Offshore helicopter operator Bristow and its peer Era Group have made a deal to merge in an effort to create a more diverse and financially stronger player.
Bristow and Era Group announced on Friday that they had entered into a definitive agreement to combine the two companies in an all-stock transaction, creating a financially stronger company with enhanced size and diversification.
It is worth reminding that Bristow emerged from Chapter 11 bankruptcy back in November 2019. Bristow managed to reduce its debt significantly and emerged with $535 million of new capital.
“The combined company, which will be named Bristow, will strengthen its global leadership position with significant operations throughout the Americas, Nigeria, Norway, the United Kingdom and Australia for offshore aviation transportation and search and rescue solutions,” the two companies said.
“We believe this merger will create substantial value for the stakeholders of both companies,” said Chris Bradshaw, President and CEO of Era.
“The identified cost synergies are significant and, combined with the strong pro forma balance sheet and absence of capital commitments, support robust free cash flow generation. This merger achieves more efficient absorption of the significant fixed costs required to run an air carrier and better positions the combined company to manage industry challenges.”
“Bristow and Era share complementary cultures built on an unwavering commitment to safety and quality through experienced, well-trained trained pilots, mechanics, engineers and support staff,” said L. Don Miller, President and CEO of Bristow.
The merger will create a player with a combined fleet of more than 300 of modern aircraft and the world’s largest operator of S92, AW189, and AW139 model helicopters, according to the two companies.
The merger is expected to achieve pro forma annual revenues of approximately $1.5 billion and run-rate adjusted EBITDA of approximately $240 million. It will enable substantial and highly achievable cost synergies with an annualized saving of at least $35 million through the elimination of redundant corporate expenses and the realization of enhanced operational efficiencies.
Era CEO to head new company
Following completion of the transaction, the combined company will be headquartered in Houston, Texas. Chris Bradshaw, President and CEO of Era, will become President and CEO of the combined company. The senior management team will be named at a future date.
The combined company will have a nine-member board of directors, including seven members from Bristow and two members from Era, including the CEO. The Chairman and Vice-Chairman of the board of directors will be appointed by Bristow.
The transaction will be structured as a reverse triangular merger whereby Era will issue shares to Bristow stockholders. Era shares will continue to trade on the NYSE.
Under the terms of the agreement, which was unanimously approved by the board of directors of both companies, Bristow shareholders would own 77% of the equity of the new company and Era shareholders would own 23%.
The transaction is expected to close in the second half of 2020, following receipt of required regulatory approvals and satisfaction of other customary closing conditions, including approval by Bristow’s and Era’s stockholders. The merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.
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