Oil and gas industry: CHC seeks bankruptcy protection
CHC Group, the parent company of Canada’s CHC Helicopter, has filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code “to facilitate the restructuring of its balance sheet and fleet, and position the Company for long-term success”. The company hopes that the reorganization will strengthen its financial position by reducing long-term debt and enhancing financial flexibility while allowing the Company to manage and operate its fleet of aircraft.
CHC said it expected day-to-day operations to continue without interruption throughout the court-supervised restructuring process. It also said it expected to maintain sufficient liquidity throughout the restructuring process to maintain its continuing business operations.
Like many companies in the oil and gas industry, CHC said its operations have been significantly affected by the dramatic decline in oil prices since their peak in 2014 and general uncertainty in the energy market, which has led to decreased customer demand and an increase in idle aircraft.
The decision to file for bankruptcy protection follows the announcement in March of a $76m net loss for the fiscal 2016 third quarter. Consolidated sales showed a 20% decline year-over-year, at $333m, though the company said adjusted EBITDAR was practically unchanged. CHC also noted a substantial improvement in free cash flow for the first nine months “mainly due to a decrease in aircraft related capital expenditures”.
CHC operates a fleet of more than 220 medium and heavy rotorcraft, including more than 30 H225/EC225s. One of these helicopters was involved in an accident on 29th April near the Flesland Airport in Bergen, Norway, in which 2 crew and 11 passengers lost their lives. CHC was operating the flight for the Norwegian oil and gas company, Statoil.
Following the accident, the causes of which have yet to be determined, CHC immediately put all H225/EC 225 flights temporarily on hold with the exception of those aircraft dedicated to life-saving search-and-rescue missions.