that has to be resolved is the effects of a Chapter 11 filing in the Cayman Islands, as this is the group domicile. Additionally, the global aspects of the organization have to be addressed, with the specific laws for each relevant company. I posed this question some time ago, as I don't understand the complexities of an international action such as this.
Chapter 11 does allow for Labour and other contracts to be completely renegotiated, in the interests of maintaining the continued business operations and activities of the organization. In this instance, employees would probably choose to be employed with reduced pay and benefits, rather than be thrown out of work, in the middle of a massive downturn in the industry. Likewise; leasing companies and others would probably prefer the long term survival of the group, to having a vast inventory of non producing assets (including very recent S&LB deals) and a shake up that would probably cause a severe adjustment to the marketability, demand and rates for their aircraft. A buyer's market is not in their interests.
As 26500 accurately observes, this company is bleeding massive amounts of money and there is a very definable and calculable absolute zero here.
To put this in perspective, review the financials and try to find the quarter or the year when profits ever came close to the current losses. EBITAR numbers are in the low dual digits if you are lucky. Recovery from the current situation would take decades based upon the typical earnings, and that is without ever considering the cost of the ever increasing cost of servicing debt.
Having been involved in a number of Chapter 11 and other bankruptcies, I don't envy the hard work ahead of this management team. Their discipline and ordered approach should be commended.
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No Chapter 11 in the Caymens: http://www.worldservicesgroup.com/gu...ov%202006).pdf
Its all down to how big a restructuring loss CD&R are prepared to take to keep the company running.
Its all down to how big a restructuring loss CD&R are prepared to take to keep the company running.
Warren Buffet, who many believe is the worlds smartest investor, once stated if he could go back in time, he would shoot Orville and Wlibur.
His reasoning was, never have so many, lost so much money, when it comes to airline companies, and he is adament about never, ever investing in one.
I think it is fair to say the same about helicopter companies.
Intense competition, intense regulation, extremly high capitol costs for aircraft, low profit margins, in a cyclical industry.
If your passionate about aviation, it can be alot of fun, but being passionate about something should not be confused with it being good investment.
Happy to be out of the game for 12 years now, making real money, and enjoying myself even more.
His reasoning was, never have so many, lost so much money, when it comes to airline companies, and he is adament about never, ever investing in one.
I think it is fair to say the same about helicopter companies.
Intense competition, intense regulation, extremly high capitol costs for aircraft, low profit margins, in a cyclical industry.
If your passionate about aviation, it can be alot of fun, but being passionate about something should not be confused with it being good investment.
Happy to be out of the game for 12 years now, making real money, and enjoying myself even more.
Howcanwebeexpectedtoflylikeeagles
whensurroundedbyturkeys
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His reasoning was, never have so many, lost so much money, when it comes to airline companies, and he is adament about never, ever investing in one
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Same could be said of CHC up until it was sold to 1st Reserve.
Takes a lot of skill and determination to drive a company like CHC into the dirt during an time when oil was at it's peak. This recent downturn in the industry is just icing on the cake.
Takes a lot of skill and determination to drive a company like CHC into the dirt during an time when oil was at it's peak. This recent downturn in the industry is just icing on the cake.
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Takes a lot of skill and determination to drive a company like CHC into the dirt during an time when oil was at it's peak
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Chapter 11 does allow for Labour and other contracts to be completely renegotiated, in the interests of maintaining the continued business operations and activities of the organization. In this instance, employees would probably choose to be employed with reduced pay and benefits, rather than be thrown out of work, in the middle of a massive downturn in the industry.
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Holy Moly
I assume you mean the US based employees working ( touring ) with CHC Global ? Yes they would have taken a loss since the Canadian dollar is much lower now against the USD. They all knew that when they hired on this could happen. For a time was the other way around and I am sure no complaints then?
The US based CHC ( Dallas ) Heli-One ( Dallas and Ft. Collins) are paid in USD.
I assume you mean the US based employees working ( touring ) with CHC Global ? Yes they would have taken a loss since the Canadian dollar is much lower now against the USD. They all knew that when they hired on this could happen. For a time was the other way around and I am sure no complaints then?
The US based CHC ( Dallas ) Heli-One ( Dallas and Ft. Collins) are paid in USD.
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I am not totally sure CHC could even apply for Chapter 11 , even so does not mean the end of the world or business. Lots of companies go into Chapter 11 for protection while they restructure the business.
Chrysler , United airlines , Delta have all been there and came out , ( not that CHC is in the same league but only examples ) .
Reading today in 2015 40 USA oil and gas companies filed for Chapter 11.
Sometimes is the only way to keep the wolves away and the company going to get through this downturn we are in.
Chrysler , United airlines , Delta have all been there and came out , ( not that CHC is in the same league but only examples ) .
Reading today in 2015 40 USA oil and gas companies filed for Chapter 11.
Sometimes is the only way to keep the wolves away and the company going to get through this downturn we are in.
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The transcript from the Q3 results, detail the retention of a number of advisors for the group, which probably reveals a lot about the potential outcome and direction they are heading.
CDG Group - CDG Group - The CDG Way
PJT
Management Consulting
Weil, Gotshal & Manges - Weil, Gotshal & Manges LLP
This is a pretty broad range of restructuring expertise, with specialty in managing aviation assets, restructuring debt, raising additional capital, and specifically in the options involving Chapter 11.
Answering my own questions regarding Chapter 11 for a global corporation, the process is definitely completely open due to the shareholding structure and location of the principal shareholders. In fact it is becoming commonplace for overseas companies to open an office in the US for the sole reason of obtaining bankruptcy protection under Chapter 11.
Chapter 11 allows the Debtor in Possession (existing owners and management) to continue to run the day to day operation of the business albeit with financial approval and control under the auspices of the Court. It is a valid and extremely mechanism to allow companies to survive a bad situation that they are encountering, and hopefully exit as a viable and thriving enterprise. Chapter 11 also essentially allows the business to continue to function with very little difference to the employees and customers. Many vendors will actively control credit lines, but there aren't many helicopter companies that haven't been affected by that in the course of their regular business activities.
The fact that there was no Q&A session during the recent conference call, may be indicative that there is a lot going on and they don't want to openly discuss any of it - can't say as I blame them for that.
There's always the chance of a sale, entire company, or individual divisions; again, everything is on the table today.
Sad to see this once great company in this dire situation.
The company has retained financial advisors Seabury Advisors, PJT Partners and CDG Group and legal advisor Weil, Gotshal & Manges LLP, to advise its Board of Directors and management team on strategic alternatives with respect to the Company's capital structure. This includes, but is not limited to, exploring options to reduce aircraft lease and interest costs as well as the Company's purchase commitments.
PJT
Management Consulting
Weil, Gotshal & Manges - Weil, Gotshal & Manges LLP
This is a pretty broad range of restructuring expertise, with specialty in managing aviation assets, restructuring debt, raising additional capital, and specifically in the options involving Chapter 11.
Answering my own questions regarding Chapter 11 for a global corporation, the process is definitely completely open due to the shareholding structure and location of the principal shareholders. In fact it is becoming commonplace for overseas companies to open an office in the US for the sole reason of obtaining bankruptcy protection under Chapter 11.
Chapter 11 allows the Debtor in Possession (existing owners and management) to continue to run the day to day operation of the business albeit with financial approval and control under the auspices of the Court. It is a valid and extremely mechanism to allow companies to survive a bad situation that they are encountering, and hopefully exit as a viable and thriving enterprise. Chapter 11 also essentially allows the business to continue to function with very little difference to the employees and customers. Many vendors will actively control credit lines, but there aren't many helicopter companies that haven't been affected by that in the course of their regular business activities.
The fact that there was no Q&A session during the recent conference call, may be indicative that there is a lot going on and they don't want to openly discuss any of it - can't say as I blame them for that.
There's always the chance of a sale, entire company, or individual divisions; again, everything is on the table today.
Sad to see this once great company in this dire situation.
Last edited by rotor-rooter; 9th Mar 2016 at 08:30. Reason: typo
let's stop this Chap 11 rumour
CHC owe me money so please, no more mention of Chap 11 etc.
As stated already, only a small percentage is traded so let's stop panicking on their pathetic sp
Everything is goooooood, there, there, that's better, ask the nasty people to go away............
As stated already, only a small percentage is traded so let's stop panicking on their pathetic sp
Everything is goooooood, there, there, that's better, ask the nasty people to go away............
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This has nothing to do with the share price, it is totally irrelevant. The problems are fundamentally a company that is burning real money into keeping the doors open.
The stock offering and unfortunate owners of the same are screwed and were simply a means of generating more cash to pour on the fire.
If you are awaiting payment as a former employee, you will be on the list of unsecured creditors. The banks and finance companies with secured debt are on the list of secured creditors, and a long way ahead of you, unfortunately.
The stock offering and unfortunate owners of the same are screwed and were simply a means of generating more cash to pour on the fire.
If you are awaiting payment as a former employee, you will be on the list of unsecured creditors. The banks and finance companies with secured debt are on the list of secured creditors, and a long way ahead of you, unfortunately.
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Very often true but look at Alan Bristow or the Bond family. They made mega millions. The winning formula with both these identities was that they ran their companies with aviation as their passion, not as purely a financial opportunity. Both AB and the Bonds had a strong team of aviation minded people behind them, not bean counters as the driving force.
TC
