Petroleum Helicopters Inc. (PHI) released a statement delivered at 1:30am to worldwide news outlets announcing that the thirty-seven year old company had sought Chapter 11 bankruptcy protection in a court filing lodged with the U.S Northern District Bankruptcy Court in Texas.
After several years of diversification efforts and divesting of the company’s excess aircraft after a global downturn in the oil and gas sector, PHI became the latest large helicopter operator in recent years to seek chapter 11 bankruptcy protection as the company faced mounting debts across its U.S based operations.
PHI noted in the press release issued March 14th, 2019 that the company voluntarily entered Chapter 11 proceedings to address the upcoming maturity of PHI’s unsecured senior notes and strengthen its balance sheet in order to best position PHI for future success.
The company’s Board and management team stated “this is the best course of action to promote the Company’s financial wellbeing, strengthen its competitive position in the industry, and advance the interests of PHI and its stakeholders, while maintaining the Company’s commitments to its customers and, above all, the safety of its employees and passengers.” Listed in the chapter 11 filing was details of $70 million in funding the Company received just a day prior to the announcement of PHI’s bankruptcy filing from a new term loan with Blue Torch Capital LLC.
Lafayette, LA based PHI listed ongoing cash flows from operations, and the loan value amount as being sufficient liquidity to allow normal business operations to continue uninterrupted during the Chapter 11 process while not compromising service levels or safety measures during the bankruptcy process. Although a lengthy process that can sometimes draw out for several years, PHI management appears optimistic about coming out of the chapter 11 proceedings in a better position like other operators such as CHC Helicopter who emerged chapter 11 proceedings in March of 2017 emerging as a stronger, asset light company that continues to grow their market after restructure.
The Company stated: “After working closely with our advisors since the spring of 2018, interacting with our various stakeholders, and carefully evaluating all possible options, the Board concluded that pursuing Chapter 11 protection is the most appropriate course of action to address our matured debt and strengthen our balance sheet. We are confident this will position the entire company for continued leadership in the industry and provide a platform for PHI’s long-term success. We remain fully committed to all of our stakeholders and to operating with the highest standards of safety and quality as we navigate this process, which we believe is the best option for a timely and efficient resolution to our financial situation.”
The Chapter 11 filings lodged by the company include PHI’s principal U.S. entities. PHI’s international operations in Mexico, Canada, Trinidad & Tobago, Cyprus, Ghana, Israel, Saudi Arabia, the Philippines, Australia, and New Zealand are not included in the Chapter 11 cases.
PHI remains in discussions with the holders of its $500 million in unsecured notes and their advisors to consider alternatives to address PHI’s outstanding debt obligations. The Company is also engaged in ongoing discussions with its various lessors to address certain of its above-market lease obligations. Importantly, the Company believes that its creditors and lessors will be supportive of PHI and its prospective business strategy and, to that end, anticipates filing a plan of reorganization in the early stages of the Chapter 11 process.
PHI has filed a series of motions that, subject to Court approval, will allow it to maintain its usual employee compensation and benefit programs, make payments for goods and services in the normal course, and otherwise operate its business as usual. These motions are typical in a Chapter 11 process and the Company does not anticipate any opposition to its motions.
PHI also projected a very short timeline to emerge from bankruptcy stating that they are aiming to emerge from chapter 11 this summer with a significantly reduced and more sustainable debt structure that will position the Company for long-term success, which will be largely dependent on oversight approval from the banruptcy court and could potentially take longer than expected if other previous cases of this nature are to be used as an example.
PHI had continued to pursue multiple business opportunities in the last two years prior to the bankruptcy filing, acquiring HNZ offshore in 2018, essentially buying a stake in the Australasian offshore market currently dominated by CHC and Bristow. PHI operates a large worldwide fleet of helicopter and fixed wing assets that include The Bell 206L4, 407, 212, Airbus AS350 and 135, Sikorsky S76C++ and S92 and mulitple Leonardo AW139s around the world performing various missions including offshore transport, survey and a large Air Medical fleet.