Bristow Group Inc. Downgraded To 'B-' On Delayed Acquisition And Tightening Liquidity; Rating Remains On CreditWatch

  • Houston-based global aviation service provider Bristow Group Inc. has delayed its previously announced acquisition of heavy-lift aircraft operator Columbia Helicopters.
  • The oil and gas market environment has deteriorated considerably since we placed our ratings on Bristow on CreditWatch with negative implications on Nov. 12, 2018.
  • Event risk is exacerbated by Bristow's tightening liquidity runway.
  • We lowered the issuer credit rating on Bristow to 'B-' from 'B'.
  • We also lowered the rating on the unsecured debt to 'CCC+' from 'B-' with a '5' recovery rating, reflecting our expectation of modest recovery (10%-30%; rounded estimate: 10%). The 'B+' issue-level rating on the company's secured notes due 2023 is unchanged. The recovery rating was revised from a '2' to a '1', reflecting our expectation of very high (90%-100%; rounded estimate: 95%) recovery in the event of a payment default.
  • We are keeping our ratings on Bristow on CreditWatch with negative implications.
NEW YORK (S&P Global Ratings) Jan. 11, 2019—S&P Global Ratings today took the 
rating actions list above.  The downgrade reflects a combination of Bristow's 
recent operating performance, shortening liquidity runway, and a delay in 
concluding the acquisition of Columbia Helicopters, which was originally 
expected to close by year-end 2018 before being postponed because of 
unfavorable market conditions. In a similar vein, we believe recent weakness 
in oil and gas prices could prolong the slump in offshore activity and 
continue to weigh on operating results in the coming quarters. On the 
liquidity front, we expect Bristow's approximately $266 million of mostly cash 
liquidity as of early November 2018 to decline primarily as a result of 
substantial net outflows in fiscal 2020 stemming partially from scheduled loan 
amortization and a heavier schedule of capital expenditures. Furthermore, 
while a successful closing of the Columbia transaction would certainly improve 
leverage, margins, and end-market diversity, it does not fully address our 
concerns over Bristow's liquidity position. While the company has previously 
been successful in refinancing and negotiating certain benefits such as capex 
deferrals/reductions and asset sales as part of its liquidity preservation 
effort, it is unclear whether Bristow will retain such flexibility going 
forward.