Discovery Air Rescued

[Bar C]

Perhaps just in the nic of time!!!!! I'll bet ya a lot of relived dudes at that place.....

 

N.W.T. to lend $34 million to helicopter operator Discovery Air

9 hours ago

LONDON, Ont. — The Northwest Territories Opportunities Fund has agreed to lend $34 million to Discovery Air (TSX:DA.A), which operates Great Slave Helicopters, Air Tindi and Discovery Mining Services for the mining and resource sectors in northern Canada.

The money will refinance $33 million of debt that matures Feb. 1.

The new loan has a two-year term and bears interest at 10 per cent per year. It's repayable in one balloon principal amount at maturity.

Discovery Air also has received an extension of the expiry date of its operating line of credit to January 23, 2009 at a reduced borrowing limit of $5 million.

Great Slave Helicopters, a wholly owned subsidiary of Discovery, provides aviation services to private-sector companies and governments operating in mineral exploration, mining, wildlife services, forest fire suppression, oil and gas exploration, power line construction and tourism.

Air Tindi's planes provide scheduled and chartered passenger and air cargo services to private sector companies while Discovery Mining Services provides remote exploration camps and other services to diamond and mineral exploration companies.

For the nine months ended Oct. 31, Discovery Air had $132 million in revenue, up from $103 million in the year-earlier comparable period. Net earnings fell to $8.8 million from $12.3 million, with the biggest drop occurring in the third quarter of fiscal 2009.

In the three months ended Oct. 31, Discovery earned $2.6 million or two cents per share, down from $5.9 million or five cents per share in the third quarter of fiscal 2008.

The company said in its analysis of the third quarter that Great Slave had been a major contributor to the reduced profitability of the company.

"Great Slave had substantially increased its infrastructure earlier in the season and to a much larger extent than the prior year in light of indications that fiscal 2009 demand would surpass that of 2008, which was a record year for Great Slave," the company said in its third-quarter report.

"Unfortunately, with the highly seasonal nature of its business operations, it was unable to reduce the resulting overhead costs as rapidly as the demand for aviation services weakened. This led to operating costs being much higher than the actual levels of flight activity warranted."

Discovery Air shares traded Monday at 30 cents, up six cents from Friday's closed but down

 

 

[Skids Up]

So. How does this work?

 

They are loaned $34 million to wipe out $33 million debt. Payable in one balloon payment in 2 years.

 

They got to this point - $33,000,000 down, and then they will pay the loan in 2 years???

 

I'm thinking that it will be hard to have a $17,000,000 surplus (+ $1.7 million interest, (10% year) and covering operating costs as well) each year in order to be able to pay out at the end of the term.

 

Must be quite a bit about BIG financing that I don't understand!

[vortex]

The Northwest Territories Opportunities Fund...??? Is this like the bailout loan to the big three auto makers?

[Bar C]

The Northwest Territories Opportunities Fund...??? Is this like the bailout loan to the big three auto makers?

 

 

Exactly what it is.... a bail out

[skullcap]

I really don't think is a bail out and look at it as a positive sign for our industry as a whole.

 

 

[rumrunner]

I really don't think is a bail out and look at it as a positive sign for our industry as a whole.

 

You are f'kn joking right?

[ame206350]

I really don't think is a bail out and look at it as a positive sign for our industry as a whole.

 

Really? Please explain.

 

 

[just looking]

This is not right. I hope the GNWT is going to bailout every company in financial crisis in the NWT.

[skullcap]

Well lets see, money borrowed to carry on an existing loan with a two year term,,,,why is that considered a bailout? As far as a good sign, well if people have done their homework and feel that loaning them 34 million then they are confident that they will get their money back thus think things will turn around. They have proven in time to be an honorable company who treats their employees and customers with respect so why not think is a good thing.

 

Little different then providing money to the big three so they can ramp up production for the upcoming need of cars(yeah right) due to oil prices falling and the consumer buying cars like crazy again. I think someone forgot to tell the oil companies that the price of oil is down so they can drop the price of gas so the consumers can do their thing. But that is a whole other topic.

 

 

Just because it is a two year term doesn't mean they must pay it back in profits in two years, it only means the loan is for two years, they have the opportunity to make payments and show profitability and probably renew the term then.

 

 

But seeing the animosity here lately am sure will be corrected and put in my place :down:

 

[Bar C]

Well lets see, money borrowed to carry on an existing loan with a two year term,,,,why is that considered a bailout? As far as a good sign, well if people have done their homework and feel that loaning them 34 million then they are confident that they will get their money back thus think things will turn around. They have proven in time to be an honorable company who treats their employees and customers with respect so why not think is a good thing.

 

Little different then providing money to the big three so they can ramp up production for the upcoming need of cars(yeah right) due to oil prices falling and the consumer buying cars like crazy again. I think someone forgot to tell the oil companies that the price of oil is down so they can drop the price of gas so the consumers can do their thing. But that is a whole other topic.

 

 

Just because it is a two year term doesn't mean they must pay it back in profits in two years, it only means the loan is for two years, they have the opportunity to make payments and show profitability and probably renew the term then.

 

 

But seeing the animosity here lately am sure will be corrected and put in my place :down:

 

I agree with this reply in another forum I read:

 

I can only hope that the $$ gets to the bottom of the barrel. Chances are the cream will be skimmed off at the top..and yup you guessed it..just about the time the "one balloon principal amount" is due..the real white towel will be tossed into the ring.

 

Sad to see tax payers $$ money gambled like this.