Bristow’s stock price briefly fell below $1 last week after credit rating agency Moody’s downgraded $750 million worth of the offshore helicopter service company’s debt to “Caa2,” a rating reserved for bonds of “poor standing.” Despite this downgrade, the stock has price rose modestly to $1.10 as of press time.
In its analysis of Bristow’s financial situation, Moody’s noted that the new lower rating “reflects [Bristow's] very high financial leverage and the associated debt service cost, elevated default risk due to delayed financial reporting, potential non-financial covenant violation, and the uncertainty around the company's ability to continue as a going concern; and persistent negative free cash flow generation that continues to drain liquidity. If the company's auditor includes a 'going concern' statement in the annual 10-K filing, it would trigger an 'event of default' under Bristow's certain secured equipment financings.
"The rating also considers the poor outlook for the offshore oil-and-gas industry and Moody's expectation of persistent pricing pressure due to industry-wide helicopter overcapacity. Moody's expects negative free cash flow generation to continue through Fiscal Year 2020, leaving very limited cash cushion in early 2020 unless the company is able to execute assets sales or raise funding through other means.”
Bristow shares had traded as high as $18.65 in May of last year.