A significant pair of dissident PHI shareholders are urging the company to offload its air medical division—the nation’s third-largest independent helicopter air ambulance provider—as an alternative to refinancing $550 million worth of the parent company’s debt at double-digit interest rates.
Alesia Asset Management and investor Timothy Stabosz, who together control 4.6 percent of PHI’s non-voting stock, are publicly urging PHI’s board to sell its helicopter air ambulance division to pay down the debt of the parent company, whose main business is providing helicopter services to the offshore energy market.
In a letter to the company’s board earlier this month, the pair commended PHI’s board for rejecting a proposal by lenders to refinance PHI’s debt at a proposed 11 to 12 percent and suggested selling PHI Air Medical as an alternative to taking on more debt. “We believe a sale of one of PHI’s two business segments would unlock the most value for shareholders. Given the incipient recovery in the oil-and-gas business, air medical is the most obvious candidate for sale,” the pair wrote. They said they believe PHI Air Medical could fetch a market price of $475 million based on the recent price paid for the nation’s leading air ambulance provider, Air Methods, which was acquired last year for $2.5 billion in cash plus net debt by affiliates of investment firm American Securities Corp.
Selling Air Medical for $475 million would leave PHI with only $75 million to refinance and Alesia and Stabosz maintain this could be done at a more reasonable interest rate yielding better financial results for the company. “The subsequent deleveraging would tremendously benefit shareholders,” they said.
Further, they think that holding onto the oil-and-gas division of the company makes more sense given that tenders for offshore drilling rigs have increased 50 percent in the last six months, with much of that activity taking place in the Gulf of Mexico, where PHI has a strong market presence. “More drilling requires more helicopters, and it is clear that PHI and its competitors will start seeing substantially more revenue in 2019 and 2020,” Alesia and Stabosz said. “The industry needs to see only a relatively small pick-up in activity before the oversupply on helicopters transitions into a shortage and helicopter operators begin to enjoy significant pricing power. A modest recovery in offshore drilling could therefore lead to a very robust recovery for PHI’s oil and gas business,” they added.
A significant pair of dissident PHI shareholders are urging the company to offload its air medical division—the nation’s third-largest independent helicopter air ambulance provider—as an alternative to refinancing $550 million worth of the parent company’s debt at double-digit interest rates.
Alesia Asset Management and investor Timothy Stabosz, who together control 4.6 percent of PHI’s non-voting stock, are publicly urging PHI’s board to sell its helicopter air ambulance division to pay down the debt of the parent company, whose main business is providing helicopter services to the offshore energy market.
In a letter to the company’s board last month, the pair commended PHI’s board for rejecting a proposal by lenders to refinance PHI’s debt at a proposed 11 to 12 percent and suggested selling PHI Air Medical as an alternative to taking on more debt. “We believe a sale of one of PHI’s two business segments would unlock the most value for shareholders. Given the incipient recovery in the oil-and-gas business, air medical is the most obvious candidate for sale,” the pair wrote. They said they believe PHI Air Medical could fetch a market price of $475 million based on the recent price paid for the nation’s leading air ambulance provider, Air Methods, which was acquired last year for $2.5 billion in cash plus net debt by affiliates of investment firm American Securities Corp.
Selling Air Medical for $475 million would leave PHI with only $75 million to refinance and Alesia and Stabosz maintain this could be done at a more reasonable interest rate yielding better financial results for the company. “The subsequent deleveraging would tremendously benefit shareholders,” they said.
Further, they think that holding onto the oil-and-gas division of the company makes more sense given that tenders for offshore drilling rigs have increased 50 percent in the last six months, with much of that activity taking place in the Gulf of Mexico, where PHI has a strong market presence. “More drilling requires more helicopters, and it is clear that PHI and its competitors will start seeing substantially more revenue in 2019 and 2020,” Alesia and Stabosz said. “The industry needs to see only a relatively small pick-up in activity before the oversupply on helicopters transitions into a shortage and helicopter operators begin to enjoy significant pricing power. A modest recovery in offshore drilling could therefore lead to a very robust recovery for PHI’s oil and gas business,” they added.