Offshore helicopter specialist in M&A push

Offshore oil and gas helicopter transportation specialist CHC is looking at a potential merger or acquisition.

In a one-sentence statement issued on Wednesday, CHC said: “We have retained the services of Paul, Weiss, Rifkind, Wharton & Garrison LLP to explore merger and acquisition opportunities across the space.”

Apart from looking at mergers and acquisitions, CHC is looking for a new CEO.

Namely, the current CEO Karl Fessenden last week announced his resignation “to accept an opportunity outside of the oil and gas industry.”

He said, the decision to leave was a difficult one, but that CHC was in a strong position both financially and competitively in the marketplace, “and the course to a bright future is set by continuing to execute our strategy.”

The resignation is effective August 2. While the company is in the quest for the new CEO, Dave Balevic, Senior Vice President of Engineering & Operations, will assume the role of interim CEO.

“Dire need for consolidation”

CHC is not the only offshore helicopter company eyeing consolidation in the sector.

Its rival Bristow had last year attempted to buy Columbia Helicopters in a $560 million deal, but the merger was canceled in March this year. Bristow in May filed for Bankruptcy protection.

Era, a helicopter firm which describes itself as the longest-serving helicopter transport provider in the U.S., has also called for consolidation.

The company, which provides services to oil majors in the Gulf of Mexico, has this week posted a net income of $4.9 million for the second quarter of 2019. The company recorded a $10,9 million one-off gain on the sale of the Dart joint venture.

Chris Bradshaw, President and Chief Executive Officer of Era Group Inc. said: “We continue to believe that our strong balance sheet and positive cash flow profile present multiple opportunities to create value for Era shareholders, including the potential for value-accretive consolidation opportunities.”

Back in April, Bradshaw sent a letter to shareholders in which he said the industry was in “dire need for consolidation,” to address the overcapacity and costs issues.

Below is a part of the letter signed by Bradshaw:

“Those who follow the offshore helicopter business understand that the current industry structure is not sustainable, with multiple helicopter operators and leasing companies having already filed for bankruptcy protection and others expected to follow suit shortly. A simple, stand-alone equitization of these distressed balance sheets is unlikely to address the fundamental issues at play and may only lead to subsequent rounds of restructuring. In our view, the offshore helicopter industry is in dire need of consolidation, amongst both the operators and the lessors.

“Consolidation will not only address the excess capacity in the industry, but will also facilitate better absorption of the significant fixed costs required to run an air carrier. By way of illustration, a combination of any two of the three large deepwater Gulf of Mexico (“GOM”) helicopter operators is likely to result in synergies that are equivalent to or greater than either stand-alone company’s GOM oil and gas EBITDA levels. The magnitude of these cost savings is such that a combination could create significant value for both companies’ stakeholders.”

Offshore Energy Today Staff

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