Bristow shareholder “greatly disappointed” with board, nominates replacements


Will the Bristow directors’ headaches ever end? One of the helicopter operator’s smaller shareholders – Global Value Investment (GVIC) – has penned an open letter calling for radical change on how the company is run and has called for the immediate removal of four of its directors — nominating new replacements.

The investment firm says that it has watched the current Bristow board with “great disappointment” over the past few years, claiming that the board has “failed to adequately react to evolving industry conditions” in the down oil-and-gas helicopter market.

Prior to this letter, GVIC demanded the immediate resignation of four of the helicopter group’s board members – including chairman of the board Thomas Knudson, director and executive vice chairman Thomas Amonett and directors Lori Gobillot and Biggs Porter.

The four replacements GVIC have nominated are the Era Group’s former CEO and CHC director Sten Gustafson, attorney Jonathan Meretsky, former Sikorsky chief Anthony Gray and GVIC’s own president and CEO Jeffrey Geygan.

As the open letter puts it:

“GVIC believes recent events represent the culmination of years of mismanagement, poor strategic decisions, weak oversight, and reckless execution by Bristow’s board. It is GVIC’s opinion that the board has been entirely ineffective in delivering value to shareholders and has repeatedly neglected its core duty–to protect shareholders’ interests.

“It has overseen the severe deterioration of Bristow’s financial and operational position over several years and in the process threatened permanent impairment to Bristow’s shareholders, bondholders, employees, customers, vendors, partners, and the company’s reputation as a preeminent provider of industrial aviation services.”

Bristow is predominantly an offshore oil-and-gas helicopter operator and, as a result, has suffered extensively from the sector’s downturn. With no green shoots appearing any time soon in the oil-and-gas patch, Bristow had hoped to diversify its operations with the purchase of a predominantly heavy-lifting helicopter operator Columbia Helicopters.

This was not a cheap decision; the acquisition was valued around $560 million and was to have been funded with the issuance of a bridge loan with a comparably high rate of LIBOR +8%, the issuance of 26.2 million shares and an additional issuance of 7.1 million shares. The proposed acquisition ultimately fell through.

Whilst the Columbia acquisition would have diversified Bristow’s operations, GVIC opposed the acquisition – highlighting in the letter that the acquisition would have diluted existing Bristow shareholders by approximately 93%. When Bristow terminated the acquisition, it paid a $20 million termination fee.

This has been the sixth letter that GVIC has sent to Bristow’s management to discuss potential management changes and performance. According to the letter, Bristow has ignored these attempts.

The reality of the situation is that GVIC is a minor shareholder in the Group. With the group owning just under 250,000 of the 35 million outstanding shares. One of GVIC’s nominees Mr Meretsky also owns shares in Bristow, approximately 65,000. Both combined amount to less than one percent of the company’s outstanding shares.

The date for Bristow’s final interest payment looming, the payment was initially scheduled for 15 April, but Bristow elected for a 30-day grace period, delaying the deadline until 15 May. This gives them only 20 days until the company to appear in court, meaning its unlikely they have the time to turn anything around in the short window.

“It is too late for what GVIC are trying to do, chances are Bristow are going into Chapter 11, it seems like they have missed the bus.” Said Clark McGinn, Principle at Uplifting Aviation.

In an attempt to six its balance sheet, Bristow Group has bought on Houlihan Lowkey and Alvarez Marsal to advise. Houlihan Lowkey is the same investment bank advising PHI through its Chapter 11 and that previously advised CHC’s and Waypoint Leasing’s.

With CHC back to facing financial troubles and potentially on the road to filing again, a quick Chapter 11 transaction is unlikely to solve the issues plaguing the oil and gas market, including the oversupply of helicopters and operators.

“Bristow is not addressing the number of problems for oil and gas operators internationally,” said McGinn principal at Uplifting Advice.

“We are going to have to have creative destruction here. I don’t think the helicopter oil services sector will come out of where it is unless people fix their balance sheets and fix the oversupply issues. There are too many helicopters and too many operators in the market. It is a competitive market based on price and not quality and maybe someone as big as Bristow going into Chapter 11 could take some of that capacity out of the market.”