MEQUON, Wis., April 18, 2019 /PRNewswire/ -- Global Value
Investment Corp. ("GVIC"), a value-oriented investment research and
advisory firm located in Mequon,
Wisconsin, today issued an open letter to the Board of
Directors of Bristow Group Inc. (NYSE: BRS). The letter details
GVIC's loss of confidence in Bristow's Board of Directors and
strongly cautions Bristow against pursuing a Chapter 11
restructuring. In addition, GVIC calls for the immediate
resignation of directors Thomas C.
Knudson, Thomas N. Amonette,
Lori A. Gobillot, and Biggs C.
Porter.
The text of the letter follows.
Dear Board of Directors,
As you know, Global Value Investment Corp. ("GVIC"), on behalf
of its clients, has maintained a long equity position in Bristow
Group Inc. ("Bristow") since 2017. GVIC has communicated with
Bristow's Board of Directors on numerous occasions over the past
several months, both privately and publicly. Regrettably, these
efforts have not resulted in meaningful engagement.
On April 17, 2019, Bristow's
common stock closed at $0.52. This
represents a one-, three-, and five-year price decline of -96.6%,
-97.4%, and -99.3%, respectively. This decline is unacceptable.
GVIC was shocked by the contents of the Form 8-K filed with the
U.S. Securities and Exchange Commission on April 15, 2019 (the "April
15 8-K"). Specifically, GVIC is left to question the
competence and intent of Bristow's Board of Directors and
management given Bristow's inability to remedy its previously
reported material weakness in internal controls over financial
reporting, yet another delay in filing the Form 10-Q for the period
ended December 31, 2018, and the
decision to delay an interest payment due on Bristow's 6.25% Senior
Unsecured Notes due 2022.
It is GVIC's understanding that the material weakness arises
solely from the prolonged separation of pledged or leased engines
from pledged or leased airframes covered by certain loan or lease
agreements. Bristow operates a fleet of nearly 400 aircraft; it is
untenable to GVIC that Bristow is unable to track assets worth
millions of dollars across a global fleet, or that it has been
unable to remedy this material weakness in a timely manner. The
cascading failure of financial reporting was created by those
entrusted to attentively manage Bristow's assets, which ultimately
belong to shareholders.
Four and one-half months have now elapsed since December 31, 2018. An organization of Bristow's
size, with the resources available to it, has no excuse for
delaying the issuance of its Form 10-Q for such a length of time or
to have repeatedly set and failed to meet expectations regarding
delivery thereof. It is even more inexcusable to expect
stakeholders to wait until June 19,
2019 to receive this report, as suggested in the
April 15 8-K. GVIC believes that
Bristow can and should cure its material weakness and file its Form
10-Q with the utmost expediency.
The April 15 8-K reported that, as
of April 12, 2019, Bristow had
$202.1 million in liquidity. Even
under a dire set of business assumptions, and considering that
Bristow's nearest meaningful debt maturity is October 2022, the interest payment of
$12.5 million (scheduled for
April 15, 2019) to holders of
Bristow's 6.25% Senior Unsecured Notes due 2022, to which
bondholders are contractually entitled, represents a modest portion
of Bristow's overall liquidity and an immaterial threat to
Bristow's solvency. If payment has been delayed at the request of
senior secured creditors, remedying the issues addressed in the
previous two paragraphs becomes even more important than either
issue in isolation.
Perhaps the most concerning development is the March 1, 2019 promotion of former CFO
L. Don Miller to CEO. During Mr.
Miller's tenure as CFO, Bristow's total debt grew from $945 million to $1,450
million – an increase of 53.4%. Furthermore, it was on Mr.
Miller's watch that the financing for Bristow's proposed
acquisition of Columbia Helicopters, Inc. was so horribly botched,
resulting in a proposal to dilute existing equity holders by
approximately 93%. It strikes GVIC that Mr. Miller regards
Bristow's equity holders – the owners of the business and those to
whom the Board of Directors is accountable – as an
afterthought.
Mr. Miller's professional history includes his role as the
post-petition President and Chief Executive Officer for Enron North
America Corp. and Enron Power Marketing, Inc. from 2001 to 2007, as
well as senior financial positions with Enron prior to its 2001
Chapter 11 filing. Mr. Miller is obviously versed in reorganization
under Chapter 11 proceedings. Considering the language contained in
the April 15 8-K, and based on
extensive conversations between GVIC and numerous other individuals
familiar with Bristow, GVIC is concerned that Mr. Miller is
determined to take Bristow into Chapter 11 reorganization
proceedings. GVIC believes this step to be entirely unnecessary at
this time and views a Chapter 11 filing as avoidable and
ill-advised.
GVIC is aware of at least one large, well-capitalized equity
investor with extensive knowledge about Bristow that has offered to
engage in substantive negotiations about providing capital to
Bristow. GVIC expects that Bristow's Board of Directors will fully
consider such financing before undertaking
any prospective debt restructuring, a Chapter 11
reorganization, or any other action that in any way further impairs
the value of Bristow's equity.
To be clear: should Bristow seek Chapter 11 reorganization
without thoroughly exploring every reasonable alternative
available, in any manner other than in good faith, or if the Board
of Directors in any way acts contrary or in conflict with their
fiduciary duties, GVIC will pursue any and all remedies available
to it under the law, both against Bristow and its directors
individually, and any others who acted in dereliction of their
duties with respect to Bristow.
Considering the magnitude of value destruction that has occurred
under the current Board of Directors, GVIC is demanding the
immediate resignation of directors Thomas
C. Knudson, Thomas N.
Amonette, Lori A. Gobillot,
and Biggs C. Porter. New directors should be appointed who are
accountable to equity owners and capable of guiding Bristow into
the future.
GVIC is prepared to put forth a slate of alternate directors for
election at Bristow's 2019 annual meeting. Any slate proposed by
GVIC would include financial, legal, and/or operational
professionals with the expertise necessary to improve Bristow's
capital structure (including contemplating the sale of
underperforming assets) and operational performance to return
Bristow to profitability. GVIC believes that others familiar with
Bristow's operations are prepared and waiting to assume key
management positions immediately.
GVIC has lost all confidence in Bristow's Board of Directors
and demands new leadership. GVIC will not cease its efforts until
it is assured that the interests of Bristow's equity owners are
preserved.
Sincerely,
Jeff Geygan
President and CEO
About Global Value Investment Corp.
Global Value
Investment Corp. is a value-oriented investment research and
advisory firm focused on investing in the equity and debt of
publicly traded companies around the world. The firm was founded in
2007 in Mequon, WI, and has since
opened additional offices in Boston,
MA, Charleston, SC and
Hyderabad, India.
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SOURCE Global Value Investment Corp.