Discovery Air

[Tuk U]

Bailed out Whew!!!!
N.W.T. to lend $34 million to helicopter operator Discovery Air
9 hours ago
LONDON, Ont. — The Northwest Territories Opportunities Fund has agreed to lend $34 million to Discovery Air (TSX:DA.A), which operates Great Slave Helicopters, Air Tindi and Discovery Mining Services for the mining and resource sectors in northern Canada.
The money will refinance $33 million of debt that matures Feb. 1.
The new loan has a two-year term and bears interest at 10 per cent per year. It's repayable in one balloon principal amount at maturity.
Discovery Air also has received an extension of the expiry date of its operating line of credit to January 23, 2009 at a reduced borrowing limit of $5 million.
Great Slave Helicopters, a wholly owned subsidiary of Discovery, provides aviation services to private-sector companies and governments operating in mineral exploration, mining, wildlife services, forest fire suppression, oil and gas exploration, power line construction and tourism.
Air Tindi's planes provide scheduled and chartered passenger and air cargo services to private sector companies while Discovery Mining Services provides remote exploration camps and other services to diamond and mineral exploration companies.
For the nine months ended Oct. 31, Discovery Air had $132 million in revenue, up from $103 million in the year-earlier comparable period. Net earnings fell to $8.8 million from $12.3 million, with the biggest drop occurring in the third quarter of fiscal 2009.
In the three months ended Oct. 31, Discovery earned $2.6 million or two cents per share, down from $5.9 million or five cents per share in the third quarter of fiscal 2008.
The company said in its analysis of the third quarter that Great Slave had been a major contributor to the reduced profitability of the company.
"Great Slave had substantially increased its infrastructure earlier in the season and to a much larger extent than the prior year in light of indications that fiscal 2009 demand would surpass that of 2008, which was a record year for Great Slave," the company said in its third-quarter report.
"Unfortunately, with the highly seasonal nature of its business operations, it was unable to reduce the resulting overhead costs as rapidly as the demand for aviation services weakened. This led to operating costs being much higher than the actual levels of flight activity warranted."
Discovery Air shares traded Monday at 30 cents, up six cents from Friday's closed but down

[Labour Board]

Reallly! WTF!

What about Arctic Sunwest, Buffalo, Summit, Landa, Northwestern air lease, Wolverine Air Simpson Air, Ursus Aviation, North Wright Airways, Aklak Air (Borek), and yes even North Cariboo (they have a base in Ft. Liard) should get bail outs equal to Air Tindi / Discovery air IMHO!

[rum-runner]

As a former Great Slave fling wing driver..I can only hope that the $$ gets to the bottom of the barrel. Chances are the cream will be skimmed off at the top..and yup you guessed it..just about the time the "one balloon principal amount" is due..the real white towel will be tossed into the ring.

Sad to see tax payers $$ money gambled like this.

[Donald]

Well I'm sure the territorial government would like to see the operator providing the 5 year (~$20 million) medevac service stay around.

[Labour Board]

Arctic Sunwest, Aklak(Borek), Landa, North Wright, North Western all run King airs and would love to bid on that contract, if you can't stay in business with a 20 million 5 year contract then you don't deserve to be in business!

[Donald]

Arctic Sunwest, Aklak(Borek), Landa, North Wright, North Western all run King airs and would love to bid on that contract, if you can't stay in business with a 20 million 5 year contract then you don't deserve to be in business!

I'm sure most of those companies did bid on the contract. It went to the lowest bidder, who at the time was also the current medevac operator. Funny how they asked to re-negotiate the contract after it was awarded, as they were losing money on it!

[jspitfire]

The company said in its analysis of the third quarter that Great Slave had been a major contributor to the reduced profitability of the company.

Well I'm sure the territorial government would like to see the operator providing the 5 year (~$20 million) medevac service stay around.

Discovery Air is made up of many different companies. As the article says, Great Slave was the major loss, I beleive Tindi still turned a profit.

[godsrcrazy]

This is Bulls--- there are many companies in north suffering right now i believe with the down turn in the economy. The pipe line hasen't gone thru, Oil and Gas is dropping. The exploration market is drying up. Even the Diamond mines had a news release saying they are cutting back. Is the GNWT going to help all forms of transportation out let alone the service industries that are starting to suffer. As far as medivac contract. The system worked well when i lived there with this being split between any carriers that wanted to provide medivac capable aircraft. If this is the price they have to pay for that they should re think things.

I say someone has a picture of someone doing a sheep or some thing.

[Tuk U]

As a former Great Slave fling wing driver..I can only hope that the $$ gets to the bottom of the barrel. Chances are the cream will be skimmed off at the top..and yup you guessed it..just about the time the "one balloon principal amount" is due..the real white towel will be tossed into the ring.

Sad to see tax payers $$ money gambled like this.

Arctic Sunwest, Aklak(Borek), Landa, North Wright, North Western all run King airs and would love to bid on that contract, if you can't stay in business with a 20 million 5 year contract then you don't deserve to be in business!

Well said guys, my guess is that we see 5T next as I'm sure they are already there with their hands out, but the problem they have is that they are the ones in the picture with the sheep, (not the crews) just to be clear... but the top end:)

[Commonwealth]

Yes, those other companies should be fuming. It's the same story everywhere I guess, "we f&cked up, but the government will help us.

On the lighter side I heard Larry Flynt has written to the US congress and requested a $4 billion bailout for the porn industry in these uncertain times.

[Tuk U]

Sort of like having one quit and the other one coughing, & spitting, doesn't look like they have a very good future....

Northern News Services
Published Wednesday, January 21, 2009
SOMBA K'E/YELLOWKNIFE - Discovery Air has penned a deal with the territorial government to borrow $34 million dollars, aimed to help the company and its Northern subsidiaries stay in the air.

Discovery owns Great Slave Helicopters, Air Tindi and Discovery Mining Services and employs about 275 Northern workers.

The deal, announced Monday, will work as a loan and is expected to help Discovery recover from what it recently called "the rapid deterioration in general business conditions" - otherwise known as the economic slowdown. The majority of the cash will be used to refinance $33-million of debt, which was acquired in 2007 when the company entered into a loan agreement for a portion of the $35 million-plus purchasing price of Quebec-based military training company Top Aces.

In it's most recent quarterly statement, for the period ending Oct. 31, 2008, Discovery widely acknowledged if the loan - which comes to term Feb. 1, 2009 - was not refinanced or extended the company would be in serious trouble: "The Corporation recognizes ... the Corporation could be placed in a situation by its lenders where it is not able to operate."

The same financial statement puts Discovery's overall long-term debt at $145 million -- $40 million of which is set to come due within one year. In the nine months ending Oct. 31, the company has brought in $132 million in revenue - but only $8.8 million in net earnings.

"We've been in the market for several months looking around to various sources in the south and some of the more typical lenders from Toronto," said David Jennings, chief executive officer and interim president of the company.

Jennings said he found out about a funding program in the North called the Northwest Territories Opportunities Fund through a consultant.

"Our company believes very strongly in the Northern economy," said Jennings, adding long-term growth for the company hinges on it having a big presence in the North.

"This was a deal that appealed to us for that reason -- so we could keep the strong presence in the North and keep the Northern companies stronger," said Jennings.

The multi-million loan, which has a 48-month term and bears a 10 per cent yearly interest, comes with several strings attached.

One is to move it's nine-person London, Ont. corporate headquarters to Yellowknife, and another is to run its Great Slave Helicopter flying school in the North.

Both conditions will benefit Yellowknife as the company works to build growth in the North, said Jennings.

"It's more pilot jobs, it's more mechanic jobs, it's more administrative jobs -- in Yellowknife and throughout the North," he said.

Discovery cut six Yellowknife positions late last November partly in response to a decline in business from the slowing mining exploration scene. Jennings said it was too early to tell if the cash injection from the territorial government would mean putting people back in those jobs, but did say it should mean no further lay-offs.

"We don't expect any further layoffs, and depending on how this funding had gone it could have been a possibility. I'm not saying it would have been a possibility, but it could have," he said.

[SeptRepair]

Makes you wonder what really is going on. In Mar 2007 Discovery Air tried to buy Vancover Island Helicopters for about 167 million. The deal fell quickly apart when Ken Norie (for lack of better words) told them to go pound salt after he found out what they planned on doing with VIH after Discovery took control. Looks like Ken made a good choice seeing how Discovery is now begging for Government help.

[sky's the limit]

Makes you wonder what really is going on. In Mar 2007 Discovery Air tried to buy Vancover Island Helicopters for about 167 million. The deal fell quickly apart when Ken Norie (for lack of better words) told them to go pound salt after he found out what they planned on doing with VIH after Discovery took control. Looks like Ken made a good choice seeing how Discovery is now begging for Government help.

Actually,

That's not quite true.

The deal fell apart when VIH's books were opened up and found to be nowhere near ready to be traded publicly - that's straight from an on the record interview I did last August. VIH is hurting right now too - we all are.

stl

[Tuk U]

Actually,

That's not quite true.

The deal fell apart when VIH's books were opened up and found to be nowhere near ready to be traded publicly -

stl[/quote]


Actually...... you're barking up a Dead dogs arse, you must have been at your limit for intake.

[sky's the limit]

Actually,

That's not quite true.

The deal fell apart when VIH's books were opened up and found to be nowhere near ready to be traded publicly -

stl


Actually...... you're barking up a Dead dogs arse, you must have been at your limit for intake.

Huh?

[ragbagflyer]

Huh?

Haha, my thoughts exactly!

[SeptRepair]

I was just paraphrasing a quote from an interview with Ken.
"Ken Norie, chief executive and president of Victoria-based VIH Aviation Group, did not divulge details of how specifically the deal broke down. In an interview, Norie said "Price was not the issue," adding the "differences were in the vision of going forward."
So i guess its a game of his word against a Discovery representatives word. Either way its irrelevant now.

[sky's the limit]

I was just paraphrasing a quote from an interview with Ken.
"Ken Norie, chief executive and president of Victoria-based VIH Aviation Group, did not divulge details of how specifically the deal broke down. In an interview, Norie said "Price was not the issue," adding the "differences were in the vision of going forward."
So i guess its a game of his word against a Discovery representatives word. Either way its irrelevant now.

Yes,

It is irrelevant now. There are two VERY interesting sides to that "deal" though, and how it fell through. As is becoming a common thread for me, I was surprised at the details which were left out the public statements. There were some issues on both sides.

Oh well, see what happens to both companies going forward, 2008 wasn't what we all thought.

stl

[nookie201]

Guess who lends a lot of money to NWT ?....Pacific Western Bank of Canada.
Pacific Western Bank was CEO of Discovery & his Son still runs it today.....

NWT loans I'm sure are guarranteed by federal goverment. taxpayer will end up sucking this up.

[Anonymous1]

I think Discovery is finished. Borrowing at 10% is higher then their profit margins of 6% which means they will now be losing more money, making it harder to find new financing and its going to turn into a death spiral. Walsten's, Hicks & Lawrence, Great Slave, Tindi....gone in a year, guaranteed. Add in the weakness in the mining sector finding new money and there's not much left. Its great to expand but when you take the owner out of a small business, the motivation is gone and all these carriers are basically a small business when they're on their own.

[Tuk U]

Guess who lends a lot of money to NWT ?....Pacific Western Bank of Canada.
Pacific Western Bank was CEO of Discovery & his Son still runs it today.....

NWT loans I'm sure are guarranteed by federal goverment. taxpayer will end up sucking this up.

Another guy barking up a dead dogs arse, you haven't got a clue, that's obvious, i

[sky's the limit]

Guess who lends a lot of money to NWT ?....Pacific Western Bank of Canada.
Pacific Western Bank was CEO of Discovery & his Son still runs it today.....

NWT loans I'm sure are guarranteed by federal goverment. taxpayer will end up sucking this up.

Another guy barking up a dead dogs arse, you haven't got a clue, that's obvious, i

You crack me up....

[B-rad]

Ya Tuk U, do you actually have anything to educate us with or are YOU barking up a dead dogs arse??

[ipilot54]

Many of those 'bought out' by Discovery took a BIG chunk of their payment in Discovery's shares. Have you seen their price lately?

[Tuk U]

Ya Tuk U, do you actually have anything to educate us with or are YOU barking up a dead dogs arse??

Well if you're ready to be educated then listen up or rather have a look, I started this post with information printed in the media and then followed up with more info also in the media, unlike stl he's "cracked up"