Texas-headquartered Bristow Group says it has filed for Chapter 11 bankruptcy protection with the US Southern District of Texas (Houston).

Bristow Group Inc. provides industrial aviation and charter services to offshore energy companies in Europe, Africa, the Americas, and the Asian Pacific. It also provides search and rescue services for governmental agencies and the oil and gas industry. Its major shareholders include Mackenzie Financial Corporation (18.33%), Blackrock Fund Advisors (13.08%), Fidelity Management & Research Company Dimensional Fund Advisors LP (US), and The Vanguard Group, Inc.

According to court documents, the Chapter 11 application covers the following entities:

  • Bristow Group, Inc.;
  • BHNA Holdings Inc.;
  • Bristow Alaska Inc.;
  • Bristow Helicopters Inc.;
  • Bristow U.S. Leasing LLC;
  • Bristow US LLC;
  • BriLog Leasing Ltd. (Cayman);
  • Bristow Equipment Leasing Ltd. (Cayman).

Bristow's other non-US-based entities, including those holding its non-US Air Operator's Certificates (AOC), namely Airnorth (Australia), Bristow Helicopters Nigeria, Cougar Helicopters (Canada), Eastern Airways (UK but sold as of May 10), Líder Aviação (Brazil), Turkmenistan Helicopters, are not included in the Chapter 11 filings.

Overall, the Group said it has assets worth USD2,860,804,000 against debts of USD1,885,623,000. The Group has approximately USD1.5 billion in senior indebtedness comprised of USD350 million aggregate 8.75% Senior Secured Notes due in 2023, USD401.5 million aggregate 6.25% Senior Notes due in 2022, and USD143.75 million aggregate 4.50% Convertible Senior Notes due in 2023 all of which are currently outstanding. Other claims are for outstanding loans and credit facilities owed to a variety of international banks.

Among the largest creditors with unsecured claims are Wilmington Trust National Association (owed a total of USD562.5 million for the 6.25% Senior Notes due 2022 and 4.50% Convertible Senior Notes due 2023), Milestone Aviation Group in Ireland (owed USD20.192 million for lease claims), and Infosys in India (owed USD1.39 million).

Bristow Group President and Chief Executive Officer, L. Don Miller, said in a statement the firm would use the proceedings to restructure and strengthen its balance sheet and achieve a more sustainable debt profile.

"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," he said.

"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."

In addition to a restructuring of its operations and assets, Bristow said certain senior secured noteholders (affiliates of, or investment funds managed or advised by BlackRock Financial Management, Inc., DW Partners, LP, Highbridge Capital Management, LLC, Oak Hill Advisors, L.P. and Whitebox Advisors LLC) had also extended a USD75 million term loan to the company prior to Chapter 11 filing. They also provided a commitment for a further USD75 million in debtor-in-possession (DIP) financing that would be available once the court had approved its application. The financing package will provide working capital needed to fund the Group's operations for the duration of its Chapter 11 reorganisation proceedings.

On May 10, Bristow Group shareholder Global Value Investment Corp (GVIC) attacked the Group's board of directors and management for what it said was its poor business practices. It claimed the leadership had failed to effect necessary cost cuts through the retention of unprofitable assets and its plan to borrow its way out of trouble.

While the Group had previously blamed its financial difficulties on a "prolonged downturn in the offshore oil and gas market”, as well as growing "levels of indebtedness, lease and aircraft purchase commitments and certain other commercial contracts", GVIC has also pointed to a lack of adequate systems in place needed to track certain assets that were leased or used to collateralise loans. Given the Group has assets of USD2.8 billion, many of which are sellable, GVIC said it had identified USD200 million worth of assets that can be sold and the proceeds used to shore up the Group's capital reserves.

Those identified include:

  • Eastern Airways which GVIC claims has consistently become less profitable, and in 2019 is projected to be EBITDA negative. GVIC estimates proceeds from its sale could reach up to USD160 million;
  • Airnorth (legally known as Capiteq Ltd) also expected to be EBITDA negative in 2019. GVIC expects the sale of the airline to raise up to USD70 million;
  • Bristow Group's fleet of long-range passenger transport Airbus Helicopters H225s which has been mothballed since April 2016. GVIC claims that while the sixteen choppers are unlikely to be used in offshore oil and gas operations, demand exists for H225 utility and military variants. GVIC believes this fleet can be sold for between USD90-140 million and has spoken with several interested potential buyers;
  • Bristow’s unconsolidated investments, including its investment in Líder, should be considered for sale. GVIC said it is aware of an interested buyer for the group's shareholding in Líder which could be sold at or above book value, or approximately USD50 million;

Lastly, GVIC recommended that in certain geographies that have become exceptionally competitive, Bristow has not achieved the necessary scale to be acceptably profitable. Therefore, in these select geographies, Bristow should consider selling its operations to direct competitors.