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Airnorth and Eastern could be sold under Bristow rescue plan

Activist shareholder Global Value Investment (GVIC) has drawn up an action plan for beleaguered Bristow Group – including disposing of two fixed-wing airlines – in a bid to stave off Chapter 11 bankruptcy protection.

Offshore helicopter specialist Bristow warned on 16 April that it had appointed advisers to explore restructuring options aimed at reducing its debt load, including Chapter 11, which would effectively wipe out several classes of investor.

GVIC has previously called for the removal of four Bristow board members, which it says have overseen "years of mismanagement" but is now pressing for urgent action to stave off Chapter 11, a move it argues is not in the interest of shareholders.

Under a three-pronged "operational plan", to be presented to Texas-based Bristow in the week of 6 May, GVIC would sell unprofitable or idle assets, aggressively cut costs and pay down or restructure debts.

Key assets for disposal include Airnorth and Eastern Airways, based in Australia and the UK respectively, which are both forecast to be negative on an earnings before interest, taxes, depreciation and amortisation (EBITDA) basis this year.

Bristow acquired both carriers to feed its helicopter operations, with limited success. GVIC believes it can attract buyers for the pair, to transform them into "regular scheduled airlines rather than running them on an industrial helicopter aviation model", says J P Geygan, GVIC vice-president.

"We have had conversations with a fixed-wing operator that was bewildered how inefficiently these airlines have been operated,” says Jeff Geygan, president and chief executive of GVIC.

Additionally, GVIC will propose that Bristow sell its 16-strong fleet of idled Airbus Helicopters H225s, which it believes can generate $80 million or upwards. These helicopters have been out of service for three years, with the operator making no attempt to dispose of them, says J P Geygan.

GVIC believes that with a strengthening of the balance sheet and repayment or renegotiation of its debts, Bristow's debt-to-EDITDA ratio can be cut to at least 6:1, down from about 12:1 at present.

In addition, GVIC says that “change in the boardroom and a change of management” is urgently required.

Former chief financial officer Don Miller was appointed as chief executive in February following the departure of predecessor Jonathan Baliff.

However, that appointment has been roundly criticised by GVIC, given Miller's oversight of the company's finances during a period in which Bristow has been unable to file its quarterly earnings.

"It is confounding to us that [Bristow] could not have found anyone better to be CEO," says Jeff Geygan.

He thinks there are numerous candidates – including GVIC's proposed board member Sten Gustafson – with industry experience who would "love to jump on board here" as chief executive.

Jeff Geygan says other shareholders have been "100% favourable" to its strategy, but "the company has remained silent in terms of communicating with us".

GVIC believes Bristow could file for Chapter 11 protection as early as 10 May, or around 16 May, when a $12.5m interest payment on its debt is due.

"We are 100% committed to defending the rights of equity holders in this situation; our plan would benefit customers, vendors, suppliers and employees as well," says J P Geygan.

GVIC owns 245,950 shares in Bristow, with a further 17,205 owned by executives. Shares have been trading at around $0.50 for the past month.

Although rivals CHC Helicopter and PHI have both entered Chapter 11 over the past three years, GVIC rejects any comparison, arguing that Bristow's circumstances are different.

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