Great Slave Helicopters has been granted creditor protection.
The company, based in Yellowknife and until last month a subsidiary of Discovery Air, said in court filings it has lost more than $5 million annually for years.
In a news release on Tuesday, the company said it had been granted protection by an Ontario court and could now “explore all options” for its survival.
Being granted protection – as Discovery Air was in March of this year – allows Great Slave Helicopters, or GSH, to temporarily avoid repaying creditors while coming up with a plan to restructure and track down either new investment or a potential buyer.
Creditor protection does not mean the company is bankrupt or in receivership, and is designed to avoid those eventualities.
Great Slave, incorporated in 1984, is responsible for more than $100 million in secured debt owed to a range of creditors, court documents stated. An independent accountancy firm, referred to as a monitor, will help the company determine how to move forward while under protection.
‘Not profitable in its present state’
“[The company] has been engaged for some time in efforts to restructure GSH’s business and operations in order to be viable on a long-term basis,” read a statement of facts filed in Ontario’s Superior Court of Justice on Sunday. The company’s creditors are based in Ontario, as is its legal counsel, and Discovery Air’s earlier creditor protection proceedings were conducted in the province.
“Based on the persistently difficult financial condition of GSH,” the statement continued, “its anticipated continued need for additional funding in order to continue its business, and [major creditor] Clairvest’s unwillingness to continue to provide such further funding to cover operating losses, as well as other factors, GSH has concluded that a restructuring or sale of its business and/or assets in an orderly manner is best facilitated through court-supervised proceedings.”
Great Slave Helicopters said it would continue working on forest firefighting contracts in the NWT, Ontario, and Alberta until at least the end of this month.
Alasdair Martin, president of Great Slave Helicopters for the past two years, said in an affidavit “a slowdown of the oil and gas and mining sectors” was one cause of the company’s financial distress.
Martin said maintenance costs and a slowdown in the global charter helicopter market were also to blame.
His affidavit appeared to suggest local competition had forced prices down and hurt the company’s revenues. Martin stated: “GSH’s business has not been profitable for several years. In addition to rising costs, GSH has been unable to raise flying rates or boost utilization due to an oversupply of helicopters in the market.
“GSH has incurred losses over the last two fiscal years totally approximately $13.7 million,” the affidavit continued, “with those losses increasing on a year over year basis. Revenue has also declined in that two-year period.
“Forecasts … indicate that GSH will not be profitable in its present state for the foreseeable future. Given its financial circumstances … there is no viable prospect of raising the necessary funding to continue GSH’s operations absent a restructuring.”
Air Tindi not affected
How that restructuring will look, and how the company’s employees will be affected, is not yet clear. Court filings appear to indicate the company will generate enough cashflow over the next month to pay staff as usual.
Discovery Air sold Great Slave Helicopters to 10671541 Canada Inc, a holding company known as ‘Acquireco’, in mid-August as part of its own restructuring proceedings.
The helicopter company employs around 200 staff at facilities in Yellowknife, Ontario, Alberta, and British Columbia, alongside 55 more as part of a Chilean subsidiary of its own.
Great Slave’s fleet consists of 51 helicopters, 34 of which it owns and 17 of which are leased from elsewhere. Twelve of those helicopters have been used as security with creditors. One creditor, ECN Aviation, has commenced proceedings regarding eight helicopters over which it holds security.
Air Tindi and Discovery Mining Services – both also purchased from Discovery Air by 10671541 Canada Inc last month – have not filed for similar protection, “continue to operate in the normal course and are otherwise unaffected by the proceedings,” Tuesday’s news release stated.