Unable to pay off $500 million in debt that came due Friday, Lafayette-based helicopter services company PHI Inc. filed for Chapter 11 bankruptcy protection late Thursday in a Texas court.
The move comes after months of talks with the firm’s creditors as PHI looked at various options to reorganize its capital structure.
PHI has slogged through a downturn in the oil and gas industry, its largest segment, in recent years. Its most recent quarterly earnings report showed an $11.5 million loss in the third quarter of 2018.
The bankruptcy filing is not expected to affect day-to-day operations of the firm, including at its Lafayette headquarters, a spokeswoman said.
“PHI is open for business and operating as usual; employees will see no change in their day-to-day work or responsibilities as a result of the filing,” said Rachel Chesley, spokeswoman for PHI.
The company said it made the decision after working with advisers since last spring to evaluate all its options. PHI will continue talking with its creditors about alternatives to addressing its outstanding obligations, and is working to emerge from bankruptcy this summer. The company last month had formed a committee to look at restructuring options.
The company said in bankruptcy court filings it “does not have the current ability to repay” the $500 million debt.
PHI is asking the court to allow it to maintain its normal employee compensation and benefit programs and to otherwise operate its business as usual.
“This filing is also not about PHI’s liquidity as a company — we have enough cash on hand to continue operating business as usual and meet all of our commitments to our stakeholders,” the company wrote in a letter about the bankruptcy. “We are confident that we will complete this process as a stronger company and business partner, with a more sustainable debt structure to underpin our long-term success well into the future.”
The bankruptcy filing includes PHI’s principal U.S. entities: PHI Inc.; AM Equity Holdings LLC; PHI Tech Services Inc.; PHI Air Medical LLC; and PHI Helipass LLC. It does not include its foreign operations.
PHI is the third major helicopter service company to file for bankruptcy in recent years, according to trade publication Aviation International News. CHC Helicopters and Erickson both filed for bankruptcy in 2016, and helicopter leasing company Waypoint filed last November, the publication reported.
PHI’s Lafayette headquarters is the center of its oil and gas segment, where it shuttles people and equipment to and from offshore drilling platforms in the Gulf of Mexico and foreign countries. The company’s customers include Shell, BP, ExxonMobil and ConocoPhillips, among others, according to filings with the U.S. Securities and Exchange Commission.
As of the third quarter of 2018, the company had 126 aircraft available for use in the oil and gas business.
The company has struggled in recent years since oil prices began slumping, dragging down the regional economy and the oil and gas production sector in the Gulf of Mexico.
PHI posted an $11.5 million loss during that quarter, though revenue ticked up during the period to $168.8 million.
The company makes most of its money from the oil and gas segment, posting $93 million during the third quarter. It had $70 million in revenue from air medical and $5.2 million from technical services.
But the oil and gas segment had a net loss of $5.8 million during the period, while air medical saw a $6.2 million profit, a lower gain than in the prior year. Some investors have recommended the company sell off its air medical segment, which is based in Phoenix, Arizona, to help pare down debt.
As of the third quarter, PHI had $1.3 billion in assets.