Helicopter-services company Bristow acquiring heavy-lift specialist Columbia

Global helicopter services company Bristow Group is acquiring heavy-lift specialist Columbia Helicopters in a debt and stock deal worth $560 million in what Bristow called “a transformative transaction.” The company made the recent announcement concurrent with releasing its financial results for the quarter ending September 30, when it posted a $144 million loss on revenues of $334.7 million. The loss includes a one-time impairment charge of $117.2 million against its Airbus Helicopters H225 fleet and inventory and Eastern Airways assets. Bristow reported that it had $308 million in cash at the end of the quarter. As of last Friday that had diminished to $266 million. 

Related Article

There's No Turning Back from an eVTOL Future

"This is really a big deal. This is a lot of money," says the AHS chief.

For the 12 months ended September 30, Columbia posted revenues of $281 million and earnings before interest, taxes, and depreciation (EBITDA) of $117 million. Columbia currently operates 21 tandem rotor heavy-lift Vertol 107 and Chinook CH-234/CH-47D aircraft. Perhaps more importantly for Bristow, the company also has full MRO and certification capabilities and lucrative military contracts. “Meaningful revenue opportunities abound” from the combined companies as well as tax benefits, said Bristow CEO Jonathan Baliff.

Under terms of the proposed deal, the Lematta family and current management will convert their $77 million stake in Oregon-based Columbia to 7.1 million shares of Bristow stock, which plunged 20 percent to $7.96 a share immediately after the deal was announced. Bristow plans to finance the remainder of the deal with debt and cash. Bristow said Columbia would remain an “unrestricted subsidiary,” keeping its name, management, board, and livery. Baliff said he expected the deal to enable Bristow to “leverage the combined company’s fleet, MRO capabilties, and certificates to expand our addressable market opportunities globally” and that the company would derive “immediate financial benefits.”  Currently, “a number of our [Bristow’s] maintenance costs are too high for the services rendered” and  a main value of the transaction was to “meaningfully reduce our $250 million [annual] spend on maintenance by utilizing Columbia’s vertically integrated, proven, in-house MRO capabilities,” said Baliff.

Baliff, who has led the company since 2010, said his primary focus would be to smoothly integrate Columbia into Bristow before he retires immediately after the transaction closes, which is expected to be by December 31. He will be replaced on an interim basis by Thomas Amonett, Bristow’s vice chairman. Columbia was founded by Wes Lematta with a single Hiller 12B in 1957. Lematta died in 2009.  

On a recent quarterly conference call with analysts, Baliff admitted that the most recent quarter “had been difficult.” He blamed the impact of foreign exchange, an uneven recovery in the energy sector, fixed-wing costs, and failure to close certain contracts for contributing to Bristow’s ongoing operating losses. He said the company was in discussions with manufacturers to terminate new aircraft deliveries, had placed 10 owned aircraft up for sale, had returned eight leased aircraft year to date, and had the ability to return 13 more.

However, Baliff noted recent increased oil and gas exploration activity and drill rig increases in key markets including West Africa, the Gulf of Mexico, the North Sea, and Brazil. He also said that the company was continuing with in its plan to transform itself into an “industrial aviation services company” less tied to the fate of oil and gas. By illustration, he said that oil and gas, the company’s UK SAR contract, and Columbia would each contribute an approximate one-third share to the combined company’s EBITDA going forward.