April 7, 2008

CHC Buyout: an update

CHC has announced the date for their special shareholders meeting to approve the buyout by First Reserve Capital. They also filed their annual information document with SEDAR. The stock has has shot 3% in the span of two days.

The proxy did no disclose any new information, however it gave the breakdown of financing that will be used in the buyout. Initially First Reserve said it will finance the deal with a large portion of its equity but failed to give any details. In the proxy it disclosed that the debt portion will be $850 million out of $2.5 billion deal. I guess seeing the commitment by First Reserve alleviated a lot of concerns around uncertainties of the buyout exposure to the credit market trouble.

The deal is bending the following steps:
  1. shareholders approval, which is almost a none issue,

  2. regulatory approval, German officials gave their blessing others will follow suit, and

  3. court approval will be given once shareholders approve the deal.

The stock price has closed towards the buyout price sans 4.11%. I expect to see the price inch closely towards that mark in the weeks to come.

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