• Debt refinancing could precede planned IPO
• Alternatives include 2029 bond refinancing
• Aircraft availability recovers during quarter, supporting stronger EBITDA

We noted in our initiation of coverage that OHI’s bond may be viewed as a form of expensive bridge financing while the company awaited cheaper capital from an initial public offering (IPO) of equity.

However, the strategy may now be changing.

While the Brazilian helicopter operator has not formally shelved its plans for a US listing, an IPO appears less likely now, at least in the very short term. As in 2022, when OHI suspended its first IPO attempt and instead refinanced its debt, the company may again prioritize addressing its liabilities, including the 2029 bond.

Despite a recent improvement in performance and cash generation (discussed below), the company will nonetheless have to roll over most of its short-term debt. In addition to debt maturing over the next 12 months (NTM), scheduled semi-annual USD 25m amortizations on the 2029 bond begin in July 2027 (see Figure 1).

Getting rid of the expensive bond should be a priority for OHI. However, doing so could be costly.

Since July 2026, the notes have been callable at 106.5% of par, involving a premium of almost USD 25m in addition to the USD 380m principal outstanding.

While this would not reduce the cost of the debt, a middle-ground solution for the 2029 notes could be an exchange offer, maintaining the coupon but extending the amortization schedule and final maturity.

The notes are now trading at par again, after falling four points following a Moody’s downgrade in early July.

However, for the company to be able to achieve a successful bond exchange that is not regarded as distressed, we believe it needs to first post at least two more quarters of strong EBITDA and free cash flow (FCF). As such, we expect any potential transaction involving the bond more to likely occur in the first few months of 2027, potentially after the release of the FY26 financials.

In the meantime, OHI may utilize working capital (WC) facilities, renegotiate certain payment terms – during 1H26, it already agreed with lessors to defer approximately USD 10m of payments to NTM – and enter into sale-and-leaseback agreements, if needed.

Fleet as a source of liquidity

In December 2025, OHI already completed a sale-and-leaseback transaction for two aircraft, with the USD 18m of sale proceeds helping the company to comply with a bond covenant requiring a minimum cash reserve of EUR 25m at the end of each quarter – it ended 4Q25 with EUR 35m (USD 41m) in cash.

In this context, it is worth noting that although shifting aircraft from owned to leased status would not change the actual cash disbursements going forward – aside from the fact that operating leases are more expensive than finance leases – the accounting treatment would result in higher reported maintenance expenses and lower depreciation, thereby reducing reported EBITDA.

In addition, operating leases – the so-called leases without purchase option – require security deposits equal to two months of payments, either in cash or through letters of credit.

OHI had a fleet of 87 aircraft – 34 owned and 53 under leases without purchase option – as of 30 June, unchanged from three months earlier and 31 December 2025. However, when standardized using Medium Aircraft Equivalent (MACE), the fleet increased to 114 MACE from 113 MACE in each of the previous two quarters.

The company has noted that 44% of its owned helicopters could be subject to sale-and-leaseback transactions if needed.

OHI has classified one of its aircraft as available for sale, and subsequent to quarter-end it also added USD 9m of lease liabilities related to a new lease agreement without purchase option, in both cases for one MACE.

Availability is the name of the game

OHI’s offshore and onshore contracts have two revenue components – payments for the exclusive availability of dedicated aircraft to the client and variable flight activity, measured in flight hours.

Therefore, reduced aircraft availability affects not only revenue generated from flight activity, but also total contract compensation. The fixed component accounts for approximately half of the revenue and is particularly important because it should theoretically translate fully into EBITDA, given the absence of associated variable costs.

When the dedicated fleet is not available, the company can sometimes utilize back-up aircraft, although this is not always possible. And, while there are no direct penalties for failing to provide the agreed level of availability, fixed compensation is prorated accordingly.

As such, in an industry with barely any seasonality, availability is a critical operating metric for the company.

OHI’s availability was significantly affected by delays in spare-parts deliveries from original equipment manufacturers (OEMs) in FY25 and 1Q26. However, the metric rebounded strongly in 2Q26 (see Figure 2).

The recovery has been maintained so far in 3Q26, and the company expects availability levels of 91%-93% going forward.

It is worth noting that, when bidding for contracts, OHI assumes availability of around 90% in its pricing models, with any performance above that level representing upside potential. A similar 90%-availability assumption is used for the backlog, which also incorporates an estimate of flight hours.

OHI ended the quarter with a backlog of USD 1.85bn, down from USD 1.94bn three months earlier, USD 2.05bn as of 31 December 2025, and a peak of USD 2.23bn at the end of 2024. However, the figure as of 30 June does not include approximately USD 514m of yet-to-be-signed contracts awarded during 1H26, which followed a period of low tender activity in Brazil in 2025.

The improved availability contributed to a record-high EBITDA of USD 54m in 2Q26 under our non-adjusted methodology (see Figure 3).

Meanwhile, company-reported adjusted EBITDA, which excludes non-recurring revenue and costs as well as other minor items, reached USD 62m in 2Q26, up from USD 46m in both 1Q26 and 2Q25.

Based on our EBITDA calculations, we estimate that OHI generated USD 17m of FCF in 2Q26, matching the level recorded in the previous quarter, when the company benefited from favorable WC movements that offset higher interest disbursements caused by the semi-annual bond coupon payment (see Table 1).

OHI ended the quarter with a cash position of USD 41m, up from USD 35m as of 31 March. Net debt, however, increased slightly quarter-over-quarter (QoQ) to USD 800m.

Net leverage, measured in USD and using OHI’s adjusted EBITDA, declined to 3.9x as of 30 June from 4.2x three months earlier (see Figure 4).

The company has a long-term net leverage target in the low-3x range, and we estimate that, if 2Q26 performance is repeated over the following quarters, the resulting FCF generation and net debt reduction could bring net leverage close to that target by June 2027, ahead of the first amortization installment on the 2029 notes.

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