Erickson Chapter 11

General discussion from the very important bit between the carpark and the flight line.
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Twistgrip
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Erickson Chapter 11

Postby Twistgrip » Thu Nov 10 2016, 10:35

"You can watch things happen, you can make things happen or you can wonder what happened"
Gonsky
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Re: Erikson Chapter 11

Postby Gonsky » Thu Nov 10 2016, 21:38

They went public in 2012 and then loaded up in debt and went on a buying spree, with a downward turn in the energy business they were unable to meet repayments on dollar dominated debt.

The moment the US increases the Fed rate more companies will be hit with higher interest replacements and more defaults will occur.

Regards,

Gregory
'Mankind has a perfect record in aviation - we have never left one up there!'
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100ft
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Re: Erikson Chapter 11

Postby 100ft » Fri Nov 11 2016, 04:25

In communist america, when a company gets too big it can't bid on US forest service contracts. Erikson lost all contract fire work in america.
Gonsky
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Re: Erikson Chapter 11

Postby Gonsky » Fri Nov 11 2016, 05:49

Communist America????

Erickson lost their eligibility to compete for USFS firefighting contracts when they purchased Evergreen Helicopters and Air Amazonia and they then had about 80 helicopters. They simply no longer qualified as a “small business” and that is how it works and they knew the law but hoped they would have additional revenue flows from buying the above companies and could cover the loss of USFS gigs.

Erickson had announced in mid-August that it could default on its 14.6 mil worth of bonds in Nov and had even filed the potential of a chapter 11 with the with the U.S. Securities and Exchange Commission. A few weeks later at end of August Moody downgraded their 355 mil debt to Caa3 as in very high risk category. And that was basically the end of the story with that much debt and that rating your gonsky.

Even in early 2016 a subcontractor, Starlight aviation was in the process of suing then for unpaid bills over $1 mil and there were reports of others.

Basically the 2013 purchase of Evergreen Helicopters exposed Erickson to the big scary world of defence business, which at the time equalled $154 million in sales in 2014, then $105 mil in 2015 and finally $40 mil in 2016. They did not factor in the US reducing its involvement offshore conflicts, middle east etc. Add to that additional revenue drops in the industry from oil and gas sectors it only made it worse but that was not making them haemorrhage $$ like the Evergreen trade and the debt loading.

Another hit came from a $71 mil balance sheet right off/drown of goodwill which basically meant they overpaid big time for Evergreen, it was at the height of the market. So $251 mil to buy and then issues $355 mil worth of debt to cover, increasing long term debt load by 3 times which was never going to be sustainable.

There was also some issue of $60 mil worth of dodgy debt that got them sued in a class action by shareholders and had to pay $18 million to cover it, the payment was for a sus internal loan repayment.

Their future is not looking good as before they cannot survive in a low interest environment, they have no chance when it moves up.

Regards,

Gregory
'Mankind has a perfect record in aviation - we have never left one up there!'

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