Cancelled $560M deal no issue to future collaboration between the companies.
Bristow Group Inc. and Columbia Helicopters, Inc. announced Monday February 11, 2019 that the two companies have mutually agreed to terminate Bristow’s agreement to acquire Columbia. In connection with the termination, Bristow has paid $20 million to Columbia. Bristow, Columbia and Columbia’s shareholders have agreed to release each other from all claims in connection with the purchase agreement and the related transactions.
Thomas C. Knudson, the Chairman of the Board of Directors of Bristow, stated, “The decision to enter into a mutual termination of the purchase agreement was based on a number of developments following the entry into the agreement, which led both Bristow and Columbia to conclude that it was not possible to combine the two companies at this time. We continue to value our relationship with Columbia and look forward to having the opportunity to work together in the future.”
Knudson took the reigns from former Bristow CEO and Chairman Johnathan Baliff, who announced in the same press release announcing the intent for Bristow to acquire Columbia on November 9, 2018, that he would be retiring in the coming months. Thomas Amonett, the current vice chairman of the Bristow board, was named interim president during the CEO transition.
Steve Bandy, the President and Chief Executive Officer of Columbia, stated, “We continue to believe in the potential for collaboration between Bristow and Columbia, and the companies are actively considering mutually beneficial opportunities to work together.”
Bristow planned on purchasing Columbia Helicopters Inc. from the Lematta family and current management using debt, newly issued shares and cash. The deal was expected to close before the end of the year, according to the original press release, which had not closed even as the companies entered into the second month of 2019, indicating potential complications ahead of today’s announcement sent to journalists shortly prior to the end of business, followed shortly after by an additional press release announcing potential discrepancies in financial reporting in financial year (FY) 2018, further detailing “material weakness” in internal controls over the company’s financial reporting.
The company further stated that the company’s financial reporting from March 31,2018 and any reports thereafter should not be relied on, indicating a larger scale issue that may have played a part in the collapse of the Columbia Helicopters acquisition. You can read the company’s full press release on the issue HERE.
Management has concluded that the Company did not have adequate monitoring control processes in place related to non-financial covenants within certain of its secured financing and lease agreements, and this control deficiency identified represents a “material weakness” in internal controls over financial reporting. Accordingly, the Company’s internal control over financial reporting was ineffective at March 31, 2018 and the reporting periods thereafter. As such, both management’s assessment and the report of KPMG on internal control over financial reporting as of March 31, 2018 should no longer be relied upon. In addition, because of the material weakness described above, in February 2019, the Company’s management has determined that the Company’s disclosure controls and procedures were not effective at a reasonable assurance level as of March 31, 2018 and the reporting periods thereafter.
Bristow provides helicopter transportation, search and rescue as well as aircraft support services, including maintenance, to government and civil organizations worldwide. Much of Bristow’s work involves the offshore oil and gas industry.
Without the Columbia deal, Bristow’s fiscal 2019 EBITDA guidance range was announced as $80 million to $110 million, down from a range of $90 million to $140 million previously, although with the latest announcement, this number is likely to change.