The April 158-K reported that, as of April 12, 2019, Bristow had $202.1 million in liquidity. Even under a dire set of business assumptions, and considering that Bristow’s nearest meaningful debt maturity is October 2022, the interest payment of $12.5 million (scheduled for April 15, 2019) to holders of Bristow’s 6.25% Senior Unsecured Notes due 2022, to which bondholders are contractually entitled, represents a modest portion of Bristow’s overall liquidity and an immaterial threat to Bristow’s solvency. If payment has been delayed at the request of senior secured creditors, remedying the issues addressed in the previous two paragraphs becomes even more important than either issue in isolation.
Perhaps the most concerning development is the March 1, 2019 promotion of former CFO L. Don Miller to CEO. During Mr. Miller’s tenure as CFO, Bristow’s total debt grew from $945 million to $1,450 million – an increase of 53.4%. Furthermore, it was on Mr. Miller’s watch that the financing for Bristow’s proposed acquisition of Columbia Helicopters, Inc. was so horribly botched, resulting in a proposal to dilute existing equity holders by approximately 93%. It strikes GVIC that Mr. Miller regards Bristow’s equity holders – the owners of the business and those to whom the Board of Directors is accountable – as an afterthought.
Mr. Miller’s professional history includes his role as the post-petition President and Chief Executive Officer for Enron North America Corp. and Enron Power Marketing, Inc. from 2001 to 2007, as well as senior financial positions with Enron prior to its 2001 Chapter 11 filing. Mr. Miller is obviously versed in reorganization under Chapter 11 proceedings. Considering the language contained in the April 158-K, and based on extensive conversations between GVIC and numerous other individuals familiar with Bristow, GVIC is concerned that Mr. Miller is determined to take Bristow into Chapter 11 reorganization proceedings. GVIC believes this step to be entirely unnecessary at this time and views a Chapter 11 filing as avoidable andill-advised.
GVIC is aware of at least one large, well-capitalized equity investor with extensive knowledge about Bristow that has offered to engage in substantive negotiations about providing capital to Bristow. GVIC expects that Bristow’s Board of Directors will fully consider such financing before undertaking any prospective debt restructuring, a Chapter 11 reorganization, or any other action that in any way further impairs the value of Bristow’s equity.
To be clear: should Bristow seek Chapter 11 reorganization without thoroughly exploring every reasonable alternative available, in any manner other than in good faith, or if the Board of Directors in any way acts contrary or in conflict with their fiduciary duties, GVIC will pursue any and all remedies available to it under the law, both against Bristow and its directors individually, and any others who acted in dereliction of their duties with respect to Bristow.
Considering the magnitude of value destruction that has occurred under the current Board of Directors, GVIC is demanding the immediate resignation of directors Thomas C. Knudson, Thomas N. Amonette, Lori A. Gobillot, and Biggs C. Porter. New directors should be appointed who are accountable to equity owners and capable of guiding Bristow into the future.
