Ornge and Canadian Helicopters Income Fund announce agreement in principle
Ornge and Canadian Helicopters Income Fund announced today that they have reached an agreement in principle that will result in the renewal of their relationship for a period of three years with the potential of an additional two years.
This agreement in principle is subject to, among other things, the execution of definitive agreements which is anticipated to occur later this fall as well as to various third party consents. Ornge, a charitable organization, operates one of the largest aero medical and land transport programs in North America. The definitive agreements would be entered into between Ornge and the Fund's subsidiary, Canadian Helicopters Limited ("CHL"). Ornge recently announced its intention to transition its rotary wing operations from a third-party fleet to an Ornge-owned fleet through the purchase of 10 new AgustaWestland AW139 helicopters.
Key provisions of the agreement in principle are as follows:
- Ornge's current rotary wing transport medicine service involves the operation of 11 medium category Sikorsky S-76 helicopters (owned by CHL) from seven bases in Ontario. The agreement in principle will also involve the transfer of aviation related assets at fair market value.
- In late 2010, the 11 Sikorsky S-76 aircraft are scheduled for replacement by Ornge over an approximate two-year period coinciding with the delivery of its 10 new state of the art AgustaWestland helicopters.
- CHL will provide services in support of Ornge's transport medicine operation for a period of three years starting April 1, 2009 (and a potential two year extension at Ornge's option). CHL will continue to provide flight operations, maintenance, airworthiness and related support for Ornge's fleet of helicopters.
- Terms and pricing between Ornge and CHL will be changed effective April 1, 2009 to reflect a different risk model, reflecting recognition of the transfer of assets from CHL to Ornge and in order to address specifics of the approximate two-year transition period referred above.
"We are confident CHL's extensive experience and commitment will assist us in providing Ontario residents with high quality transport medicine services," said Dr. Chris Mazza, Ornge president and Chief Executive Officer.
"We are excited to continue our partnership with Ornge, a world leader in Transport Medicine, and are very pleased that we have been awarded this contract following an extensive and competitive bid process. We are also extremely pleased for the opportunity to become the largest operator in Canada of the new generation AgustaWestland AW139 aircraft," added Don Wall, CHL's senior executive vice-president.
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