For a fuller writeup on the transaction and the companies, check out our earlier post on the subject. It will be interesting to see if the company can continue to diversify geographically (away from the US) and in focus (away from the oil & gas industry). It will also be interesting to watch how ERA is able to manage its capital structure on its own. Acquiring helicopters requires some serious capex investment which means the company will likely rely on additional debt. This debt carries certain covenants which could be tripped if there is a downturn or messup and it will no longer be able to rely on Seacor to bail it out again as it did in ’12. As an independent company it should have lots of options though. There are also certain macro (offshore oil & gas industry) and regulatory forces (ex. US government response to the Horizon spill) at play here.
In its Form 10, ERA listed its competition in the oil & gas space (the bulk of its business) as the Bristow Group (BRS), PHI Inc (PHII) and Rotorcraft Leasing Company LLC. Both Bristow and PHI are publicly traded and here are their LTM multiples as of Sept 30 (Source: Capital IQ, Google Finance)
| Company Name | Market Cap (M, 2/1) | TEV/EBITDA | P/Diluted EPS | P/Tangible BV |
| Bristow Group | 509 | 8.3x | 22.4x | 1.3x |
| PHI Inc | 2,004 | 8.8x | 29.2x | 1.0x |
While comps are helpful in valuation, it is also important to carefully go through the company’s Form 10. That is where you will find its most recent financial data, MD&A and a ton of other important information on the company (like capitalization or alteration to its helicopter depreciation treatment etc).
Disclosure: Author holds no position in any stock mentioned.