CHC Group to price up to $600 million convertible preferred shares to yield 8.5%, up 21%

By Rebecca Melvin

New York, Aug. 22 – CHC Group Ltd. plans to price up to $600 million of convertible preferred shares in a private placement with a dividend of 8.5% and in initial conversion premium of 21%, according to a news release.

Clayton, Dubilier & Rice and its affiliates will invest $500 million in CHC through the purchase of newly issued convertible preferred shares, with existing CHC shareholders permitted to purchase up to $100 million of the convertible preferred shares at CHC’s option.

The preferred shares will be convertible into common equity at the holder’s option at a price of C$7.50 at any time with an accretion of 25 basis points quarterly until the eighth anniversary of the closing date.

Dividends will accrue in-kind prior to the second anniversary of the transaction closing date, and in-cash or in-kind at the election of the CHC after that, in addition to participation in any common dividends on an as-converted basis.

The preferred shares cannot be converted for two years and will convert automatically after that until year eight if shares trade at or above 175% of the conversion price. After year eight, the shares will convert automatically at the average the stock trades at or above the then-current conversion price for 10 consecutive trading days.

Proceeds will be used to reduce debt and other fixed charges; optimize the mix of owned versus leased aircraft; and for other general corporate purposes.

Based in George Town, Cayman Islands, CHC is a provider of commercial helicopter services to the offshore oil and gas industry.

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