Business Context and Reporting Period
This Form 8-K Current Report was filed by Bristow Group Inc. on January 10, 2023. The filing details the entry into two new material definitive financing agreements by the Company's U.S. and U.K. subsidiaries to refinance existing indebtedness and support obligations under contracts with the United Kingdom's Department for Transport and the Maritime & Coastguard Agency.
Key Financial Metrics and Debt Structure
The filing establishes two new senior secured term loan facilities totaling up to GBP 145,000,000:
- U.S. Facility Agreement: A term loan of up to GBP 70,000,000 provided in two tranches (GBP 40,000,000 and GBP 30,000,000) to Bristow U.S. Leasing LLC.
- U.K. Facility Agreement: A term loan of up to GBP 75,000,000 to Bristow Aircraft Leasing Limited.
- Interest Rate: Both facilities bear interest at the Sterling Overnight Index Average (SONIA) plus 2.75% per annum.
- Maturity Date: Both loans mature on March 31, 2036.
- Repayment Terms: Equal consecutive quarterly installment payments commencing March 31, 2023.
- Collateral:
- U.S. Loan: Secured by three Sikorsky S-92 and two Leonardo AW189 helicopters ("BULL Aircraft").
- U.K. Loan: Secured by five Leonardo AW189 helicopters ("BALL Aircraft") and the BULL Aircraft.
- Covenants: Includes an annual Loan-to-Value (LTV) ratio covenant starting at 80% and reducing to 25% over the life of the loans.
The filing text does not provide specific values for revenue, profit, cash flow, or operating margins as this is a transactional report rather than a periodic financial statement.
Material Changes and Refinancing
The new agreements replace previous term loan credit facilities with Lombard North Central Plc dated November 11, 2016. The primary material changes include:
- Refinancing of existing indebtedness and the aircraft financed thereby.
- Extension of the debt maturity to March 31, 2036.
- Establishment of mandatory prepayment events tied to aircraft disposition, loss events, or termination of contracts with the U.K. Department.
Outlook, Risks, and Contingencies
Management commentary is limited to the description of the financing terms. Key risks and contingencies identified in the filing include:
- Contract Dependency: Mandatory prepayment is triggered if contracts with the U.K. Department are terminated or partially terminated.
- Asset Risk: Mandatory prepayment is required if aircraft are subject to final disposition or an event of loss.
- Liquidity Conditions: Borrowing availability is subject to the perfection of liens on the aircraft collateral and other customary conditions.
- Interest Rate Risk: Variable interest rates based on SONIA plus a fixed margin.
Investor Verification Checklist
- Verify the exact drawdown amounts of the two tranches under the U.S. Facility Agreement.
- Confirm the current status of the U.K. Department contracts to assess prepayment risk.
- Review the valuation of the BULL and BALL Aircraft collateral to ensure compliance with the 80% initial LTV covenant.
- Check for any subsequent filings regarding the actual funding date and interest rate resets.