MD Helicopters enters Chapter 11 as buyer announced
By Oliver Johnson | March 31, 2022
Estimated reading time 8 minutes, 41 seconds.
MD Helicopters appears to have finally found a buyer, with a creditor consortium led by Bardin Hill and MBIA Insurance set to purchase the company’s assets and promising to “provide new capital to strengthen MD’s financial position.”
As part of the process, MD has filed for Chapter 11 bankruptcy protection — a move it said would “allow for a quick and orderly sale.”
In a press release announcing the move, MD said it has received a commitment of $60 million in debtor-in-possession financing from Bardin Hill and MB Global Partners. If the court approves the process, MD said this money, together with revenue generated from its ongoing operations, would support the business throughout the sale process.
However, the consortium’s bid is still subject to court approval, and could even be topped by a better offer.
“Since last year, we have been exploring a potential sale of the company that would enable us to move forward with new ownership to support MD’s continued manufacturing operations and maintenance services long into the future, as well as deleverage our capital structure,” said Alan Carr, sole director and chairman of the board of MD Helicopters.
“After a thorough review of the options available to us, we believe this transaction and court-supervised process will help achieve our objective and create the best path forward for MD and all of our stakeholders.”
MD said it expects to continue its regular course of operations throughout the sale, serving its civil and military customers and working with suppliers as normal.
“We firmly believe that changing our ownership will enable us to move forward as a stronger partner than ever,” the company said.
In a “Customer FAQ,” MD said all existing orders will continue to be honored and there will be no changes to aircraft delivery schedules. It added that it expects to complete the sale within 100 days — which would be July 8.
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Regarding the potential new owners, the FAQ notes that the creditor consortium is led by “longtime supporters and investors” in MD, who “believe in our company’s future.”
Jason Dillow, chief executive officer and chief investment officer of Bardin Hill, said: “MD has a storied history in the aerospace industry and a track record of delivering exceptional performance, value and support to its operators.
“We believe MD is on an exciting growth trajectory, led by a strong management team, state-of-the-art technology, and an established brand. We look forward to working with the MD team in this new chapter for the company.”
The Mesa, Arizona-based OEM has endured a turbulent recent history. Founded in 1947 as a unit of Hughes Aircraft, the company became known as Hughes Helicopters, and developed many iconic rotary-wing aircraft, including the MD 269/300, the OH-6 and MH-6, MD 500, and AH-64 Apache.
Its ownership changed hands several times over the decades, ending up with Lynn Tilton’s Patriarch Partners in 2005.
Tilton had developed a reputation for acquiring and restructuring companies in distress, and while MD continued to produce commercial helicopters and secured several important military contracts, its production numbers lagged behind its competitors.
While Tilton remained bullish about MD’s prospects — announcing that 2020 would be “a big year and a big expensive year” for the company at HAI Heli-Expo 2020 — she stepped down from her role as the company’s CEO on March 23, 2020. She remains MD’s single largest shareholder.
Carr joined MD in April 2020 with the mandate to sell the company.
Carr is a former lawyer who worked as an investor before joining MD. His previous firm handled the bankruptcies of Air Canada, United and Delta.
“Because this is bankrupt-adjacent, that’s where I come in, but I don’t see that this is a company that needs to go bankrupt,” Carr said during the August 2021 interview. “We have liquidity. We’re current with all the vendors. Things are getting better, not worse, since I’ve gotten here.”