Bristow Group Inc. – Emerges from Bankruptcy and Announces New Board; Backstopped $385mn Rights Offering, Equitization of $150.0mn DIP Financing Facility Cornerstones to Fresh Start

October 31, 2019 – The Debtors notified the Court that their Joint Chapter 11 Plan of Reorganization had become effective as of October 31, 2019 [Docket No. 879]. The Court had previously approved the Debtors’ Joint Chapter 11 Plan of Reorganization on October 7, 2019 [Docket No. 825]. The Debtors also filed a Plan supplement which attached key exit financing and governance documents, including in respect of exit financing and the emerged Debtors' new board [Docket No. 877].

On May 11, 2019, Bristow Group Inc.. (formerly NYSE: BRS) and seven affiliated Debtors (together, “Bristow,” “BGI” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Sothern District of Texas, lead case number 19-32713. In their lead Petition, the Debtors, a leading provider of industrial aviation services offering helicopter transportation, search and rescue (SAR) and aircraft support services to government and civil organizations worldwide, noted estimated assets of $2.9bn and estimated liabilities of $1.9bn.

In a press release announcing the emergence, the (former) Debtors stated: “Bristow has reduced its debt significantly and is emerging with $535 million of new capital, which it believes will provide significant financial flexibility to support its global operations. The Company also announced it has amended and reinstated its $75 million term loan as of its emergence. 

In accordance with the Plan of Reorganization, Bristow's new Board of Directors has assumed its responsibilities. The new Board will be chaired by Aris Kekedjian, and includes Wesley E. Kern, Robert J. Manzo, Lorin L. Brass, G. Mark Mickelson, Brian D. Truelove, Hooman Yazhari and L. Don Miller, who will continue to serve on the Board. Former Bristow director Ian A. Godden will continue to serve as chairman of Bristow Aviation Holding Limited, Bristow's U.K. affiliate, and serve in an advisory role to Bristow.”

Board bios are included in the press release.  

In an October 7th press release announcing the Plan's confirmation, the Debtors stated: “Upon emergence as a privately held Company, Bristow's largest owners are expected to be affiliates of Solus Alternative Asset Management LP, South Dakota Investment Council, Empyrean Capital Partners, LP, Bain Capital Credit and Oak Hill Advisors, who are expected to own in excess of 50% of Bristow's equity collectively, with the remaining equity held by other secured creditors and unsecured noteholders. 

Under the terms of the approved Plan, at emergence the Company will receive $535 million of new capital from a majority of Bristow's secured and unsecured noteholders: (i) $385 million through an equity rights offering, and (ii) Bristow's $150 million debtor-in-possession loan, which was funded in August 2019 and will convert into new equity of the reorganized Company at emergence."

The Plan Supplement attached the following key exit financing and governance documents:

• Exhibit A: New Certificate of Incorporation of Reorganized Bristow Parent 
• Exhibit D: Stockholders Agreement 
• Exhibit J: Disclosures regarding Directors and Officers of Reorganized Bristow Parent 
• Exhibit K: Amendment to 2019 Term Loan Facility Credit Agreement 
• Exhibit L: Restructuring Transactions Memorandum

Plan Overview

The Debtors' memorandum in support of Plan confirmation [Docket No. 743] provides the latest iteration of a complicated and oft-changed Plan. The memorandum states: "The Plan is based on the Restructuring Support Agreement, which over time and through negotiations has evolved to reflect a global compromise and settlement among the Debtors, the Creditors’ Committee, and the Supporting Noteholders consisting of: (i) 99.3% of the principal amount of the Secured Notes; (ii) 100% of the principal amount of the 2019 Term Loans; and (iii) 73.6% of the principal amount of the Unsecured Notes combined.

The Plan provides for:

1. A $385 million new money rights offering to purchase new equity interests in Reorganized Bristow Parent, which is fully backstopped by certain Supporting Noteholders. 
2. (x) If the Debtors enter into a new Exit Facility on or prior to the Effective Date, each Holder of a 2019 Term Loan Facility Claim will receive payment in full in Cash, or (y) if the Debtors do not enter into a new Exit Facility prior to the Effective Date, each such Holder will (i) have its Allowed 2019 Term Loan Facility Claim Reinstated and governed by the Amended and Restated 2019 Term Loan Credit Agreement, and (ii) receive its Pro Rata share of the 2019 Term Loan Amendment Fee. 
3. Each Holder of a Secured Notes Claim will receive (i) payment in full in Cash of all accrued and unpaid prepetition and postpetition interest at the non-default contract rate (except to the extent otherwise paid as adequate protection pursuant to the Final Cash Collateral Order and not recharacterized or otherwise avoided, but not including any make-whole or prepayment premium); (ii) after giving effect to the immediately preceding clause (i), Cash in an amount equal to 97% of such Holder’s Allowed Secured Notes Claim; and (iii) the right to participate in its Pro Rata share (without oversubscription rights) of up to $37.5 million of the Rights Offering. 
4. Each Holder of an Unsecured Notes Claim will receive (i) if such Holder is a 4(a)(2) Eligible Holder, its Pro Rata share of (x) New Common Stock in an amount equal to 11% of all New Stock on a fully diluted basis (except for the New Stock issued pursuant to the Management Incentive Plan), (y) the Unsecured 1145 Subscription Rights, and (z) the Unsecured 4(a)(2) Subscription Rights, (ii) if such Holder is not a 4(a)(2) Eligible Holder, either (x) if such Holder does not timely make the Unsecured Cash Out Election (including the failure to timely return an election notice), its Pro Rata share of (A) New Common Stock in an amount equal to 11% of all New Stock on a fully diluted basis (except for the New Stock issued pursuant to the Management Incentive Plan), (B) solely if such Holder fully exercises its Unsecured 1145 Subscription Rights, the Unsecured 4(a)(2) Distribution Cash Amount (up to a maximum of 7.6% of such Holder’s Unsecured Notes 5 Claims), and (C) the Unsecured 1145 Subscription Rights, or (y) if such Holder timely makes the Unsecured Cash Out Election, its Pro Rata Share of the GUC Distribution Cash Amount. 
5. Each Holder of a General Unsecured Claim will receive (i) if such Holder is a 4(a)(2) Eligible Holder, either (x) if such Holder does not timely make the Unsecured Cash Out Election, its Pro Rata share of (A) New Common Stock in an amount equal to 11% of all New Stock on a fully diluted basis (except for the New Stock issued pursuant to the Management Incentive Plan), (B) the Unsecured 1145 Subscription Rights, and (C) the Unsecured 4(a)(2) Subscription Rights, or (ii) if such Holder is not a 4(a)(2) Eligible Holder, either (x) if such Holder does not timely make the Unsecured Cash Out Elections, its Pro Rata share of (A) New Common Stock in an amount equal to 11% of all New Stock on a fully diluted basis (except for the New Stock issued pursuant to the Management Incentive Plan), (B) solely if such Holder fully exercises its Unsecured 1145 Subscription Rights, the Unsecured 4(a)(2) Distribution Cash Amount (up to 7.6% of such Holder’s General Unsecured Claims), and (C) the Unsecured 1145 Subscription Rights, or (y) if such Holder timely makes the Unsecured Cash Out Election, its Pro Rata share of the GUC Distribution Cash Amount. 
6. Trade Claims will be paid in full on the Effective Date or otherwise in the ordinary course of the Debtors’ business. 
7. The Debtors’ credit facility with Lombard will be reinstated without impairment. 
8. Claims based on (i) the Debtors’ guarantees of obligations of their non-Debtor subsidiaries’ customer contracts, including their contract for search and rescue services for the United Kingdom’s Maritime & Coastguard Agency, and (ii) Bristow Parent’s guarantees of the Lombard (BALL) Credit Facility of its non-Debtor subsidiary Bristow Aircraft Leasing Limited and the UK ABL Credit Facility of its non-Debtor subsidiary Bristow Helicopters Limited, will each be Reinstated without impairment. 
9. The PK Air Credit Facility Claims and the MAG Lease Obligation Claims will be Reinstated as set forth in the Order Granting Debtors’ Motion to Approve Term Sheet with PK Airfinance S.À.R.L. and the Milestone Aviation Group Limited [Docket No. 698], dated September 23, 2019 (the “Milestone Settlement Order”). The PK Air Facility Loan Documents shall be amended and the MAG Lease Documents shall be assumed and cured, pursuant to, and in accordance with, the settlement approved by the Milestone Settlement Order. 
10. The Macquarie Term Loan Credit Facility Claims will be reinstated and the Macquarie Term Loan Credit Facility will be, subject to Court approval, amended as provided for in the global settlement between the Debtors and the Macquarie Parties, as set forth in the Debtors’ Emergency Motion to Approve Term Sheet with Macquarie Leasing LLC and Macquarie Rotorcraft Holdings LLC [Docket No. 731] (the “Macquarie Settlement”). 
11. Full equitization of the Debtors’ $150 million DIP Facility. 
12. The cancellation of the Existing Interests in Bristow Parent without any distribution."

The Debtors’ Pre-petition Capital Structure

About the Debtors

The following is a summary of classes, claims, voting rights, and expected recoveries (defined terms are as in the Plan and/or Disclosure Statement):

• Class 1 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated aggregate amount of claims is N/A and the estimated recovery is 100%.
• Class 2 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated aggregate amount of claims is 0 and the estimated recovery is 100%.
• Class 3 (“2019 Term Loan Facility”) is impaired and entitled to vote on the Plan. The estimated aggregate amount of claims is $75.0mn and the estimated recovery is 100%. 
• Class 4 (“Secured Notes Claims”) is impaired and entitled to vote on the Plan. The estimated aggregate amount of claims is $282.3mn and the estimated recovery is 100%. Each Holder of an Allowed Secured Notes Claim shall receive (i) payment in full in Cash of any accrued and unpaid prepetition and postpetition interest at the non-default contract rate (except to the extent otherwise paid as adequate protection pursuant to the Final Cash Collateral Order and not recharacterized or otherwise avoided, but not including any make-whole or prepayment premium), (ii) after giving effect to the immediately preceding clause (i), Cash in an amount equal to 97% of the outstanding amount of such Allowed Secured Notes Claim and (iii) such Holder’s Pro Rata share of the Secured Noteholder Subscription Rights.
• Class 5 (“Lombard (BULL) Term Loan Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated aggregate amount of claims is $91.0mn and the estimated recovery is 100%.
• Class 6 (“PK Air Credit Facility Claims”) is impaired and entitled to vote on the Plan. The estimated aggregate amount of claims is $201.6mn and the estimated recovery is 100%. Each Holder of an Allowed PK Air Credit Facility Claims shall receive its Pro Rata share of the New PK Air Note.
• Class 7 (“Macquarie Term Loan Credit Facility Claims”) is impaired and entitled to vote on the Plan. The estimated aggregate amount of claims is $164.0mn and the estimated recovery is 100%. Each Holder of an Allowed Macquarie Term Loan Credit Facility Claims shall receive its Pro Rata share of the New Macquarie Note.
• Class 8 (“Unsecured Notes Claims”) is impaired and entitled to vote on the Plan. The estimated aggregate amount of claims is $562.5mn and the estimated recovery is uncertain.
• Class 9 (“Lombard (BALL) Term Loan Guarantee Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated aggregate amount of claims is $75.3mn and the estimated recovery is 100%.
• Class 10 (“MCA and Other Customer Guarantee Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated aggregate amount of claims is N/A and the estimated recovery is 100%.
• Class 11 (“Trade Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated aggregate amount of claims is $5.0mn -$7.0mn and the estimated recovery is 100%.
• Class 12 (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. The estimated aggregate amount of claims is $35.0mn to $60.0mn and the estimated recovery is [?]%.
• Class 13 (“Intercompany Claims”) is unimpaired/impaired, deemed to accept/reject and not entitled to vote on the Plan. The estimated aggregate amount of claims is N/A and the estimated recovery is 100%/100%.
• Class 14 (“Intercompany Interests”) is unimpaired/impaired, deemed to accept/reject and not entitled to vote on the Plan. The estimated aggregate amount of claims is N/A and the estimated recovery is 100%/100%.
• Class 15 (“Existing Interests”) is impaired, presumed to reject and not entitled to vote on the Plan. The estimated aggregate amount of claims is N/A and the estimated recovery is 0%.
• Class 16 (“Section 510(b) Claims”) is impaired, presumed to reject and not entitled to vote on the Plan. The estimated aggregate amount of claims is N/A and the estimated recovery is 0%.

Events Leading to the Chapter 11 Filing

In a declaration in support of the Chapter 11 filing (the “Allman Declaration”), Brian J. Allman, Bristow's Senior Vice President and Chief Financial Officer, detailed the events leading to the Debtors’ Chapter 11 filing.

The Allman Declaration states, ““A substantial portion of the Company’s revenue is derived from clients in the oil and gas industry. The steep decline in energy commodity prices that began in mid-2014 and the continued volatility in the global oil and gas industry, have presented substantial difficulties for helicopter service providers. Oversupply of oil, together with weakening demand, have greatly impacted capital expenditures for exploration and production activities. These factors have led to a substantial number of oil-and-gas-related bankruptcies over the last four years.

As a result of the prolonged energy downturn, the Company’s clients have significantly reduced the number of their offshore exploration projects, offshore production operations and related expenditures. This has reduced their demand for helicopter services, and thus revenue to the Company’s oil and gas business operations. For example, from fiscal years 2015 to 2019 the Company’s revenue from its oil and gas business declined by approximately 40%. Declines in revenue and demand have been experienced across the Company’s industry, resulting in an oversupply of aircraft in the market, further depressing margins and revenue.

In addition to these pressures, the number of service providers in key regions where the Company operates has increased in the last few years. This increased competition—including in Australia, the North Sea and the U.S. Gulf of Mexico—has further depressed revenues and margins. In sum, the scope and volume of helicopter services demanded by the market has greatly contracted, while the overall level of competition has increased.

The effects of these pressures have been felt by nearly all companies in the helicopter service industry. The excess supply of helicopters in the market has lowered utilization rates and profitability. This has required helicopter operators, like their clients, to implement their own cost-cutting initiatives, by reducing fleet sizes, requesting concessions and waivers from lessors and lenders, and exploring strategic alternatives. Including the Debtors’ Chapter 11 Cases, there have been five large chapter 11 proceedings involving helicopter services and leasing companies in the last few years, including, In re PHI Inc. (Bankr. N.D. Tex., Case No. 19-30932), In re Waypoint Leasing Holdings Ltd. (Bankr. S.D.N.Y, Case No. 18-13648), In re CHC Group Ltd. (Bankr. N.D. Tex., Case No. 16-31854), and In re Erickson Inc. (Bankr. N.D. Tex., Case No. 16-34393).

About Bristow Group Inc.

Bristow Group Inc. is the world's leading industrial aviation service provider offering helicopter transportation, search and rescue (SAR) and aircraft support services to government and civil organizations worldwide. Bristow's strategically located global fleet supports operations in the North Sea, Nigeria and the U.S. Gulf of Mexico; as well as in most of the other major offshore oil and gas producing regions of the world, including Australia, Brazil, Canada, Guyana and Trinidad. Bristow provides SAR services to the private sector worldwide and to the public sector for all of the U.K. on behalf of the Maritime and Coastguard Agency. To learn more, visit our website at www.bristowgroup.com.

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