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CHC expects to pass EU ownership hurdle to close First Reserve deal

March 14, 2008, Vancouver - CHC Helicopter Corp. said Thursday it has secured the appropriate European investment to help close a $3.7-billion takeover by First Reserve Capital Corp.


March 14, 2008
By Brenda Bouw

Topics

March 14, 2008, Vancouver – CHC Helicopter Corp. said Thursday it has
secured the appropriate European investment to help close a
$3.7-billion takeover by First Reserve Capital Corp.

Sylvain Allard, president and chief executive of CHC, said the
company has filed the appropriate submissions, but would not name
the investor or investors.

"It involves the ownership by a European investor that will have
the operations, but the assets will not be in those operations,''
Allard said in a conference call with analysts.

"These people will have, in terms of the operating company …
the majority of shares … which is fairly typical.''

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The company said it has been working on the new investor for some
time, likely since the death of company founder Craig Dobbin in
October 2006.

The acquisition by U.S.-based First Reserve, announced last
month, has one complicated hurdle when it comes to licences.

Both Canadian and European Union regulations require the company
be controlled by a national – rules require at least a 51-per-cent
voting interest.

The founding Dobbin family, with dual Canadian-Irish citizenship
and about a 60-per-cent voting interest, currently fulfills that
requirement.

"I don't think they would have announced a deal without being
pretty certain they can get the regulatory ship in shape,'' said
Michael Mills, an analyst with Halifax-based Beacon Securities.

However, Mills said the regulatory approvals are still a risk
factor in the closing of the deal, which is expected at the end of
June.

"It's still a bit of a variable. There's always a bit of a risk
when dealing with regulatory boards, but I'd classify this risk as
relatively small at this point.''

Michael Mazar, an analyst with BMO Capital Markets in Calgary,
said the timing of the deal is also something to watch.

The company has said it will cancel its 12.5 cent quarterly
dividend if the deal is closed by July 23.

First Reserve's offer is worth $32.68 a share for each of CHC's
class A and class B shares, for a total cash component of $1.5
billion. It would also assume about $800 million in debt as well as
the liability associated with off-balance-sheet aircraft leases,
which the company said amounts to about $1.4 billion or $1.5
billion.

Shareholders will vote on the deal at a meeting in Vancouver on
April 29. The deal also requires approval in Canada and Europe.

Thursday's conference call came after CHC said reported late
Wednesday its third-quarter profit was nearly cut in half compared
with a year ago as revenue grew seven per cent.

In its financial report, the flight services company said it
earned $6.5 million or 14 cents per share on $321.9 million in
revenue for the three months ended Jan. 31.

That compared with a profit of $12.8 million or 28 cents per
share on $300.8 million in revenue for the same period a year
earlier.

Also Thursday, Allard commented on the crash of an affiliate,
Brazilian Helicopter Services Taxi Aereo S.A., in the Campos Basin
off the coast of Brazil on Feb. 26.

Four people died and the helicopter pilot is still missing.

Allard expressed sadness about the accident and said it "reminds
us all that our safety management systems must be constantly
evaluated and improved.''

He said the cause of the crash continues to be investigated.

On the TSX Thursday, CHC shares were trading down 12 cents at
$30.48.

THE CANADIAN PRESS


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