Erickson Air Crane Opens Portland HQ

Erickson, operator of a fleet of helicopters, sought refuge in bankruptcy court Tuesday. Fredrick D. Joe/The Oregonian

(Fredrick D. Joe)

Portland aviation company Erickson Inc., unable to handle the giant load of debt piled on it by its private equity owner, filed Chapter 11 bankruptcy late Tuesday.

Erickson described the bankruptcy as "consensual" and said it was going forward with a reorganization plan supported by its major creditors. The plan will "dramatically reduce its total indebtedness," and preserve the company's 700 jobs, the company promised.

"The combination of a leveraged balanced sheet and deteriorating market for the services they provide proved too much for the company," said Patrick Mohan, senior distressed debt analyst at Reorg Research, a financial industry trade publication that reported the company's default.

Erickson said in a written statement it expects to exit bankruptcy and resume normal operations in 2017. The company declined interview requests as it has since it defaulted on its quarterly debt payment on Nov. 1.

Three hundred of the company's 700 employees work at the Portland headquarters or at a major operations center in Southern Oregon. It filed the bankruptcy in Dallas, Texas.

Bankruptcy documents indicate that certain of its creditors have tentatively agreed to extend $60 million in financing to Erickson.

Company officials said the value of Erickson's existing stock depends on the reorganization plan approved by the court. But in a filing with the U.S. Securities and Exchange Commission, Erickson said it "expects that its currently outstanding stock has no value."

The company announced last week that Quinn Morgan, its former chairman and controlling shareholder, had quit the board. Private equity companies controlled by Morgan bought Erickson in 2007 and took the company public in 2012. It borrowed $355 million in 2013 in large part to buy the helicopter affiliate of McMinnville-based Evergreen International.

The bankruptcy is another private equity disaster for Southern Oregon.

After Morgan's investment firm took control, Erickson moved its executive staff out of Medford in favor of Portland. It's resulting struggles under a heavy debt load offers an eerie parallel to Harry and David, the mail-order gift company best known for its fruit baskets.

Wall Street investor Wasserstein Co. bought the gift company in 2004. At Wasserstein's direction, the company's long-term debt soared from zero to $245 million. Harry and David sent $84 million of the cash straight back to Wasserstein and its partners to cover their acquisition costs.

Just like Erickson, Harry and David struggled under the debt load and filed for bankruptcy in 2011.

As for Erickson, the bankruptcy was not the only bad news it revealed Wednesday. It also divulged that its 2014 and 2015 financial statements are inaccurate. Erickson did not disclose that certain of its leased aircraft were not airworthy and did not reflect the likely cost of repairs in its financial statements.

Thomas Rorick, an analyst with Debtwire Research, predicted the company will successfully shed the debt that was weighing it down. "I do think they will probably emerge healthier than when they went in, that's the whole point of the bankruptcy."

-- Jeff Manning

503-294-7606, jmanning@oregonian.com