Scott Thanisch, CHC: We need to “build sustainability”
Scott Thanisch, CHC’s chief financial officer and senior vice president, joined the company in 2016 knowing that it was a tough time for helicopter operators. CHC filed for Chapter 11 in 2016 and emerged in March 2017. Almost 30 months later, the market is still tough.
“In the short-term, the oil and gas companies are the beneficiaries of this situation with pricing at all-time lows,” says Thanisch. “However, it is our belief that the oil and gas producers and the operators serving them should all be focused on figuring out how to best build sustainability in the market.”
CHC’s rival Bristow has admitted that it is considering “several financial alternatives”, including Chapter 11 to restructure its debt. Its share price is sitting at an all-time-low and shareholders are calling for the removal of four of its directors.
PHI also announced plans to file for Chapter 11 in March this year, proposing a debt-for-equity swap of more than $630 million.
“CHC has lived the Chapter 11 process from the inside, providing us with a unique perspective on the issues facing the sector. Given the downward pressures on pricing driven by overcapacity in the sector, it is no surprise we have arrived at a point in this industry where many helicopter service providers are financially distressed.”
Questions about CHC’s current financial position were bought forward with the recent coverage from Alexander Gladstone – a senior reporter for Debtwire, an Accuris company. His report reckoned that CHC’s non-public third-quarter earnings show a decrease of revenues of 2% to $210.9 million year-on-year – driven by a lower number of project completions.
Whilst the company’s EBITDA was up 126% for the quarter at $32.9 million, this included $30 million received from a once-off OEM recovery payment. Without this, the group’s profits would be just under $2 million. The $30 million payment is subject to confidentially agreements but is thought to relate to issues with the EC225.
The Debtwire report also stated that CHC is engaging with New York consultancy firm AlixPartners to advise on the operational turnaround.
“We are executing the strategy laid out following our successful restructuring. One component of this strategy is continuing to optimize our costs,” says Thanisch.
“To help us accomplish this restructuring and provide a fresh external perspective, we engaged the performance consulting arm of AlixPartners on a limited basis to zero in on areas for further improvement. That work now is largely complete.”
He adds that CHC is still cutting costs, to: “… secure CHC’s long-term health and create a streamlined, highly competitive cost structure while establishing a fleet of aircraft better aligned with our customers’ businesses.”
Thanisch also clarified that the company has not engaged with advisors to discuss another Chapter 11.
The company’s initial Chapter 11 filing in 2016 shook the oil-and-gas helicopter industry and was, in retrospect, a sign of things to come. Whilst CHC bounced back, the offshore oil-and-gas market certainly did not. CHC has emerged from Chapter 11 into an oil and gas market that is in an even worse state than in 2016. Many of CHC’s competitors are now considering Chapter 11 themselves.
To exit Chapter 11, CHC struck a deal to cut almost a billion dollars of debt in March 2017. The operator received $450 million from Bain Capital and Milestone to help it leave Chapter 11 and, with that, CHC came back with a stronger capital structure and CEO Karl Fessenden at the helm. Existing creditors led by Bain Capital invested $300 million. Milestone restructured leases with the operator and lent CHC $150 million backed by helicopters.
Thanisch was appointed as CFO in December 2017, having served as the interim CEO since October. He first joined the company in April 2016 as vice president and treasurer, shortly before CHC filed.