CHC Group Ltd. on Thursday filed for bankruptcy protection as one of the world’s largest helicopter operators joined a slew of oil-field services companies caught by the downturn in global energy prices.
The filing came just days after a fatal crash of one of its helicopters in Norway forced the company to ground much of its fleet.
“The step we have taken today provides an orderly path to enhance our financial flexibility and establish a competitive capital and operating structure that will allow us to invest in and grow CHC’s business over the long-term,” Karl Fessenden, President and Chief Executive of the Richmond, British Columbia-based company, said.
CHC is one of two global companies alongside Houston-based Bristow Group Inc. that dominate the business of ferrying workers and cargo offshore for energy companies and have been forced to shrink and cut costs.
A boom in demand for flying when oil prices passed $100 a barrel drove rapid expansion in the sector and had lured companies such as General Electric Co. into a nascent business leasing helicopters for big energy companies. Now, industry executives estimated that a fifth of the global fleet of helicopters is idle or underused.
CHC operated a fleet of 231 helicopters on Jan. 31 and had been exploring a debt-restructuring for several months even before the April 29 crash of an Airbus Group SE EC225 helicopter.
The accident killed its two pilots and 11 oil workers flying back to the Norwegian mainland, and led regulators in the U.K. and Norway to ground the EC225, a workhorse helicopter with a history of technical problems.
CHC leased 157 helicopters and operated 42 EC225s, and had orders with manufacturers including Airbus, the Sikorsky unit of Lockheed Martin Corp. and Leonardo SpA’s AgustaWestland.
Mr. Fessenden said “normal business operations will continue.”
The company has struggled under successive private equity owners to restructure its long-term debt, which stood at $1.38 billion at Jan. 31, according to regulatory filings.
Cash has dwindled as demand for flying decreased, and the company sought to boost liquidity by drawing down the remaining $233.4 million on its revolving loan.
On April 15, it skipped a $46 million interest payment on approximately $1 billion in bonds, triggering a 30-day grace period to make the payment and avoid default. Under agreements with the company’s other creditors, a default on the bonds could cause a default on its other debts.
The move prompted Moody’s Investors Service to downgrade the company deep into junk territory, and the ratings agency said a chapter 11 filing appeared likely.
CHC, which went public two years ago, has seen its market value wiped out after peaking at $1.3 billion, and the company was delisted from the New York Stock Exchange in January. First Reserve Corp, a specialist private-equity firm in the energy sector, paid C$3.7 billion ($2.9 billion) for the company in 2008.
The company had $237 million in firm orders for new helicopters and $245 million in options, though like its peers it had been negotiating with manufacturers and leasing companies to defer deals or return aircraft early.
Lawyers at Weil Gotshal & Manges and Debevoise & Plimpton are representing the company, which is also working with financial advisers at Seabury Advisors, PJT Partners and CDG Group.
The company filed for protection in the bankruptcy court for the Northern District of Texas.
—Robert Wall contributed to this article.
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