Bristow Group, Inc. · NYSE:VTOL
Bristow — Proxy Contest (May 2019)
33 slides from Bristow's proxy contest presentation, May 8, 2019
Slide 1: Bristow Group Inc. Investor's Case for Change
Bristow Group Inc. (NYSE: BRS) Investor’s Case for Change Published May 7, 2019 The following is a presentation released by Global Value Investment Corp.:
Slide 2: Disclosures
Disclosures Global Value Investment Corp. (“GVIC”) is a registered investment adviser and does not provide investment banking services. GVIC does not receive fees or other compensation (including “in kind” compensation) in connection with preparing and distributing this presentation. The opinions re
Slide 3: Additional Information and Where to Find It
GVIC, Sten Gustafson, Jonathan Meretsky, Anthony Gray, Jeffrey Geygan and James Geygan are participants in the solicitation of proxies from shareholders of Bristow Group Inc. (“Bristow”) in connection with Bristow's 2019 Annual Meeting of Shareholders (the “Annual Meeting”). GVIC intends to file a p
Slide 4: Introduction
Introduction Bristow Group Inc. (“Bristow” or the “Company”) is a preeminent provider of industrial aviation services, operating a fleet of aircraft around the world. Bristow provides its services primarily to the offshore oil and gas industry and public or private entities requiring helicopter sear
Slide 5: History of Financial Decline
History of Financial Decline The dramatic decline in Bristow’s fundamental financial position is evident: Income Statement From March 31, 2015 to December 31, 2018: TTM revenue declined from $1,858.67 million to $1,408.32 million (-24.2%) TTM operating income declined from $190.87 million to -$41.91
Slide 6: History of Financial Decline: Operational Metrics
History of Financial Decline Operational Metrics From March 31, 2015 to December 31, 2018: Helicopter fleet size as measured by large aircraft equivalent (LACE, a capacity-weighted measurement), remained unchanged at 167, with only minor interim fluctuations. TTM operating expenses decreased only mo
Slide 7: History of Financial Decline: Stock Returns
History of Financial Decline Over the past one, three, and five years, Bristow’s common stock has returned -97.5%, -98.0%, and -99.4%, respectively. Source: FactSet; data as of 5/6/2019.
Slide 8: Operational Blunders: Columbia Acquisition
Operational Blunders Bristow’s management and Board of Directors have been unable to implement necessary operational improvements when faced with market headwinds. Rather than undertake the difficult and diligent work necessary to improve Bristow’s business and balance sheet, on November 9, 2018, Br
Slide 9: Operational Blunders: Delayed Filings and CEO Promotion
Operational Blunders At the same time that the Columbia acquisition was terminated, Bristow announced that it would be unable to file its Form 10-Q for the quarter ended December 31, 2018 in a timely manner and identified a material weakness in internal controls over financial reporting. This Form 1
Slide 10: Operational Blunders: Delayed 10-Q and Interest Payment
Operational Blunders Bristow has delayed the filing of its Form 10-Q for the period ending December 31, 2018 four times, forcing negotiation with creditors and retention of legal and financial advisors. On April 15, 2019, Bristow delayed a scheduled $12.5 million interest payment on its 6.25% Senior
Slide 11: Weak Board of Directors
Weak Board of Directors Over the past year, the Board of Directors has: Promoted CFO Don Miller to CEO, despite grave issues in Bristow’s financial reporting, a debt burden that increased more than 50% during Miller’s tenure as CFO, and the failed acquisition of Columbia Helicopters, Inc. Failed to
Slide 12: Director Stock Ownership
Director Stock Ownership Furthermore, none of the current directors have meaningful equity ownership. The longest-tenured director, Thomas Knudson, has been a director since June 2004. Yet in 15 years, Mr. Knudson has accumulated only 83,580 shares. The last time Mr. Knudson purchased Bristow common
Slide 13: Chapter 11 Unnecessary
Chapter 11 Unnecessary GVIC believes any Chapter 11 reorganization proceeding at Bristow is avoidable and ill-advised. With $202.1 million in liquidity as of April 12, 2019, Bristow has sufficient liquidity to service its debt and operate its business in the short- and medium-term. Bristow’s recent
Slide 14: Management Changes
Management Changes The first and most urgent change proposed by GVIC is that of senior management. GVIC does not believe that Don Miller has the expertise or disposition to effectively lead Bristow. GVIC has identified specific individuals with extensive experience in industrial aviation, oil and ga
Slide 15: Revenue Growth
Revenue Growth While Bristow’s revenue has suffered through the downturn in offshore oil and gas from which the market is now emerging, commercial efforts have been lacking. Bristow’s ability to provide the high level of service expected by its offshore oil and gas customers depends on mutually bene
Slide 16: Cost Cutting
Cost Cutting GVIC has identified between $100 million and $150 million in annualized cost savings. These changes can be implemented in six to 12 months. GVIC and others strongly believe that lessors and OEMs are prepared to negotiate with Bristow on the cost and terms of its leases and service agree
Slide 17: Fleet Optimization
Fleet Optimization By optimizing Bristow’s fleet of helicopters, maintenance and operating costs can be reduced meaningfully. As leases expire, leased capacity should be replaced with owned capacity. GVIC expects the returning leased aircraft can result in a dramatic reduction in lease costs within
Slide 18: Asset Rationalization
Asset Rationalization GVIC believes there is significant book value and fair market value in Bristow’s assets. As part of a turnaround, each business segment should be evaluated on an individual basis for profitability and operational sensibility. In order to facilitate strengthening of the balance
Slide 19: Asset Rationalization: H225 Fleet and Líder
Asset Rationalization H225 Fleet – Since April 2016, Bristow has not operated its fleet of 16 owned H225 helicopters for commercial purposes. While the aircraft is unlikely to be used in offshore oil and gas operations, demand exists for utility and military variants of the H225. GVIC believes this
Slide 20: EBITDA Recovery
EBITDA Recovery Assuming a base FY 2019 EBITDA of $100 million, GVIC believes the potential for significant EBITDA growth within 12 months is enormous. FY 2019 EBITDA:$100 million +EBITDA from Revenue Growth (at 8% EBITDA Margin):$8 million +EBITDA from Cost Cutting (Low End of Range):$100 million +
Slide 21: Reduce Leverage
Reduce Leverage GVIC estimates that Bristow currently carries approximately $1.4 billion in debt and $200 million of cash. With $1.2 billion in net debt, Bristow’s debt-to-EBITDA ratio would be significantly improved following the implementation of GVIC’s recovery plan. The table below, which presen
Slide 22: Additional Capital Available
Additional Capital Available GVIC has identified several sources of capital available for the purposes of adding liquidity or replacing existing indebtedness. However, as previously noted, GVIC believes that Bristow currently has sufficient liquidity to service its contractual debt obligations and o
Slide 23: Diversification
Diversification Approximately 67% of Bristow’s operating revenue is attributable to its oil and gas operations, 16% attributable to U.K. search and rescue operations, and 17% attributable to fixed wing operations. GVIC believes that diversification into adjacent rotor-wing aviation operations must o
Slide 24: Industry Consolidation
Industry Consolidation GVIC believes that Bristow’s industry is ripe for consolidation, and Bristow is well-positioned to be an important player in this process. A limited number of transactions can result in meaningful industry consolidation, both in specific geographies and across the globe. Meani
Slide 25: Outright Sale
Outright Sale GVIC believes there are several public and private entities that would have an interest in acquiring Bristow’s entire enterprise. It would be imprudent for Bristow to enter Chapter 11 reorganization proceedings before these options are thoroughly explored, and a report made to sharehol
Slide 26: Equity Value
Equity Value GVIC believes there is substantial equity value in Bristow, and for that reason, any attempt to enter Chapter 11 reorganization proceedings would destroy equity value and constitute a breach of fiduciary duty. As of September 30, 2019, Bristow’s book value per share was approximately $2
Slide 27: Turnaround Summary
Turnaround Summary GVIC expects that the existing Board of Directors to fully explore all options, including GVIC’s turnaround plan, before electing to commence Chapter 11 reorganization proceedings. GVIC welcomes engagement from Bristow, equity owners, debt holders, vendors, lessors, and other stak
Slide 28: GVIC's Nominees
GVIC’s Nominees In an open letter dated April 18, 2019, GVIC called for the resignation of directors Thomas C. Knudson, Thomas N. Amonett, Lori A. Gobillot, and Biggs C. Porter. On April 24, 2019, GVIC nominated four highly qualified directors: Sten Gustafson, Jonathan Meretsky, Anthony Gray, and Je
Slide 29: GVIC's Nominees: Sten Gustafson
GVIC’s Nominees Sten Gustafson Sten Gustafson has nearly 25 years of experience in the global energy sector. Mr. Gustafson’s began his career as an attorney in 1990, holding positions at the international law firms of Cleary, Gottlieb, Steen & Hamilton and Baker Botts L.L.P. He continued his career
Slide 30: GVIC's Nominees: Jonathan Meretsky
GVIC’s Nominees Jonathan Meretsky Jonathan Meretsky is a lawyer by education with significant complex international finance practice experience. He has been in the role of Managing Director at Merit House since 2009, one of Atlantic Canada's most respected private investment and finance houses. Afte
Slide 31: GVIC's Nominees: Anthony Gray
GVIC’s Nominees Anthony Gray Anthony Gray has deep experience in legal, compliance, and ethical matters. From 2010 to 2013, Mr. Gray served as the global compliance office at Sikorsky Aircraft Corporation, a subsidiary of United Technologies, where he created and led an ethics and compliance program
Slide 32: GVIC's Nominees: Jeffrey Geygan
GVIC’s Nominees Jeffrey Geygan Jeffrey Geygan has more than 30 years of experience as an investment professional. From 1987 to 2007, Mr. Geygan served as a vice president and senior portfolio manager at Smith Barney, Inc. and UBS Financial Services, Inc. In 2007, Mr. Geygan founded Global Value Inve
Slide 33: About GVIC
About GVIC 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 identifies undervalued investments and concentrates on closing the valuation gap. The firm was founde