HAI Convention News

CHC sells for $3.7 billion

 - February 23, 2008, 4:05 PM

CHC Helicopter Corp., the world’s largest provider of helicopter services to the offshore oil and gas industry, is to be sold for $3.7 billion in what company officials described as “the largest oilfield services buyout ever.”

First Reserve Corp. of Greenwich, Conn., on Friday announced its intent to purchase CHC. In addition to $1.46 billion in cash, the private-equity firm will assume $1.48 billion in aircraft liabilities and about $779 million in debt.

First Reserve will pay $32.30 per share for the company, a considerable premium over CHC’s price of $21.63 per share at the close of trading on Thursday.
The announcement was made at 9:49 a.m. on Friday, and at the close of trading, the CHC share price had risen to $29.93.

“I’m glad to see that First Reserve recognized the value that was created in CHC over the years and was able to translate that value into a fair offer for all shareholders,” said CHC chairman Mark Dobbin.

Suggesting that the acquisition is a springboard to further expansion by CHC, president and CEO Sylvain Allard described the deal as a “partnership that will help us realize our growth potential.”

The estate of the late Craig Dobbin, who founded CHC Helicopters in 1984, constitutes the largest block of shares in the Vancouver, British Columbia-based company. When its founder died in October 2006, said Allard, there was speculation then that the family might divest itself of its interest in CHC. “There was no intent at the time to sell CHC, but [Dobbin’s death] certainly triggered a lot of outside interest.” However, in recent months, First Reserve was the only suitor. And Allard added, “When you get an offer by a company like First Reserve, you have to consider it, [and] they knocked on the door often enough to convince the board.”

The CHC board unanimously approved the acquisition and has recommended that its shareholders vote in favor of it. Because the Dobbin Estate holds roughly 63 percent of “overall votes,” stockholder approval appears assured.

Allard said he expects the acquisition to be completed by June, pending the satisfaction of all conditions, including regulatory approvals. In the meantime, said Allard, CHC considers the time until then a “no-shop” period, during which the company will not be soliciting counter-bids.

CHC management, including Allard, will remain with the company after the deal closes. “The structure and mandate of the company remain the same,” he said. Dobbin, however, will leave his post as chairman of the board.

Meanwhile, it isn’t a “done deal,” and terms of the agreement allow CHC to terminate it under certain circumstances, among them “a superior proposal that would be subject to fulfillment of certain conditions,” including payment to First Reserve of a $38.05 million break fee.

Referring to the familiar CHC company logo, Allard said emphatically, “You’ll see the hummingbird fly for a long time to come.”