Bristow files for bankruptcy protection

July 2019 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

July 2019 Issue

Helicopter services and training provider Bristow Group has filed for Chapter 11 bankruptcy following a period financial difficulty.

Bristow has become the latest helicopter firm to experience financial difficulty, and has filed for Chapter 11 with the US Southern District of Texas in an attempt to restructure, strengthen its balance sheet and reduce its significant debt pile. The company noted that it had debts of $1.885bn against assets of $2.86bn and cited “previously disclosed financial challenges” and “constrained liquidity” as the causes of its financial difficulty. Primary creditors listed include the company’s senior noteholders, which are owed $895.25m, various banks and financial institutions which are owed $580m, and the GECAS helicopter leasing unit Milestone Aviation Group which is owed $21.9m.

The Chapter 11 filing will apply to some of Bristow’s legal entities in the US, including BHNA Holdings, Bristow Alaska, Bristow Helicopters, Bristow U.S. Leasing, Bristow U.S., BriLog Leasing, and Bristow Equipment Leasing, and two of its Cayman Islands subsidiaries. The rest of the company’s non-US entities will not be included. Bristow’s operations are expected to continue as normal for the duration of the Chapter 11 process thanks to a $75m loan from unnamed senior secure noteholders, plus another $75m in debtor-in-possession (DIP) financing from those noteholders, pending court approval.

“After working diligently with our advisors on a thorough review of strategic financial alternatives, the board of directors and management concluded that the best path forward for Bristow and its stakeholders is to seek Chapter 11 protection,” said L. Don Miller, president and chief executive of Bristow Group. “This process will allow us to strengthen our balance sheet, achieve a lower and more sustainable debt level and emerge as a stronger company. We have the support of the overwhelming majority of our parent company senior secured noteholders, with whom we have entered into a restructuring support agreement that will help to de-lever our balance sheet, and we are actively working with other important stakeholders as we enter this process.

“Bristow remains steadfast in its commitment to safety and providing exceptional client service during the Chapter 11 process. For clients, it is business as usual at Bristow, and our talented team will stay focused on delivering safe, reliable and professional services around the globe throughout the process and beyond. We expect to execute a prompt and efficient reorganisation, and to emerge from this restructuring process as a stronger company that is an even better business partner, employer and trusted service provider,” Mr Miller added.

The company has not filed any official financial results in calendar 2019 nor did it do so in the fourth quarter of calendar 2018. Its most recent financial filing – covering the three months to 30 September 2018 – saw Bristow’s total debt at $1.44bn. Many of the company’s financial difficulties can be traced back to its aggressive expansion earlier this decade, which coincided with the decline in crude oil prices which led many of its customers to cut back on their transport requirements.

For activist shareholder Global Value Investment (GVIC), the company’s bankruptcy filing is a blow. GVIC had been pressing Bristow to consider alternatives to the restructuring process, which will wipe out its existing shareholders. GVIC owns 245,950 shares in Bristow, with a further 17,205 owned by the firm’s president and chief executive. GVIC has been particularly critical of Bristow’s management, suggesting its present directors have “overseen the destruction of several billion dollars of shareholder value”.

GVIC has also highlighted Bristow’s declining financial performance over the last few years. Between 31 March 2015 and 31 December 2018, Bristow’s revenue, operating income and adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) declined by 24.2 percent, 122 percent and 95 percent, respectively. During that time, total debt increased by 67.7 percent, to $1.4bn.

Richard Summerfield