Bristow could owe Columbia Helicopters $20 million in contract termination fees

posted on 8th January 2019 by Omar
Columbia Helicopters

Plans to buy Columbia Helicopters have stalled due to falling stock prices for Bristow Group. Under the plan, Bristow would acquire Columbia for $560 million in a cash/debt/stock deal that was expected to close by the end of 2018.

The purchase agreement provides either companies can terminate the deal if it does not close by April 9 this year  (2019), subject to an additional sale period. If the deal fails, Bristow would owe Columbia $20 million in termination fees.

Under terms of the proposed deal, the Lematta family and current management will convert their $77 million stake in Columbia Helicopters to just over  7 million shares of Bristow stock. Bristow’s share price has continued to fall, reaching a low of $2.12 each share on December 24 last year before rebounding in recent days to the $3 range as the price of oil began rising again from year-end lows that approached $40 per barrel.

Last week, a Bristow spokesman said they continue to “work hard” to close the deal but the drop in Bristow’s share value, since the deal was announced, raises the possibility that the company might need to raise more cash to close it, hoping that its share price will continue to improve, or a combination of both.

Bristow said it would yield immediate financial benefits, when the deal was announced, by allowing Bristow to access Columbia’s MRO capabilities and military approval certificates to cut costs and diversify from the volatile offshore energy sector.