New Director Slate, Management Proposed for Bristow

by Mark Huber
- April 24, 2019, 10:03 PMWisconsin-based Global Value Investment Corp. (GVIC) continued its assault on Bristow Group’s directors and senior managers on April 24. GVIC filed a proxy statement with the U.S. Securities and Exchange Commission (SEC) that stated that it intended to nominate a new slate of directors at the heavily indebted helicopter services company’s next annual shareholders’ meeting, which has yet to be scheduled. GVIC maintains that Bristow’s current leadership is defective and that its anticipated future bankruptcy filing would be ill-advised. “Bristow’s current directors have overseen a remarkable destruction of value,” said GVIC CEO Jeffrey Geygan. “Improvements at Bristow are long overdue.”

The proposed slate of four directors includes Sten Gustafson, the former CEO of helicopter services company Era Group and a former director at CHC Helicopter. Gustafson, who is also an international law attorney, assisted with founding a private helicopter service in Saudi Arabia. During his tenure at Era from 2017 to 2018, Gustafson financially de-levered that company while generating record quarterly revenues. The other three proposed directors include GVIC CEO Geygan; Anthony Gray, an attorney who led helicopter maker Sikorsky’s global compliance office from 2010 to 2013; and Jonathan Meretsky, an attorney who has served as managing director at Canada’s Merit House investment firm since 2009 and is an expert on “ocean-tech” as it relates to the global oil and gas industry. Meretsky currently owns 65,602 shares of Bristow while GVIC controls 245,940 shares. The combined position amounts to approximately one percent of Bristow’s shares outstanding. GVIC took its position in Bristow in June 2017 at prices between $7 to $8 per share. Bristow had traded as high as $80 per share in 2014. Its stock is now trading in the range of 50 cents per share after trading as high as $18 per share in May 2018. Earlier this month the credit rating agency Moody’s downgraded Bristow’s debt rating to Caa3—very high credit risk.

In its filing Wednesday with the SEC, GVIC noted that Bristow’s leadership had made a “chain of bad decisions” including the “inexplicably expensive financing package” proposed for the aborted $560 million acquisition of Columbia Helicopters late last year. “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,” the company wrote in its SEC filing. GVIC again criticized the promotion of L. Don Miller from Bristow chief financial officer (CFO) to CEO on March 1, calling it a “testament to the poor business judgment and sense of timing demonstrated by Bristow’s directors.” GVIC alleges that Miller was “intimately involved in Bristow’s failed financial undertakings.”

Those included the acquisition of fixed-wing operators Eastern Airways and Airnorth, maintaining a large equity position in Brazilian operator Lider Aviacao, and failing to make timely disposal of fallow assets such as Bristow’s current fleet of 16 parked Airbus H225 class heavy helicopters, including two that are SAR provisioned.

In an interview with AIN on Wednesday, GVIC senior executives, including Jeffrey Geygan, said Bristow could cut debt and improve operating performance “outside of bankruptcy,” pointing out that the company still has $900 million in assets and roughly $202 million in cash or cash equivalents against debts of $1.4 billion. “Among the [Bristow] equity and debt holders that we have spoken with about the state of Bristow’s finances, there is a strong belief and consensus that this company can be rehabilitated outside of Chapter 11 [bankruptcy].” Geygan said that included helicopter leasing companies who are “not eager” to take Bristow helicopters back. He said the view was echoed by senior industry executives that GVIC has spoken to outside of Bristow.

Bristow could raise additional cash quickly by disposing of underperforming assets, according to GVIC vice president James Geygan. “These assets would have significant value in the hands of the correct strategic operator,” James Geygan said, adding that certain equity investors in Bristow had made written offers of additional operating capital.

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