Canadian Helicopters Income Fund (CHL.UN) (the â€œFundâ€) announces today that it has been notified by Ornge that Ornge will not exercise its option to extend beyond the initial term ending March 31, 2012, the contract pursuant to which Canadian Helicopters Limited (â€œCHLâ€), a subsidiary of the Fund, provides services in support of Orngeâ€™s transport medicine operation (the â€œServices Agreementâ€). The Services Agreement will therefore terminate on March 31, 2012.
The Services Agreement was entered into on March 31, 2009 as part of a broader transaction through which Ornge purchased from CHL the fleet of 11 Sikorsky S-76 helicopters and other aviation assets (including four hangars) used in Orngeâ€™s transport medicine operation. Under the Services Agreement, CHL continues to provide flight operations, maintenance, airworthiness and related support for Orngeâ€™s fleet of helicopters over a period coinciding with the approximate two-year transition period starting in late 2010, during which Orngeâ€™s fleet of Sikorsky S-76 aircraft are scheduled to be replaced by 10 AgustaWestland aircraft. Canadian Helicoptersâ€™ revenues from its contracts with Ornge were expected to decline as a result of this transition, regardless of any extension of the Services Agreement. Total revenues for the Fund from its contract with Ornge during the current financial year are expected to be approximately $34m. Consistent with its expectations regarding revenues over Orngeâ€™s fleet replacement period, Canadian Helicopters estimates total revenues for the Fund from its contract with Ornge for the twelve months period ending March 31, 2012 to decline to $26.5m. The Fund anticipates that the termination of the Services Agreement will entail certain contract termination costs, none of which are expected to be material. See â€œForward Looking Statementsâ€ below.
â€œWe are proud to have provided rotary wing emergency transport and related support, including for a period the provision of paramedics, to the residents of Ontario over the last 34 years and wish to thank the government of Ontario through its various entities we have served, for the opportunity they have given us to do so. Through our extensive experience in rotary wing operations and commitment to provide safe and efficient services, we believe that we have provided Ontario residents with the highest quality of medical transport at lowest costs. While we would welcome the opportunity to provide these services to the Province of Ontario again, the decision not to extend its contract with Canadian Helicopters also represents an opportunity to redeploy our resources in the pursuit and development of other markets, consistent with our diversification strategy,â€ said Don Wall, President and Chief Executive Officer of Canadian Helicopters.
ABOUT CANADIAN HELICOPTERS INCOME FUND
Through Canadian Helicopters Limited, Canadian Helicopters Income Fund is the largest helicopter transportation services company operating in Canada and one of the largest in the world based on the size of its fleet. With over 35 base locations across Canada, Canadian Helicopters provides helicopter services to a broad range of sectors, including emergency medical services, infrastructure maintenance, utilities, oil and gas, mining, forestry and construction. In addition to helicopter transportation services, Canadian Helicopters operates two flight schools, provides third party repair and maintenance services in Canada and provides military support in Afghanistan. With over 60 years of experience, Canadian Helicopters is an industry leader in establishing safety standards and operating procedures.
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