In a scathing public letter released last week, one of helicopter services company Bristow Group’s larger shareholders called for the resignation of four senior members of the company's board and warned it against pursuing Chapter 11 bankruptcy proceedings. Wisconsin-based Global Value Investment Corp. (GVIC) called for the removal of directors Thomas Knudson, Thomas Amonette, Lori Gobillot, and Biggs Porter and excoriated CEO L. Don Miller for running up company debt. “GVIC has lost all confidence in Bristow’s board of directors and demands new leadership,” the company wrote, while also taking aim at Bristow’s senior executives.
GVIC CEO Jeff Geygan said his company questioned “the competence and intent of Bristow’s board of directors and management given Bristow’s inability to remedy its previously reported material weakness in internal controls over financial reporting, yet another delay in filing the [U.S. Securities and Exchange Commission quarterly financial disclosure form] Form 10-Q for the period ended December 31, 2018, and the decision to delay an interest payment due on Bristow’s 6.25 percent senior unsecured notes due 2022.”
Given the almost 400-aircraft size of Bristow’s worldwide fleet, GVIC said it was “untenable” that “Bristow is unable to track assets worth millions of dollars across a global fleet” or remedy a material weakness in the company’s financial reporting due to the separation of pledged/leased engines from pledged/leased airframes, a situation Bristow revealed on February 19. GVIC further accused Bristow of a “cascading failure of financial reporting” that “was created by those entrusted to attentively manage Bristow’s assets.”
The investment fund singled out the performance of new Bristow CEO Miller, who previously served as the company’s CFO, for criticism. GVIC noted that it was “during Mr. Miller’s tenure as CFO [that] Bristow’s debt grew from $945 million to $1.45 billion—an increase of 53.4 percent. Furthermore, it was on Mr. Miller’s watch that the financing for Bristow’s proposed acquisition of Columbia Helicopters was so horribly botched, resulting in a proposal to dilute existing equity holders by approximately 93 percent.”
According to GVIC, Miller played a pivotal role in the 2001 bankruptcy of energy company Enron, at the time the largest corporate bankruptcy in U.S. history. “Mr. Miller’s professional history includes his role as the post-petition president and CEO for Enron North America and Enron Power Marketing from 2001 to 2007, as well as senior financial positions with Enron prior to its 2001 Chapter 11 filing.” GVIC said it “is concerned that Mr. Miller is determined to take Bristow into Chapter 11 reorganization proceedings.” GVIC called that move “ill-advised” as “at least one large, well-capitalized equity investor with extensive knowledge about Bristow that has offered to engage in substantive negotiations about providing capital to Bristow.”
GVIC recommended that Bristow take immediate steps to improve its performance, including the sale of underperforming assets. While GVIC did not name those assets specifically, they are believed to include Bristow’s perennial money-losing fixed-wing operations Eastern Airways and Airnorth. GVIC also recommended replacing Bristow’s senior executives. “GVIC believes that others familiar with Bristow’s operations are prepared and waiting to assume key management positions immediately.”