Oct 2 - Standard & Poor's Ratings Services today said it assigned its 'B+' issue-level rating, and '4' recovery rating, to CHC Helicopter S.A.'s US$200 million senior secured notes due 2020. The '4' recovery rating indicates our expectations of average (30%-50%) recovery in the event of default. CHC Helicopter S.A. is a subsidiary of 6922767 Holding s.a.r.l. (collectively, CHC Helicopter).
The notes will be guaranteed by CHC Helicopter and its subsidiaries including CHC Helicopter Holding s.a.r.l. The notes issuance will not lead to any increase in debt levels as proceeds from the notes will be used to pay down debt outstanding under the company's credit facility. Standard & Poor's adjusted debt-to-EBITDA ratio is about 7.5x and expected to improve to 7.0x by fiscal year-end 2013 and 6.0x by fiscal year-end 2014.
"The 'B+' rating and stable outlook on CHC Helicopter reflect what we consider to be the company's highly leveraged financial risk profile and fair business risk profile," said Standard & Poor's credit analyst Jatinder Mall. "We base these profiles on our view of the company's high leverage ratio, the fact that its private equity ownership limits the rating to the 'B' category, and its participation in a capital-intensive industry," Mr. Mall added.
Somewhat mitigating these weaknesses, in our opinion, are the company's strong position as the world's largest provider of commercial helicopter services; favorable medium-to-long-term demand outlook from the offshore oil and gas production industry (about three-quarters of revenue); and relatively moderate levels of competition in the markets where it provides services.
CHC Helicopter's fair business risk profile reflects a company that operates in a bifurcated industry comprising the Gulf of Mexico and the rest of the world. The company has made a strategic decision not to operate in the Gulf of Mexico, which is a highly competitive market. The rest of the world is considered oligopolistic, with CHC Helicopter and Bristow Group Inc. (BB/Negative/--) being major global operators. In the majority of the markets in which the company operates, CHC Helicopter has a distinct advantage given its global customer relationships, safety process, and newer aircraft.
(For the recovery analysis see "Recovery Report: CHC Helicopter S.A.'s Recovery Rating Profile," published Sept. 26, 2012, on RatingsDirect on the Global Credit Portal.)
RATINGS LIST 6922767 Holding s.a.r.l. (CHC Helicopter) Corporate credit rating B+/Stable/-- Rating Assigned CHC Helicopter S.A.
US$200 mil sr secured notes due 2020 B+
Recovery rating 4
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. All ratings affected by this rating action can be found on Standard & Poor's public Web site at . Use the Ratings search box located in the left column. (New York Ratings Team)