In a widely anticipated move, helicopter offshore services company PHI filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Northern District of Texas yesterday. PHI’s move was triggered by its failure to repay $500 million worth of unsecured 5.25 percent senior notes due this month. PHI telegraphed a likely bankruptcy filing as early as last October when it terminated a previously announced cash tender offer for the repurchase of those notes and had been under pressure from creditors and investors to sell off its profitable air medical division to satisfy that obligation.
PHI said it would continue to operate normally during bankruptcy restructuring with its existing cash and $70 million from a new Wall Street investment firm, Blue Torch Capital. Blue Torch operates a $750 million “Capital Credit Opportunities Fund” that specializes in making high-interest loans to “companies in transition.” PHI said the bankruptcy filing includes only its principal U.S. entities and excludes foreign entities in Mexico, Canada, Trinidad & Tobago, Cyprus, Ghana, Israel, Saudi Arabia, the Philippines, Australia, and New Zealand. PHI said it remained in discussion with the holders of its $500 million worth of unsecured notes “to consider alternatives to address PHI’s outstanding debt obligations.” PHI also is in discussions with various helicopter lessors “to address certain of its above-market lease obligations.” The company said it is working on a reorganization plan and hopes to emerge from bankruptcy this summer. PHI operates a fleet of 240 aircraft from 70 locations and employs 2,200 worldwide.
PHI’s bankruptcy is the third among major helicopter service companies in recent years. CHC Helicopters and Erickson both filed bankruptcy in 2016. Helicopter leasing company Waypoint, which had a large exposure to offshore helicopter services companies, filed bankruptcy last November. Waypoint’s assets were later acquired by Australia’s Macquarie Group at a steep discount, for $650 million, in a deal announced late last year and that closed this month.