May 11, 2019 − Bristow Group Inc.. (NYSE: BRS) and seven affiliated Debtors (together, “Bristow,” “BGI” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Sothern District of Texas, lead case number 19-32713. The Company, a leading provider of industrial aviation services offering helicopter transportation, search and rescue (SAR) and aircraft support services to government and civil organizations worldwide, is represented by Jim Prince of Baker Botts L.L.P. Further board-authorized engagements include (i) Wachtell, Lipton, Rosen & Katz as co-counsel, (ii) Alvarez & Marsal as restructuring advisor, (iii) Houlihan Lokey as financial advisor and (iv) Prime Clerk as claims agent.
The Company’s petition notes between 1,000 and 5,000 creditors, estimated assets of $2.9bn and and estimated liabilities of $1.9bn. Documents filed with the Court list the Company's three largest unsecured creditors as (i) Wilmington Trust, National Association (trustee in respect of $415.9mn of 6.25% Senior Notes), (ii) Wilmington Trust, National Association (trustee in respect of $146.6mn of 4.5% Convertible Senior Notes) and (iii) Milestone Aviation Group ($20.2mn lease claims).
In a press release announcing the filing, Bristow advised that: “Bristow intends to use the proceedings to restructure and strengthen its balance sheet and achieve a more sustainable debt profile, while continuing to provide safe, reliable and professional industrial aviation services to its global clients well into the future.
All of Bristow's businesses are operating in the ordinary course and are anticipated to continue to do so for the duration of the Chapter 11 process. The Chapter 11 filings pertain to certain of Bristow's legal entities in the United States and two of its Cayman Islands subsidiaries.
In addition to executing the Restructuring Support Agreement (the ‘RSA’) with the Company, certain senior secured noteholders made a $75 million term loan to the Company prior to the Court filing, and provided a commitment for a further $75 million in debtor-in-possession (‘DIP) financing that would be available upon Court approval. The financing package provides Bristow with capital that enables the Company to fund its global operations and make continued investments in safety and reliability during the Chapter 11 reorganization proceedings.
Bristow's other non-U.S. entities, including those holding Bristow's non-U.S. air operating certificates ('AOCs'), are not included in the Chapter 11 filings."
L. Don Miller, the Debtors’ President and Chief Executive Officer, added: “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."
Restructuring Support Agreement
In an 8-K filed with the SEC on May 13, 2019, the Debtors provided the following detail as to their May 10, 2019 Restructuring Support Agreement entered into with (i) certain holders (the "Supporting Secured Noteholders") of the 8.75% Senior Secured Notes due 2023 (the "8.75% Senior Secured Notes") and (ii) the guarantors of the 8.75% Senior Secured Notes. Effectively, the Supporting Secured Noteholders have committed to supporting a restructuring that will see those creditors exchange their senior debt for 100% of the equity in the emerged Debtors MINUS whatever portion of that equity is necessary to entice holders of the Debtors' unsecured notes and general unsecured claims to support the Debtors' Plan. Pursuant to the terms of the RSA and a related term sheet:
Events Leading to the Chapter 11 Filing
In a declaration in support of the Chapter 11 filing (the “Allman Declaration”), Brian J. Allman, Bristow's Senior Vice President and Chief Financial Officer, detailed the events leading to the Debtors’ Chapter 11 filing.
The Allman Declaration states, ““A substantial portion of the Company’s revenue is derived from clients in the oil and gas industry. The steep decline in energy commodity prices that began in mid-2014 and the continued volatility in the global oil and gas industry, have presented substantial difficulties for helicopter service providers. Oversupply of oil, together with weakening demand, have greatly impacted capital expenditures for exploration and production activities. These factors have led to a substantial number of oil-and-gas-related bankruptcies over the last four years.
As a result of the prolonged energy downturn, the Company’s clients have significantly reduced the number of their offshore exploration projects, offshore production operations and related expenditures. This has reduced their demand for helicopter services, and thus revenue to the Company’s oil and gas business operations. For example, from fiscal years 2015 to 2019 the Company’s revenue from its oil and gas business declined by approximately 40%. Declines in revenue and demand have been experienced across the Company’s industry, resulting in an oversupply of aircraft in the market, further depressing margins and revenue.
In addition to these pressures, the number of service providers in key regions where the Company operates has increased in the last few years. This increased competition—including in Australia, the North Sea and the U.S. Gulf of Mexico—has further depressed revenues and margins. In sum, the scope and volume of helicopter services demanded by the market has greatly contracted, while the overall level of competition has increased.
The effects of these pressures have been felt by nearly all companies in the helicopter service industry. The excess supply of helicopters in the market has lowered utilization rates and profitability. This has required helicopter operators, like their clients, to implement their own cost-cutting initiatives, by reducing fleet sizes, requesting concessions and waivers from lessors and lenders, and exploring strategic alternatives. Including the Debtors’ Chapter 11 Cases, there have been five large chapter 11 proceedings involving helicopter services and leasing companies in the last few years, including, In re PHI Inc. (Bankr. N.D. Tex., Case No. 19-30932), In re Waypoint Leasing Holdings Ltd. (Bankr. S.D.N.Y, Case No. 18-13648), In re CHC Group Ltd. (Bankr. N.D. Tex., Case No. 16-31854), and In re Erickson Inc. (Bankr. N.D. Tex., Case No. 16-34393).”
The Debtors’ Prepetition Capital Structure
Priority Against Debtors
2019 Secured Term Loan
8.75% Senior Secured Notes due 2023
6.25% Senior Notes due 2022
4.50% Convertible Senior Notes due 2023
Lombard Debt (U.S. & U.K.)
PK Air Debt
Third-Party Aircraft Lease Obligations
General Unsecured Claims
BGI is a publicly held international aviation services company. Its common stock has traded on the NYSE under the ticker “BRS.” The Company has a long history in industrial aviation services through Bristow Helicopters Limited (“BHL”) and Offshore Logistics, Inc., which were founded in 1955 and 1969, respectively. Based on the number of aircraft operated, the Company is the leading global industrial aviation services provider operating through the Debtors and their non-Debtor affiliates. It has major transportation operations in the North Sea, Nigeria, the Gulf of Mexico, and most of the other major offshore energy producing regions of the world, including Australia, Brazil, Canada, Russia and Trinidad. The Company derives its revenue primarily from industrial aviation services provided to offshore energy production companies, as well as from private and public search and rescue (“SAR”) services.
Headquartered in Houston, the Company currently employs approximately 3,000 individuals around the world.