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What's happening in CHC?

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What's happening in CHC?

Old 17th Mar 2015, 23:13
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darn. will have to try tomorrow when it drops below $1
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Old 17th Mar 2015, 23:32
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Helimut:
Quit depressing me, in 30 years with CHC I have seen a lot of ups and downs with the company but it sure is in a sorry state right now.
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Old 17th Mar 2015, 23:47
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It's what happens when the finance types get involved and think of the business as a spreadsheet they learned at some business school while studying for an MBA. They think that means they can run a business when in fact they have absolutely no idea what they are talking about or doing.

'I make loads of money so I know what I'm doing' 'I'm clever because I worked for Morgan Stanley and Goldmans'.... etc

A business cannot be treated like a spreadsheet, it's about people and relationships and accepting that sometimes the best looking deal is not the right one. Of course the finance is important, we need to make money after all, but the business is about people, clients and own workforce. I find it highly patronising that none of the major RW firms are run by people who are steeped in the industry. Are we not able to run our own business, grow our own leaders of the future? No? Ok let's get clever finance people to do it for us... Jeez.

It's tragic how the people who perpetrated this gigantic clusterf&*k wonder off to the next job/ shredding of another good business and are not able to be held to account for their failure.

I'd get t-shirts with 'I was f&*(ed by First Reserve' on them and picket their offices in Manhattan. Only I'd get arrested for disturbing the peace while they laugh out of the window completely immune from any recourse.

In case you hadn't spotted it, I'm not a massive fan of Private Equity, or numbers monkeys as I like to call them.

Rant off, I'm tired.

Last edited by nowherespecial; 18th Mar 2015 at 00:36. Reason: hadn't finished ranting after a cup of coffee
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Old 18th Mar 2015, 03:25
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Overall, once the value of the company drops below it's liabilities, the company is legally insolvent and will (should) end up in court with it's creditors.
Not to go off on too much of a tangent, lets say the company did become legally insolvent, or worse still, cease operating. One has to believe all of CHC's AOC partner companies are watching this and getting more than a little nervous.

Suddenly all those aircraft, pilots/engineers, equipment, etc.......gone....and I mean right now. Poof. What happens then?

And lets not forget the oil companies......can you imagine what is surely being discussed behind many closed doors right now?
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Old 18th Mar 2015, 08:37
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I think that CHC has imploded.

The New York Stock Exchange now values CHC at 10% of what it did one year ago. The value one year ago was already a fraction of what FR paid for the Company.

The new private equity investors CD&R injected 500m USD into the company in exchange for preferred shares (that means they get paid first). The existing shareholders quite rightly rejected a call for them to put more money in through a rights issue.

The loses per share are completely unsustainable and the CD&R money was a short term lifeline only. As professional investors, I cannot believe that they will put any more money into this.

In my opinion that leaves two options:
To file for bankruptcy protection while they restructure and await market improvements.
To asset strip the profitable elements and sell them before winding up the Company.

I don't believe that 'do nothing' is an option here. We all know that CHC have lost a lot of business recently and if you were placing a long term helicopter contract today, how secure would you feel awarding it to CHC?
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Old 18th Mar 2015, 10:40
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The individual AOCs will remain to exist. Many contracts are with third party holders anyway and not directly with CHC, so for the customer it is still relatively safe. I imagine if the once great CHC now becomes insolvent the individual operations will be sold off as independent companies to new buyers, who will inherit the contracts, workforce and current structure in that national AOC. There are AOCs in CHC that still have huge potential and are making money, and could be ripe for selling to pay off the unavoidable debt. I am sure the customers are discussing this and have contingency plans, but the contracts will likely remain, just the overall ownership will take a move. I can imagine CHC HS in Norway being very profitable operation for the right owner if it was released from CHC. Likewise Brazil and possibly one or two others. Their success will be relatively dependent on them being independent and fairly autonomous again as they once were. Helikopter Service was itself once a direct competitor to CHC and when running itself without external influence was extremely successful. Many of the structures and personnel remain, so it is not a huge leap of the imagination to think that HS could be reborn within Norway and possibly with a Norwegian owner. It would spell the end for CHC as HS is one of the main sources of income, but if the end has already arrived and they have no choice due to the obligation of the courts this may be the only option. The circle has turned full?
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Old 18th Mar 2015, 10:58
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Since we are speculating on what might happen, maybe CD & R will take the company private again and then you cannot see what is going on by watching a stock price and they donīt have to post there quarterly or annual performance.
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Old 18th Mar 2015, 11:15
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As you're talking about stock in the last posts :

Scott+Scott, Attorneys at Law, LLP (“Scott+Scott”), a national shareholder and consumer rights litigation firm, announces the commencement of an investigation into CHC Group Ltd

HeliHub Attourney announces investigation of CHC Group
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Old 18th Mar 2015, 13:22
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Hard to say what the investigation is about, maybe some disgruntled investors who bought the stock at the IPO offering price and has gone down hill every since and think they were robbed?


Talks about Petrobras not paying for the 225īs to all the operators in Brazil when they were stopped but that was resolved some time ago, aircraft are flying and getting paid. Or at least I think they are with all the problems with Petrobras these days if they can pay there bills or not.
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Old 18th Mar 2015, 17:13
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It's what happens when the finance types get involved and think of the business as a spreadsheet they learned at some business school while studying for an MBA. They think that means they can run a business when in fact they have absolutely no idea what they are talking about or doing..... etc
I don't really understand this view tbh and actually its a similar view to that displayed when looking at accidents. i.e. unless you have tens of thousands of hours at the sharp end you can't hold a view.

CHC seems to have very much a finance related issue. Bills in USD and income in NOK, EUR and GBP.... that is pure fx risk and i'm not sure why a helicopter pilot would be better at dealing with that.. actually its a pretty poor and elementary oversight but never-the-less.

As it happens CHC CEO is Karl Fessenden who has a reasonable aviation background!


2/2015-PresentCHC Group LtdChief Executive Officer
3/2011-2/2015GE EnergyVP:Power Generation ServicesNote: Power Generation Services & Energy Services
2005-UnknownGE EnergyGeneral Manager:PowerNote: Power Generation Services
FormerGE Technology InfrastructureManager:Integration
FormerGE Aircraft Engine ServicesMng Dir/Gen Mgr:ContractualNote: General Manager of Contractual Services, Parts and Repairs Services
FormerPratt & Whitney
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Old 18th Mar 2015, 18:02
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Oh well then. CHC is saved.
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Old 18th Mar 2015, 22:07
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Pitts,

I find your view of aviation narrow minded. There are plenty of roles within aviation that come nowhere near a cockpit or picking up a wrench and are very focused on running a business.

I do not blame the new CEO for the debacle CHC is currently facing, quite the opposite, I think his appointment shows the folly of the last person. I think hiring KF is too little too late.

News - CHC Helicopter

I see there is continued house cleaning at CHC today.
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Old 19th Mar 2015, 00:12
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Nowherespecial - sorry my response highlighting the pilot was perhaps balanced by the highlight of the current CEO's CV that demonstrates these other roles you perhaps allude to?

Regardless I'm sure CHC's issue is more complex than I've suggested and no doubt beyond the current CEO. That said there is a test to the plenty of people in aviation focused on running a business etc.. (And not to knock those people but just saying)... Then given the stock has been smoked these aviation people should buy the company.
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Old 19th Mar 2015, 05:37
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News - CHC Helicopter

I see there is continued house cleaning at CHC today.
Desperate times call for desperate measures. Anybody else notice the irony of having a press release signed by two VPs, both positions now of no relevance given the new capital structure of the company? Let the house cleaning continue!
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Old 19th Mar 2015, 10:57
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Pitts, that's fair enough. I am defensive over aviation people as as an industry we pay badly so people think we're not capable of getting good people. I'm a sensitive soul.

I like the idea of MBA types who have worked in aviation their whole career, ie experienced in the sector and qualified to do the jobs and understand the issues on day 1. For me KF fits the bill nicely, he's just late (not his fault at all obviously).
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Old 20th Mar 2015, 21:43
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I don't think it's just the share price that is causing problems, from what I've heard from old friends in Aberdeen there seems to be major issues up there regarding morale between the aircrew and engineering on one side and management on the other.
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Old 20th Mar 2015, 23:36
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Great first post there. Nothing concrete, just the age old 'a friend said' cr*p. I obviously don't know who your 'friends' are, but what I do know is that the pilot workforce in Aberdeen are generally in very good spirits and realise that things are actually looking pretty good for CHC in Aberdeen. Certainly better than Bristow, Bond and NHS. Winning work off the competition is always something that will raise morale

Engineering are now producing much better availability for the customers

Last edited by Variable Load; 21st Mar 2015 at 05:58.
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Old 21st Mar 2015, 00:00
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VL - Clearly good luck as with anyone with real skin in the game but the challenge for CHC - as has been pushed on a variety of earnings calls is the ability to fund itself.

See this. http://ir.chc.ca/Cache/1500069567.PD...T=&iid=4293047

You look at free cash flow and at some point that needs to turn around or the company needs to raise capital... the appetite for which will come from its ability to turn things around. If that gets really questioned it won't be the touchy / feel better customer service that will save CHC it will be liquidity.

This from mid-2014 :- Our Strategy - CHC Helicopter


Operator
Thank you. Our final question of the day is coming from the line of Jacob Dweck of Fore Research. Please proceed with your question.
Jacob Dweck
Yes, hello. A couple of questions. Given your cash balance today and the guidance for free cash flow for the next fiscal year and the bond repurchase that has already been completed, it looks like new cash comes down to maybe $50 million at the end of fiscal ’15. Is that correct? And then again, in ’16 still with negative free cash flow,
how do you plan on funding the company with the minimum cash that’s needed to run the business?
Joan Hooper

CFO
I would focus on liquidity, not a cash balance. So from a liquidity standpoint, obviously we’ve got our cash, but we have always had lines of credit that as necessary we’ll draw upon. We have a $375 million line of credit, so we’re not worried about our liquidity at all on our past deposit of free cash flow.
J
This is the earnings transcript from this week:-

http://seekingalpha.com/article/3007...p=qanda&l=last

You can read for yourselves the number of times free cash flow is mentioned!!

You guys need the price of crude oil to move higher.

The stock down at $1.30 tells you what the market thinks.

If Gartman is right then its goodnight

http://www.cnbc.com/id/102520464

http://video.cnbc.com/gallery/?video=3000362934

Last edited by Pittsextra; 21st Mar 2015 at 00:24. Reason: added CNBC link
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Old 21st Mar 2015, 06:00
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Pitts, the OP was discussing Aberdeen, so my reply is totally appropriate. As for the 'big game', I'm not not in a position of knowledge to comment.
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Old 21st Mar 2015, 07:18
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OK I'll quantify my statement as you obviously feel it's ambiguous. I used to work at CHC and still have some old friends working there, they have said the pilots are unhappy due to shift alterations, new operating systems and being forced to attend happy clappy courses. The engineers are equally unhappy due to delayed paydeals, new systems, lack of spares, changes in leadership etc. Aberdeen has always had issues with problems at all three operators but I don't know too much about Bond and the costcutting at Bristows is due to kick in soon. I'm just saying what I've heard as I thought this was a rumour network not a confirmed in stone network!
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