(Bloomberg) -- When an Irish helicopter company raised $375 million in 2013 from backers including funds controlled by George Soros and Michael Dell, the plan was to build up its leasing arm and tap demand for aircraft used in the oil and gas industry. Five years later, that plan failed to take off.
Waypoint Leasing Holdings Ltd. filed for Chapter 11 protection Sunday, citing a cyclical downturn in the oil and gas industry as a major factor in the company’s insolvency.
The company is the largest independent helicopter leasing company in the world, with operations on every continent except Antarctica. It holds about $1.1 billion in debt, Waypoint general counsel, Todd K. Wolynski, said in a declaration filed in bankruptcy court in Manhattan.
The helicopter industry has been buffeted recently. PHI Inc. bonds plummeted after the company announced a strategic review, Air Methods Corp. bonds decreased after it the company was said to report earnings declines and Bristow Group Inc. equity and bonds dropped after the company said its adjusted full-year loss more than tripled.
Dell’s MSD Capital LP, Soros’ Quantum Strategic Partners Ltd., and Cartesian Capital Group made a $375 million equity commitment in Waypoint in April 2013 and later that year Waypoint reached an agreement for a borrowing capacity to secure $1 billion in assets.
In the following years, Waypoint made multiple purchases, including a deal in late 2014 to buy 31 aircraft worth over $400 million to meet growing demand from the offshore oil and gas industry.
“There’s a lot of underlying demand for helicopters and that will continue,” then-Waypoint Chief Executive Officer Ed Washecka said in a phone interview at the time. “The world is going to need more energy, and that’s true three years from now, 10 years from now, 20 years from now."
Washecka may have been right about the world needing energy, but over the following years Waypoint suffered multiple setbacks. Waypoint derived $75 million, or 53 percent, of its business from CHC Group Ltd., an oilfield services company that went bankrupt in 2016, according to the Wolynski declaration. The fatal crash of an Airbus H225 helicopter in Norway that same year didn’t involve Waypoint but still decimated demand for that aircraft, of which Waypoint owned six, Wolynski said in court papers.
"The weak demand from oil and gas helicopter operators coupled with the
oversupply of available helicopters in the market is significantly impacting the Debtors’ utilization and yields," according to Wolynski. Of the 165 aircraft in the Waypoint fleet, about 35 weren’t generating any income by Nov. 16.
The sponsors, which own 99 percent of the company, tried to help. Last year they suspended their management fee, saving the company about $3 million annually, and in March and April, put in another $20 million in equity capital to support the business, according to Wolynski.
A spokesman for MSD declined to comment. A Soros spokesman didn’t respond to an email seeking comment.
It wasn’t enough. Waypoint said its bankruptcy filing that it has run a sales process in recent months that received bids from "numerous parties" in hopes of seeing the company acquired by a new owner.
The company is seeking debtor-in-possession financing but has yet to reach an agreement with lenders, according to court papers.
The case is Waypoint Leasing Holdings Ltd., 18-13648, Southern District of New York (Manhattan).
©2018 Bloomberg L.P.
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