CHC Group (OTC Pink Sheets: HELIQ) today announced that it has entered into a plan support agreement (the “PSA”) with respect to the terms of a chapter 11 plan of reorganization (the “Plan”). The PSA contemplates a comprehensive recapitalization of the Company that will provide $300 million in new capital from its existing creditors, as well as terms for restructured aircraft leases and additional asset based financing commitments of $150 million from its largest lessor and its affiliates. The PSA will be implemented pursuant to a plan of reorganization as part of CHC’s Chapter 11 proceedings that were commenced on May 5, 2016. The Company expects to submit the Plan to the court in the next few weeks and anticipates emerging from the court-supervised process as quickly as possible with forecasted liquidity of more than $400 million and access to an additional $150 million of aircraft financing.

“Executing this agreement enables us to establish a stronger capital structure for CHC and is another critical milestone toward completing our court-supervised reorganization process,” said Karl Fessenden, President and Chief Executive Officer. “With the support of the Plan Sponsors, Unsecured Creditors Committee, and The Milestone Aviation Group Limited as our lead aircraft lessor, we look forward to obtaining approval of our restructuring plan, recapitalizing the company, and putting CHC on the path to long-term success. We remain confident that the restructuring we are undertaking will position CHC to capitalize on future growth opportunities as our industry recovers.”

The parties to the PSA include: The Milestone Aviation Group Limited (“Milestone”) and certain of its affiliates (the “Milestone Parties”), holders (the “Plan Sponsors”) of approximately 67.56% of the outstanding principal amount of the Company’s 9.25% Senior Secured Notes due 2020 (the “Secured Notes”), the Official Committee of Unsecured Creditors (the “UCC”), and holders (the “Individual Creditor Parties” and together with the Milestone Parties, the Plan Sponsors and the UCC, the “Consenting Creditor Parties”) of approximately 73.56% of the outstanding principal amount of the Company’s 9.375% Senior Notes due 2021 (the “Unsecured Notes”).

“CHC is one of the leading global providers of helicopter services, and will be very well-positioned post restructuring to benefit from a recovery in the global energy industry,” said Mike Bevacqua, a Managing Director at Bain Capital Credit, which is the Company’s lead Plan Sponsor and largest secured creditor. “We believe this recapitalization will have a positive outcome for all the Company’s stakeholders, and look forward to continuing to play a constructive role in supporting CHC’s progress.”

Under the lease restructuring term sheet entered into between the Company and Milestone (the “Milestone Term Sheet”), which is incorporated into the PSA, Milestone will serve as the lead lessor for CHC’s go-forward fleet of helicopters. Milestone will provide CHC with modified lease terms on their existing leases and additional helicopters at market lease rates. In addition to the leased aircraft, the Milestone Term Sheet includes provision of a commitment letter for a new $150 million asset backed debt facility for purchase or refinancing of aircraft.

“From the outset, one of our primary goals has been to establish a smaller, more productive fleet of aircraft that provides the right aircraft at the right time for our customers’ helicopter service needs, while maintaining our commitment to setting the standard for safety, customer service and value across the industry. We believe that Milestone, as a part of General Electric, provides the strength and stability we need in a lessor partner, and we are confident that this agreement provides a strong foundation for CHC’s fleet of aircraft going forward,” Fessenden concluded.

“As the pioneer of global helicopter leasing, Milestone Aviation Group has always taken a long-term view of the helicopter industry, and we are committed to the industry’s health and stability during a challenging time,” said Milestone President Daniel Rosenthal. “We believe that an agreement that enables CHC to recapitalize and emerge from its restructuring process as a going concern is important for our industry, and we are pleased that Milestone, along with other major creditors, has reached a mutually acceptable agreement with CHC to restructure its obligations.”

The principal provisions of the Plan contemplated by the PSA are as follows:

Eligible holders of the Secured Notes and the Unsecured Notes will have the opportunity to participate in a rights offering to purchase mandatorily convertible second lien notes (the “New Second Lien Convertible Notes”) of the Company for an aggregate purchase price of $300 million (the “Rights Offering”), with $280 million allocated to the holders of Secured Notes and $20 million allocated to holders of Unsecured Notes. The New Second Lien Convertible Notes will be convertible into 85.4% of the New Common Shares on a fully diluted basis (but subject to dilution by the management incentive plan of the Reorganized Company (“MIP”)), and will vote in post-emergence governance matters on an as-converted basis.

Holders of the Secured Notes, Unsecured Notes and General Unsecured Claims will receive the following general treatment under the Plan:

In addition to the ability to participate in the Rights Offering allocated to the Secured Notes, all holders of Secured Notes will receive their pro rata share of 79.5% of new equity (“New Equity”) to be issued by a newly-formed Cayman limited liability company (the “Reorganized Company”) (prior to dilution by New Second Lien Convertible Notes and the MIP), which equates to 11.6% of New Equity (fully diluted on account of the New Second Lien Convertible Notes, but excluding the MIP).

All holders of Unsecured Notes will receive their pro rata share of 8.9% of New Equity (prior to dilution by the New Second Lien Convertible Notes and the MIP), which equates to 1.3% of New Equity (fully diluted on account of the New Second Lien Convertible Notes, but excluding the MIP).

All other holders of General Unsecured Claims of the Company will receive their pro rata share of (a) 11.6% of New Equity (prior to dilution by the New Second Lien Convertible Notes and the MIP), which equates to 1.7% of New Equity (fully diluted on account of the New Second Lien Convertible Notes, but excluding the MIP), and (b) $37.5 million in new unsecured notes of the Reorganized Company.

The Plan may also provide for distributions up to an aggregate amount of $750,000 in cash to holders of certain General Unsecured Claims, with any such distributions reducing the principal amount of the New Unsecured Notes on a dollar for dollar basis and further provides for an allocation from distributions on the Secured Notes and/or Unsecured Notes of a specified amount of New Membership Interests for any Non-Eligible Offerees of the Secured Notes and/or Unsecured Notes who timely execute a Non-Eligible Offeree acknowledgement and vote in favor of the Plan.

Holders of the Company’s Revolving Credit Agreement Claims will receive a new term note in the amount of their claim, in accordance with the Bankruptcy Code, or such other treatment that is reasonably acceptable to the Company, the UCC, and the Plan Sponsors. The Company and the Consenting Creditor Parties are currently in active negotiations with holders of the Revolving Credit Agreement Claims as to their treatment.

The Plan does not provide for any distribution to holders of the Company’s existing equity securities, including its ordinary shares and preferred shares. Following the effective date of the Plan, the Company will apply to the Registrar of Companies in the Cayman Islands for a voluntary striking off of the Company. Upon a striking off of the Company, the Company will be dissolved (subject to certain reinstatement rights of the holders of the existing equity) and the existing equity holders will receive no distribution.

The PSA and other transaction agreements to be executed by the Company include certain covenants on the part of the Company to solicit and seek court approval of the Plan, and the Consenting Creditor Parties have agreed to vote in favor of and support the Plan and the restructuring transactions. The PSA and related agreements are subject to customary closing conditions and termination rights upon the occurrence of certain events, as well as payment of certain fees and expenses. In connection with the PSA, certain of the Consenting Creditor Parties have agreed, pursuant to a backstop agreement (the “Backstop Agreement”), to backstop the Rights Offering in consideration of the payment, subject to court approval, of a nonrefundable premium payable in New Second Lien Convertible Notes in the amount of $30.8 million or, upon certain triggering events, in cash in the amount of $21.3 million. The Backstop Agreement also includes certain covenants on the part of the Company and is subject to customary closing conditions and termination rights upon the occurrence of certain events.

Customers, suppliers and other stakeholders can find additional information about CHC’s reorganization at www.chc.ca/restructuring. In addition, court filings and other information related to the restructuring proceedings are available at www.kccllc.net/chc.

About CHC

CHC Helicopter is a leader in enabling customers to go further, do more and come home safely, including oil and gas companies, government search-and-rescue agencies and organizations requiring helicopter maintenance, repair and overhaul services through the Heli-One segment.

About Milestone Aviation Group

Milestone Aviation Group, a GE Capital Aviation Services Company, is the world’s leading helicopter leasing company. Milestone has a fleet of over 215 helicopters worth US $3.7 billion and supports 32 operators in 26 countries on six continents. The company has a forward order book of firm and option aircraft with an estimated aggregate purchase price of US $3.2 billion. These near-term delivery positions of in-demand helicopters are made available for lease globally. Milestone partners with helicopter operators worldwide and supports them through lease and debt financing. The company provides financing for helicopters serving a variety of industries, including offshore oil and gas, search and rescue, emergency medical services, police surveillance, mining and other utility missions. www.milestoneaviation.com.

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