Air Methods files for Chapter 11

BY Fraser Tennant

In a move intended to restructure its business operations and reduce its total debt, private equity-owned air medical helicopter company Air Methods and certain of its affiliates has filed for Chapter 11 bankruptcy protection.

The Chapter 11 filing allows the company to implement a restructuring support agreement (RSA) with its first lien lenders (including commitments for $80m of debtor-in-possession (DIP) financing), bondholders and its equity sponsor under which such key stakeholders have agreed to support an expedited balance sheet restructuring.

Additionally, the restructuring contemplated by the RSA – which aims to reduce the company’s total debt by approximately $1.7bn – provides for vendors and suppliers to be paid in full, and for teammates to continue receiving their pay and benefits without interruption.

As it moves through the court-supervised process, Air Methods is operating normally and without service interruptions, continuing to serve partner hospitals, healthcare systems and customers.

“We are pleased to have reached this agreement with our key stakeholders, which will enable us to continue supporting patients with lifesaving care and serving as an integral link between the nation’s top healthcare facilities and people in rural and remote communities,” said JaeLynn Williams, chief executive of Air Methods. “Over the past year, we have made meaningful progress optimising our field operations, going in-network with leading commercial insurers and improving our cost structure.”

“We have also seen record numbers of transports, and we have opened several new bases across the country this year as there is a great demand for air medical services. By strengthening our balance sheet, we are taking an important step forward in delivering on our transformation plan while answering every call with the highest level of service and patient care.”

With more than 40 years of air medical experience, Air Methods is the preferred partner for hospitals and one of the US’ largest community-based providers of air medical services. The company’s fleet of owned, leased and maintained aircraft includes approximately 390 helicopters and fixed-wing aircraft.

Air Methods expects to complete the restructuring process on an expedited basis and emerge from Chapter 11 with an optimal capital structure by the end of the year.  

Ms Williams concluded: “With increased financial flexibility and access to additional capital, we will be better positioned to continue opening new greenfield bases, accelerate our talent acquisition initiatives, execute on our growth initiatives and equip more emergency personnel with the expertise needed to safely deliver the highest quality air medical care for generations to come.”

News: Medical helicopter company Air Methods files for bankruptcy

Chevron announces $53bn all-stock acquisition of Hess Corp

BY Richard Summerfield

Chevron Corp has announced that it will acquire its smaller rival Hess Corp in a $53bn all-stock deal which will boost the company’s presence in oil-rich Guyana.

Under the terms of the deal, Chevron will acquire the company for $171 a share, a premium of about 4.9 percent on the stock’s last closing price. John Hess, chief executive of Hess Corp, is expected to join Chevron’s board of directors once the deal is closed in the first half of 2024.

Guyana has become a major oil producer in recent years after huge discoveries by Exxon Mobil, its partner Hess and China’s CNOOC, which together produce 400,000 barrels per day (bpd) from two offshore vessels and have said they could develop up to 10 offshore projects. Chevron said that the acquisition of Hess will add a major oilfield in Guyana as well as shale properties in the Bakken Formation in North Dakota.

The Chevron-Hess merger comes at an interesting time for deals in the oil & gas space, just weeks after Exxon Mobil announced it would acquire Pioneer Natural Resources for around $60bn.

“This combination positions Chevron to strengthen our long-term performance and further enhance our advantaged portfolio by adding world-class assets,” said Mike Wirth, chairman and chief executive of Chevron. “Importantly, our two companies have similar values and cultures, with a focus on operating safely and with integrity, attracting and developing the best people, making positive contributions to our communities and delivering higher returns and lower carbon.”

“Building on our track record of successful transactions, the addition of Hess is expected to extend further Chevron’s free cash flow growth,” said Pierre Breber, chief financial officer of Chevron. “With greater confidence in projected long-term cash generation, Chevron intends to return more cash to shareholders with higher dividend per share growth and higher share repurchases.”

“This strategic combination brings together two strong companies to create a premier integrated energy company,” said Mr Hess. “I am proud of our people and what we have achieved as a company, which has one of the industry’s best growth portfolios including Guyana, the world’s largest oil discovery in the last 10 years, and the Bakken shale, where we are a leading oil and gas producer. Chevron has a world-class diversified portfolio of assets and one of the industry’s strongest balance sheets and cash return profiles. I believe our strategic combination creates a company that is stronger in every respect, with the leadership, asset portfolio and financial resources to lead us through the energy transition and deliver significant shareholder value for years to come.”

According to Chevron, the deal will help to increase the amount of cash given back to shareholders. The company anticipates that in January it will be able to recommend boosting its first-quarter dividend by 8 percent to $1.63. The company also expects to increase stock buybacks by $2.5bn to the top end of its guidance range of $20bn per year once the transaction closes.

News: Chevron to buy Hess Corp for $53 bln in all-stock deal

Thermo Fisher announces Olink deal

BY Richard Summerfield

In a deal which will boost its life sciences portfolio, Thermo Fisher Scientific has agreed to acquire Sweden-based proteomics company Olink for approximately $3.1bn.

Under the terms of the deal, Thermo Fisher will acquire Olink for $26 per common share in cash to represent $26 per American depositary share (ADS) in cash. The price represents around a 74 percent premium to Olink’s ADSs on the Nasdaq on 16 October, the trading day before the deal was announced. Thermo Fisher will offer to acquire all outstanding Olink common shares and ADSs. The deal also includes net cash of about $143m.

Thermo Fisher plans to fund the transaction using its cash on hand and debt financing and expects the deal to be closed by mid-2024, subject to customary closing conditions, including regulatory approvals. Both companies’ boards have approved the deal. Additionally, Summa Equity AB, Olink’s largest shareholder, as well as other Olink shareholders and management, who together hold more than 63 percent of the company’s common shares, have also signed agreements supporting the offer.

Upon completion of the deal, Olink will be integrated into Thermo Fisher’s Life Sciences Solutions division. Thermo Fisher has said that Olink’s portfolio is home to 5300 validated protein biomarker targets and has seen its work published in 1400 scientific publications. As part of the deal, Thermo Fisher is also set to acquire the Swedish firm’s facilities in the Americas, Europe and Asia.

“The acquisition of Olink underscores the profound impact that proteomics is having as our customers continue to advance life science research and precision medicine,” said Marc N. Casper, chairman, president and chief executive of Thermo Fisher. “Olink’s proven and transformative innovation is highly complementary to our leading mass spectrometry and life sciences platforms. Our company is uniquely positioned to bring this technology to customers enabling them to meaningfully accelerate discovery and scientific breakthroughs. We look forward to welcoming Olink’s colleagues to Thermo Fisher.”

“Olink is dedicated to improving the understanding of human biology by accelerating the use of next-generation proteomics and providing industry-leading data quality at unprecedented scale,” said Jon Heimer, chief executive of Olink. “Thermo Fisher’s deep life sciences expertise, global reach and proven operational excellence will enable significant opportunities for both customers and colleagues, while also providing immediate value to our shareholders.”

Olink finished the first six months of this year with a net loss that grew 31 percent year over year to $22.23m, up from a net loss of $16.99m in H1 2022. The 2023 loss includes a second quarter net loss of $8.27m, up about 72 percent from a $4.82m net loss in Q2 2022. The company’s total revenue grew 13 percent in the first half of 2023, to $56.89m from $50.19m, with Q2 revenue rising 7 percent year over year, to $29.44m from $27.51m.

News: Thermo Fisher Scientific to buy Olink in $3.1 billion deal

ExxonMobil acquires shale rival Pioneer in $60bn deal

BY Fraser Tennant

In what is the largest acquisition announced in 2023 so far, US multinational oil and gas company Exxon Mobil Corporation is to acquire independent oil and gas exploration and production firm Pioneer Natural Resources in a transaction valued at $59.5bn.

Under the terms of the definitive agreement, Pioneer shareholders will receive 2.3234 shares of ExxonMobil for each Pioneer share at closing. The transaction is expected to close in the first half of 2024.

The merger combines Pioneer’s more than 850,000 net acres in the Midland Basin with ExxonMobil’s 570,000 net acres in the Delaware and Midland Basins, creating the industry’s leading high-quality undeveloped US unconventional inventory position. Together, the companies will have an estimated 16 billion barrels of oil equivalent resource in the Permian.

“Pioneer is a clear leader in the Permian with a unique asset base and people with deep industry knowledge,” said Darren Woods, chairman and chief executive of ExxonMobil. “The combined capabilities of our two companies will provide long-term value creation well in excess of what either company is capable of doing on a standalone basis.”

Additionally, the merger represents the opportunity for even greater US energy security by bringing the best technology, operational excellence, environmental best practices and financial capability to an important source of domestic supply, benefitting the American economy and its consumers.

“The combination of ExxonMobil and Pioneer creates a diversified energy company with the largest footprint of high-return wells in the Permian Basin,” said Scott Sheffield, chief executive of Pioneer. “As part of a global enterprise, Pioneer, our shareholders and our employees will be better positioned for long-term success through a size and scale that spans the globe and offers diversity through product and exposure to the full energy value chain.”

The transaction has been unanimously approved by the boards of directors of both companies, which is subject to customary regulatory reviews and approvals. It is also subject to approval by Pioneer shareholders.

Mr Sheffield concluded: “The consolidated company will maintain its leadership position, driving further efficiencies through the combination of our adjacent, contiguous acreage in the Midland Basin and our highly talented employee base, with the improved ability to deliver durable returns, creating tangible value for shareholders for decades to come.”

News: Exxon secures lead in top US oilfield with $60 billion buy of shale rival Pioneer

Shift Technologies files for Chapter 11 bankruptcy

BY Fraser Tennant

Following multiple years of losses, omnichannel used-car dealer Shift Technologies, Inc. and its subsidiaries has filed for Chapter 11 bankruptcy in order to implement a systematic closure of its business.

According to the filing, the company’s deteriorating cash position and inability to obtain further financing drove it to file for bankruptcy and begin the process of closing down the business and liquidating assets.

To facilitate the Chapter 11 process, Shift intends to utilise cash on hand and cash generated by the liquidation of inventory through wholesale channels to provide the necessary liquidity to support the wind down and closure of operations – a decision taken after months of efforts to navigate through the challenges it faced.

Thus, the company’s two physical Californian locations in Oakland and Pomona, CA, as well as its website, have ceased operations. In addition, Shift has terminated 80 percent of its employees, leaving 24 to wind down operations. The company estimates the process will cost between $4.1m and $5m.

Founded in 2014 in an attempt to disrupt the traditional dealership model, Shift enjoyed significant success in the used car market, particularly during the height of the pandemic, before inflationary concerns, a cooling market, higher interest rates, tighter capital markets and overall economic uncertainty severely impacted activity.

A previous attempt to remain afloat, in July 2023, saw the company reduce its headcount by approximately 34 percent – a reduction aimed at restructuring and better aligning the company’s people and responsibilities with its omnichannel sales strategy.

“We deeply value our employees, customers, partners and the communities in which we have operated,” said Ayman Moussa, chief executive of Shift Technologies. “This was not the outcome we had expected or hoped to achieve. Ultimately, the extensive efforts of our senior leadership team and advisers were not successful. We want to thank all our dedicated employees, customers, and vendors who have supported us over the years.”

News: Shift Technologies intends to file for bankruptcy protection in US