Bristow Group has a bad day

Ronnie Robertson

Bristow Group, the helicopter group with its head office in west Houston, had a bad day at the office today.

Columbia deal collapses

Firstly its deal to acquire Columbia Helicopters collapsed. This will result in Bristow paying a $20 million break-up fee. In November, Bristow, which provides helicopters services for the offshore oil industry, had agreed to buy privately-held Columbia for $560 million. This was a bid to diversify operations as Columbia provides helicopter services for defense, firefighting and forestry customers.

Bristow agreed to pay $492 million in cash with the rest in coming from the issuance of new stock. The cash would have come from a $360 million bridge loan with an interest rate of 10.8% and $135 million of convertible loan notes with an interest rate of 7%.

Just before the deal was announced the stock price was $10. The price dropped almost 25% in one day and bottomed out at $1.94 in mid-December. That made the equity component of the deal very dilutive.

Material weakness

The company has also delayed filing its quarterly report for the three months ending 31 December 2018. It has found a material weakness in its internal controls related to non-financial covenants within certain of its secured financing and lease agreements. The weakness existed at 31 March 2018, its last year-end.

The Company is specifically evaluating whether certain debt balances should be reclassified from long-term to short-term in the 10-K, whether related waivers can be obtained from lenders, if necessary, and the resulting impact on the assessment of the Company’s ability to continue as a going concern.

CEO departure date set

On the day the Columbia deal was announced, CEO Jonathan Baliff announced he would retire at a date to be determined. With the collapse of the deal, his last day will be February 28, 2019. There’s been no indication that Mr Baliff will be receiving any severance.

[UPDATE 02-12-19 – Surprise! Bristow has filed an 8-K that disclosed Mr Baliff’s retirement will be treated as a separation of employment. He will get a cash severance of $1.4 million, equal to two times base salary. He will also get a pro-rated bonus assuming target performance (my calculation is $640k)]

The stock price ended up 16 cents to $3.06, though after hours it fell to $2.55.

SEC filing

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