A group of Bristow Group’s creditors holding the company’s 8.75% $350 million senior secured notes due 2023 has organized with Davis Polk, according to sources. The Houston-based offshore aviation services company announced on Monday the
termination of its deal to acquire Columbia Helicopters and “
material weakness” in internal controls.
The company’s notes have slumped across the board on the back of Monday’s disclosures. The secured notes traded today at 75.5, down from the 82/83 context on Feb. 7, and the 6.25% unsecured notes due 2022 traded today at 23, compared with 46.75 on Feb. 7 prior to the news, according to TRACE. The 4.5% convertible notes due 2023 dropped to 23.5 today, from their prior round-lot trade at 38.875 on Dec. 20, also according to TRACE.
The company
said in an 8-K filing that it did not have adequate monitoring control processes in place related to nonfinancial covenants within certain of its secured financing and lease agreements and that internal control over financial reporting as of March 31, 2018, should no longer be relied upon. As a result, the company delayed the filing of its 10-Q and said it would not comment further until it is filed. The company added that it is “specifically evaluating whether certain debt balances should be reclassified from long-term to short-term in those financial statements, 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.”
On a preliminary basis, Bristow
reported that adjusted EBITDA fell 32% to $23.6 million in the fourth quarter from a year earlier on an 8.2% revenue decline to $331.3 million. The company said fixed-wing operations, foreign-exchange impacts and expenses associated with the terminated Columbia Helicopters transaction weighed on financial performance and liquidity in the fiscal third quarter. The company paid Columbia a $20 million breakup fee, according to the 8-K.
Liquidity as of the fiscal third quarter ended Dec. 31 was $236.9 million, split between $231.3 million of cash and $5.6 million of revolver availability, down $83 million from
Sept. 30. Bristow reported negative $42 million of operating cash flow in the fiscal third quarter and negative $58.4 million of free cash flow after accounting for $16.4 million of capital expenditures.
The company
said Monday that it was still in the process of selecting a new CEO; it had said in November that CEO Jonathan Baliff would retire at the end of this month.
Davis Polk did not immediately respond to a request for comment.
Editor's Note: This story has been updated to remove references to non-round lot trade prices.