OREANDA-NEWS. CHC Group today announced that it has entered into a plan support agreement (the "PSA") with respect to the terms of a chapter 11 plan of reorganization (the "Plan"). The PSA contemplates a comprehensive recapitalization of the Company that will provide $300 million in new capital from its existing creditors, as well as terms for restructured aircraft leases and additional asset based financing commitments of $150 million from its largest lessor and its affiliates. The PSA will be implemented pursuant to a plan of reorganization as part of CHC's Chapter 11 proceedings that were commenced on May 5, 2016. The Company expects to submit the Plan to the court in the next few weeks and anticipates emerging from the court-supervised process as quickly as possible with forecasted liquidity of more than $400 million and access to an additional $150 million of aircraft financing.

"Executing this agreement enables us to establish a stronger capital structure for CHC and is another critical milestone toward completing our court-supervised reorganization process," said Karl Fessenden, President and Chief Executive Officer. "With the support of the Plan Sponsors, Unsecured Creditors Committee, and The Milestone Aviation Group Limited as our lead aircraft lessor, we look forward to obtaining approval of our restructuring plan, recapitalizing the company, and putting CHC on the path to long-term success. We remain confident that the restructuring we are undertaking will position CHC to capitalize on future growth opportunities as our industry recovers."
 
The parties to the PSA include: The Milestone Aviation Group Limited ("Milestone") and certain of its affiliates (the "Milestone Parties"), holders (the "Plan Sponsors") of approximately 67.56% of the outstanding principal amount of the Company's 9.25% Senior Secured Notes due 2020 (the "Secured Notes"), the Official Committee of Unsecured Creditors (the "UCC"), and holders (the "Individual Creditor Parties" and together with the Milestone Parties, the Plan Sponsors and the UCC, the "Consenting Creditor Parties") of approximately 73.56% of the outstanding principal amount of the Company's 9.375% Senior Notes due 2021 (the "Unsecured Notes").
 
"CHC is one of the leading global providers of helicopter services, and will be very well-positioned post restructuring to benefit from a recovery in the global energy industry," said Mike Bevacqua, a Managing Director at Bain Capital Credit, which is the Company's lead Plan Sponsor and largest secured creditor. "We believe this recapitalization will have a positive outcome for all the Company's stakeholders, and look forward to continuing to play a constructive role in supporting CHC's progress."
 
Under the lease restructuring term sheet entered into between the Company and Milestone (the "Milestone Term Sheet"), which is incorporated into the PSA, Milestone will serve as the lead lessor for CHC's go-forward fleet of helicopters. Milestone will provide CHC with modified lease terms on their existing leases and additional helicopters at market lease rates. In addition to the leased aircraft, the Milestone Term Sheet includes provision of a commitment letter for a new $150 million asset backed debt facility for purchase or refinancing of aircraft.
 
Holders of the Secured Notes, Unsecured Notes and General Unsecured Claims will receive the following general treatment under the Plan:

  • In addition to the ability to participate in the Rights Offering allocated to the Secured Notes, all holders of Secured Notes will receive their pro rata share of 79.5% of new equity ("New Equity") to be issued by a newly-formed Cayman limited liability company (the "Reorganized Company") (prior to dilution by New Second Lien Convertible Notes and the MIP), which equates to 11.6% of New Equity (fully diluted on account of the New Second Lien Convertible Notes, but excluding the MIP).
  • All holders of Unsecured Notes will receive their pro rata share of 8.9% of New Equity (prior to dilution by the New Second Lien Convertible Notes and the MIP), which equates to 1.3% of New Equity (fully diluted on account of the New Second Lien Convertible Notes, but excluding the MIP).
  • All other holders of General Unsecured Claims of the Company will receive their pro rata share of (a) 11.6% of New Equity (prior to dilution by the New Second Lien Convertible Notes and the MIP), which equates to 1.7% of New Equity (fully diluted on account of the New Second Lien Convertible Notes, but excluding the MIP), and (b) $37.5 million in new unsecured notes of the Reorganized Company.
  • The Plan may also provide for distributions up to an aggregate amount of $750,000 in cash to holders of certain General Unsecured Claims, with any such distributions reducing the principal amount of the New Unsecured Notes on a dollar for dollar basis and further provides for an allocation from distributions on the Secured Notes and/or Unsecured Notes of a specified amount of New Membership Interests for any Non-Eligible Offerees of the Secured Notes and/or Unsecured Notes who timely execute a Non-Eligible Offeree acknowledgement and vote in favor of the Plan.

Holders of the Company's Revolving Credit Agreement Claims will receive a new term note in the amount of their claim, in accordance with the Bankruptcy Code, or such other treatment that is reasonably acceptable to the Company, the UCC, and the Plan Sponsors. The Company and the Consenting Creditor Parties are currently in active negotiations with holders of the Revolving Credit Agreement Claims as to their treatment.