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Bristow is still working to close its $560-million acquisition of heavy-lift specialist Columbia Helicopters, having passed the deal’s originally targeted completion date of Dec. 31.
The acquisition, labelled “the largest transaction in the company’s history” by Bristow CEO Jonathan Baliff, was announced by the offshore transport giant on Nov. 9, 2018.
But in documents subsequently filed with the U.S. Securities and Exchange Commission (SEC), Bristow said it would not be able to meet the Dec. 31 target “based upon current market conditions.”
According to the operator’s SEC filing, Bristow or Columbia have the right to terminate the agreement if the acquisition is not completed by April 9. It also states that Bristow will have to pay Columbia a $20 million termination fee if it is unable to complete the move.
“Our teams continue to work on the necessary steps to work toward closing,” a Bristow spokesperson told Vertical when approached for comment.
Houston, Texas-based Bristow had announced the acquisition plan as it reported a $140-million net loss in its second quarter financial results. The company’s stock price plunged following the news, from over $10 per share on Nov. 8, to a low of $2.09 per share on Dec. 26. At close of business on Jan. 8, it sat at $3.49 per share.
That day, activist investor Global Value Investment Corp. (GVIC) delivered an open letter to the chairman of the board of directors of Bristow Group objecting to the proposed financing of the acquisition.
According to GVIC’s estimates, the transaction would massively dilute Bristow’s existing shares.
“GVIC believes that the combination of Bristow and Columbia could result in a valuable enterprise capable of driving long-term shareholder value,” Jeffrey Geygan, GVIC’s president and CEO, stated in the letter. “However, any combination should be executed on sensible financial terms. The currently proposed terms are far from sensible, including massive dilution and expensive debt.”
He added that GVIC is prepared to “take all actions it deems necessary” to ensure the interests of Bristow’s shareholders are fully considered and protected.
“GVIC strongly encourages Bristow and Columbia to reevaluate the terms of the transaction in the mutual interest of the shareholders of both companies, and if necessary, terminate the transaction,” said Geygan.
Bristow had hoped the merging with Columbia, based in Aurora, Oregon, would provide each with “immediate operational and financial benefits,” according to Baliff in a Nov. 9 conference call with investors.
Bristow plans to have Columbia operate as a separate subsidiary, but hopes to be able to leverage the company’s expertise, contacts and its U.S. Department of Defense (DoD) Commercial Airlift Review Board (CARB) certificate — which allows it to perform outsourced military transport operations — to find new work for Bristow’s “underutilized” offshore fleet.
As of November, Bristow had a fleet of 233 helicopters around the globe. It specializes in the offshore transport for the oil-and-gas industry, but has attempted to diversify its operations and revenue stream over the last few years.
Columbia was founded in 1957 by industry pioneer Wes Lematta, and has seen global success by specializing in heavy-lift services, primarily to U.S. military and government customers, with its fleet of 21 Vertol 107s and CH-234/CH-47D Chinooks. It has 860 employees.