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BRS stock crashing

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BRS stock crashing

Old 5th Mar 2019, 20:51
  #161 (permalink)  
 
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Moody's downgrade BRS

I'm no financial advisor but this doesn't look good. I've added explanations/scale of Moody's ratings in bold.


Rating Action:

Moody's downgrades Bristow to Caa2


04 Mar 2019

Approximately $750 million of rated debt affected

New York, March 04, 2019 -- Moody's Investors Service, ("Moody's") downgraded Bristow Group Inc.'s (Bristow) Corporate Family Rating (CFR) to Caa2 from B3, Probability of Default Rating (PDR) to Caa2-PD from B3-PD, senior secured rating to Caa1 from B2, and senior unsecured notes to Caa3 from Caa2. The Speculative Grade Liquidity Rating was downgraded to SGL-4 from SGL-3. The rating outlook remains negative.



"The downgrade reflects Bristow's declining liquidity and continued weak financial performance, management's determination of material weakness in internal controls over financial reporting, as well the elevated default risk posed by possible non-financial covenant violation and debt reclassification that may occur if the company is unable to successfully assess its historical compliance with covenants or obtain necessary waivers," said Sajjad Alam, Moody's Senior Analyst. "While the company has asserted that it is not aware of any non-compliance in its secured financing and helicopter lease agreements that have not been cured or waived, it is unclear how long it will take to complete management's review of existing processes and controls and remedy the internal control deficiency, when Bristow will be able to complete its assessments and obtain any necessary waivers from various lenders and lessors as they work through this matter with its auditor, and whether Bristow will be able to produce financial statements within a reasonable timeframe without adverse or qualifying statements from its auditor."



Issuer: Bristow Group Inc.

.Downgraded:

.... Corporate Family Rating, Downgraded to Caa2 from B3

.... Probability of Default Rating, Downgraded to Caa2-PD from B3-PD

....Senior Secured Rating, Downgraded to Caa1 (LGD3) from B2 (LGD3)

....Senior Unsecured Regular Bond/Debenture, Downgraded to Caa3 (LGD5) from Caa2 (LGD5)

....Speculative Grade Liquidity Rating, Downgraded to SGL-4 from SGL-3 - A rating of the risk, published by Moody's, that a company will not be able to meet its short-term liabilities due to illiquidity. An SGL-4 rating is the least liquid rating. This indicates a company may not have cash on hand to pay immediate obligations.

INVESTMENT GRADE
  • » Aaa – highest rating, representing minimum credit risk
  • » Aa1, Aa2, Aa3 – high-grade
  • » A1, A2, A3 – upper-medium grade
  • » Baa1, Baa2, Baa3 – medium grade
SPECULATIVE GRADE
  • » Ba1, Ba2, Ba3 – speculative elements
  • » B1, B2, B3 – subject to high credit risk
  • » Caa1, Caa2, Caa3 – bonds of poor standing
  • » Ca – highly speculative, or near default
  • » C – lowest rating, bonds typically in default, little prospect for recovery of principal or interest


.Outlook:

....Maintain Negative Outlook



RATINGS RATIONALE



Bristow's Caa2 CFR reflects its very high financial leverage and the associate debt service cost; elevated default risk due to delayed financial reporting, potential non-financial covenant violation, and the uncertainty around the company's ability to continue as a going concern; and persistent negative free cash flow generation that continues to drain liquidity. If the company's auditor includes a "going concern" statement in the annual 10-K filing, it would trigger an "Event of Default" under Bristow's certain secured equipment financings. The rating also considers the poor outlook for the offshore oil and gas industry, and Moody's expectation of persistent pricing pressure due to industry-wide helicopter overcapacity. Moody's expects negative free cash flow generation to continue through fiscal 2020 leaving very limited cash cushion in early 2020 unless the company is able to execute assets sales or raise funding through other means. Bristow's ratings are supported by its global scale, leading market position in the offshore helicopter services industry, long-term and non-cyclical search and rescue (SAR) contract with the UK government, large and modern fleet of mostly owned aircraft, contractual relationship with a diverse group of oil and gas customers, and consistent commitment to safety.



Financial leverage will remain elevated around 7x through fiscal 2020 and additional projected negative free cash flow will further stress liquidity. The company has not filed its fiscal third quarter 2019 financials on due date and management has concluded that there is "material weakness" in internal controls involving certain non-financial covenants of its secured financing and lease agreements.



Bristow's liquidity is weak, which is reflected in the SGL-4 rating. Despite cutting capex, Bristow could still generate $70-$80 million of negative free cash flow in fiscal 2020. As of December 31, 2018, Bristow had $231 million of balance sheet cash and $6 million of availability under its ABL facility, but Moody's estimates total liquidity would be lower today following the $20 million breakup fee payment to Columbia Helicopters (unrated) and likely negative free cash flow generation since December 31. Bristow has been returning leased helicopters and selling unencumbered helicopters to boost liquidity, but it has been a slow process thus far.



Bristow's senior notes are rated Caa3, one notch below the Caa2 CFR given the significant amount of secured debt in the capital structure. The secured term loan is rated one notch above the CFR at Caa1 because of their priority-claim to Bristow's assets in a potential default scenario. Moody's Loss Given Default Methodology indicates a two notch separation between the CFR and the secured notes, but Moody's believes that the assigned Caa1 rating is more appropriate given that secured lenders do not have an all-asset pledge reducing potential recoveries in the event of a default.



The negative outlook reflects Bristow's declining liquidity, projected negative free cash flow generation and the elevated risk of default. A downgrade is likely if the company is unable to cure the potential covenant breach or any default event or if total liquidity falls below $100 million. An upgrade could be considered if the company resolves its financial reporting and covenant issues, provides visibility around how it plans to remedy control weakness, and maintains adequate liquidity while improving earnings.



The principal methodology used in these ratings was Global Oilfield Services Industry Rating Methodology published in May 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.



Bristow Group Inc., headquartered in Houston, Texas, is a leading provider of helicopter transportation services to the oil and gas industry worldwide.



REGULATORY DISCLOSURES



For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the credit rating action on the support provider and in relation to each particular credit rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.



For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this credit rating action, and whose ratings may change as a result of this credit rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.



Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Sajjad Alam
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653


Steven Wood
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653


Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653

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Old 5th Mar 2019, 21:48
  #162 (permalink)  
 
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Originally Posted by Ed Winchester View Post


There’s no flies on you!
I hope you are being pleasant or are you being sarcastic?
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Old 6th Mar 2019, 07:22
  #163 (permalink)  
 
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Ainippe - I think there may have been some sarcasm since it seemed obvious the letter was a spoof
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Old 6th Mar 2019, 08:49
  #164 (permalink)  
 
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It sucked me in for a bit - my stupidity I guess,
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Old 6th Mar 2019, 10:30
  #165 (permalink)  
 
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BRS, run into the ground by incompetent morons in such a short time. If you still work there, get out while you can
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Old 6th Mar 2019, 19:19
  #166 (permalink)  
 
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And under the magic $1 it goes. Does this trigger anything or does it need to be below for a certain period of time?
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Old 6th Mar 2019, 19:54
  #167 (permalink)  
 
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Old 7th Mar 2019, 11:07
  #168 (permalink)  
 
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Anyone brave enough ?

If there is a turnround to happen, you could make a killing at the current price.....

on the other hand....
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Old 7th Mar 2019, 11:55
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Investing in Penny Stocks....especially those that started at almost Twenty Dollars a Share.....is the definition of "Gambling".

Don't look at the Technicals....look at the "odds" Bristow even survives.

Now as we all know....someone will step in and buy up those parts of the business that do have some hope and out of the ashes will rise yet a "new" Bristow.

Of course it will be in name only!
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Old 7th Mar 2019, 16:26
  #170 (permalink)  
 
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Don't get involved guys this thing is going to zero. There is simply no reason to buy or for anyone to buy it. The business Bristow are engaged in require no brand, there is clearly no goodwill left in the enterprise and who wants to step in to take on the debt, legacy contracts and any human resource liabilities?

The equity price merely reflects a claim on all future cash flows. At the moment BRS has a market cap of a couple of reasonably spec'd helicopters proving the market effectively thinks this thing is dead.
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Old 7th Mar 2019, 17:59
  #171 (permalink)  
 
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I see that BRS has desended below $1 today. Is that not a trigger point to delist or head to a new exchange ?
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Old 7th Mar 2019, 21:45
  #172 (permalink)  
 
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I heard today that Eastern has been sold (or given?!!!) back to the original owners?

Might be nonsense.
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Old 7th Mar 2019, 22:05
  #173 (permalink)  
 
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Originally Posted by SICKorSKI View Post
I see that BRS has desended below $1 today. Is that not a trigger point to delist or head to a new exchange ?
Doesn't it have to be below $1 for 30 days to be de-listed? That's what I thought, could very easily be wrong on that though.
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Old 8th Mar 2019, 16:52
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Deficiency notice
If a company is in violation of the continued listing standards for a period of 30 consecutive days, the NASDAQ sends a "deficiency notice." The most common reasons for a deficiency notice are a share price that falls below $1.00 or a market cap that falls below the stated minimum (as low as $5 million if other requirements are satisfied).Once a deficiency notice has been sent, the company has 90 days to comply with the continued listing standards, or 180 days if the violation was for a sub-$1.00 share price. In order to be compliant, the company's share price or market cap must rise above the minimum for at least 10 consecutive days in the 90-day (or 180-day) period.
If the company fails to comply
If the conditions that triggered the deficiency notice are not met in time, the NASDAQ will then send the company a delisting letter, which must be disclosed to the public within four business days.There is an appeal procedure that a company can use, if it feels that it doesn't deserve to be delisted or if it can regain compliance in a reasonable amount of time. Once the company receives the delisting letter, it has seven days to request a hearing with the NASDAQ listing qualification panel to present its case, which postpones the delisting process until the panel makes a decision.Unless an appeal is filed, the company's stock is halted, and then delisted after seven days. If the appeal is rejected, the company also has the option to appeal to the SEC or in federal court. The NASDAQ gives the company an additional 15 days to do so, but begins its final delisting procedures during that time.
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Old 12th Mar 2019, 18:15
  #175 (permalink)  

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I heard the price sank below $1 ? Things are pretty grim. Sad to see a once great company sink to such depths.

NEO

Last edited by Nigerian Expat Outlaw; 12th Mar 2019 at 18:15. Reason: Is it sank or sunk ?
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Old 13th Mar 2019, 02:44
  #176 (permalink)  
 
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NEO,

You’re correct, it’s sank, the past tense. Sunk is an adjective or a past participle.

i thoroughly agree that it’s very sad to see a once-great company fall so far. It seems to happen to so many companies when bean counters with no experience of anything but balance sheets or making up all sorts of acronyms like EBITDA are allowed unfettered control and all must bow down before their financial altar. Accountants should stick to auditing businesses, not running them. And don’t even get me started on the proliferation of human remains ‘professionals’ in companies.

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Old 13th Mar 2019, 13:41
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What's the score these days with the UK company ? It always had a majority ownership by EU companies/nationals for AOC purposes although BRS called the business shots. Back in the day it was Caledonia Investments and a patsy individual who voted with the US to give effective control over there. IIRC, Caledonia took a reciprocal large minority ownership in BRS when it listed on the NYSE. Not sure what the current shareholdings are.

Given the large slice of overall BRS revenues flowing through there and a substantial HM Government contract I presume there would be a sale of BHL group as a Going Concern to UK based investors ?
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Old 13th Mar 2019, 15:33
  #178 (permalink)  
 
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If I remember, the Bristow UK Company is Bristow Aviation Holdings. Caledonia sold most of its shares in 2017 for a loss (about $12 per share). A quick check shows Caledonia has about 1.4m shares left so it only has about $1.5m of value in BRS which is rocketing up to $1.06 as I am typing!
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Old 13th Mar 2019, 16:41
  #179 (permalink)  
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Originally Posted by Phone Wind View Post
making up all sorts of acronyms like EBITDA
The “E” in EBITDA stands for Earnings. Regardless of how great it was to have a beer with Alan Bristow in years past, please tell us more about how earnings don’t matter to a business.

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Old 14th Mar 2019, 01:42
  #180 (permalink)  
 
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RMK,

Back in the good old days of having a beer with Alan Bristow, profit was what counted, not earnings and yes, I’m well aware of what the E in EBITDA stands for, having been sent on courses by the bean counters to be able to decipher their TLAs and FLAs. However, I also learned that it is a very poor and misleading mechanism if it is used to get an idea of the cash flow of a public company because:

1. It excludes taxes and interest, which are real cash items and not at all optional—a company must obviously pay its taxes and loans.

2. On the other hand, it does not exclude all non-cash items, only depreciation and amortization. Among the non-cash items not adjusted for in EBITDA are bad-debt allowances, inventory write-downs, and the cost of stock options granted.

3. Unlike proper measures of cash flow, it ignores changes in working capital. Additional investments in working capital consume cash.

4. Finally, the main flaw of it is in the E (Earnings). If a public company has over- or under-reserved for warranty costs, restructuring expenses, or bad-debt allowances, its earnings will be skewed and its EBITDA misleading. If it has recognized revenue prematurely or disguised ordinary costs as capital investments, its numbers are suspect. If it has inflated revenue through round-trip asset trades, the E is of no informational value.

I’m just a poor old retired dinosaur, but my other half is involved in investigating fraudulent bean counters and when I mentioned this to her, she told me that a lot of failing businesses focus on highlighting EBITDA because it minimizes the impact of factors outside of their scope of control and focuses only on what can be controlled.



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