ACQUISITION OF BUSINESS

On December 29, 2017, we completed a series of transactions with HNZ Group, Inc. (“HNZ”) and 2075568 Alberta ULC, a company newly-formed by the former Chief Executive Officer of HNZ for purposes of purchasing the stock of HNZ (the “Canadian Purchaser”). On December 29, 2017, we provided term loans to the Canadian Purchaser in an aggregate principal amount of approximately CAD $167.5 million (equivalent to USD $131.6 million) substantially all of which was repaid the same date in exchange for receipt of HNZ’s offshore helicopter services business conducted in New Zealand, Australia, the Philippines and Papua New Guinea (the “HNZ Offshore Business”). The remaining balance of USD $0.8 million is expected to be repaid on or prior to December 31, 2019, or at such other time as mutually-agreed between the Canadian Purchaser and us.

We funded our term loans to the Canadian Purchaser on December 29, 2017 primarily with the proceeds of maturing or liquidated short-term investments.

In the fourth quarter of 2017, we recognized the assets that we acquired and the liabilities that we assumed in connection with the HNZ Offshore Business at their estimated acquisition date fair values. See Note 1 for information on goodwill and other intangible assets that we recorded in connection with the acquisition.

As of December 31, 2017, we had recognized approximately $2.3 million in cumulative merger-related transaction costs, including legal and advisory fees in the selling, general and administrative expenses section of the accompanying Consolidated Statements of Operations.

The fair value of the acquired assets and liabilities noted in the table may change during the provisional period, which may last up to twelve months subsequent to the acquisition date. The Company may obtain additional information to refine the valuation of the acquired assets and liabilities and adjust the recorded fair value. Adjustments recorded to the acquired assets and liabilities will be applied prospectively.

The following amounts represent the fair value of assets acquired and liabilities assumed in the merger.



	Thousands of dollars
Cash	$	4,142
Accounts receivable	27,819
Inventories	3,096
Fixed assets	43,689
Intangible assets:
Noncompete agreements (weighted-average life of 5 years)	900
Customer relationships (weighted-average life of 15 years)	11,622
Tradenames (weighted-average life of 7 years)	4,201
Other assets	5,310
Accounts payable and accrued liabilities	(25,272		)
Deferred taxes ⁽¹⁾	(5,270		)
Other liabilities	(750		)
Total identifiable net assets	69,487
Goodwill ⁽²⁾	61,299
Total consideration transferred	$	130,786

⁽¹⁾ In connection with the acquisition accounting, PHI provided deferred taxes related to the estimated fair value adjustments for acquired intangible assets.

⁽²⁾ Goodwill is the excess of purchase price over fair market value of the net assets acquired under the acquisition method of accounting. The amount of goodwill that is deductible for income tax purposes is not significant.

We did not record earnings in December for the acquired business due to the immateriality of the earnings resulting after the acquisition from December 30th through the 31st. ASC 805, Business Combinations, requires the disclosure of additional information including the revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred at the beginning of the prior annual reporting period (supplemental pro forma information). The Company has determined that disclosure of such information was impractical and is not provided as the financial records of the acquiree were not adequate to allow the preparation of supplemental pro forma information.