While Columbia Helicopters insists that it remains committed to its proposed $560 million acquisition by Bristow Group announced in November, an activist investor with a small Bristow stake has cast doubt on the financing details of the deal.
In an open letter to fellow Bristow directors last week, Wisconsin-based Global Value Investment Corporation (GVIC) noted that the deal relied on Bristow to issue up to 33.5 million shares of new stock, a move that could potentially dilute existing shareholder value by 93 percent. “GVIC believes that any benefits that may result from the Columbia acquisition are greatly outweighed by this dilution,” it wrote.
The deal also calls for Bristow to assume $360 million in new debt in the form a one-year “bridge loan” at approximately 10.8 percent interest. Bristow shares already have lost more than two-thirds of their value since the proposed Columbia deal was announced, and last month, a Bristow filing with the U.S. Securities and Exchange Commission noted that the deal was unlikely to close by a projected December 2018 target date due to “market conditions.” Columbia is now valued at more than 4.5 times Bristow’s market capitalization.
GVIC is suggesting that Bristow pursue other “strategic alternatives to unlock shareholder value” other than the acquisition of Columbia. Those, according to GVIC, include “strategic divestment of assets, privatization of the company, or a merger transaction with a like company. GVIC believes that Era Group, Inc., CHC Group Ltd., or others would entertain discussions on a potential business combination.” Barring that, GVIC hinted it may stand in the way of the proposed Bristow-Columbia deal and “take all actions it deems necessary to ensure shareholders’ interests are fully considered and protected.” GVIC asserts that Bristow’s real current value is $27 per share. The stock is currently trading in the $3.25 range.