Bristow Group Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

6 Months Ended

Sep. 30, 2020

Era Group Inc.

On June 11, 2020, the combination of Old Bristow with Era was successfully completed in an all-stock transaction with Era having issued shares of common stock (“Combined Company Common Stock”) to Old Bristow’s stockholders. The transaction was accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). In the Merger, Old Bristow merged with and into Merger Sub, a subsidiary of Era, with Old Bristow remaining as the surviving company and as a subsidiary of Era, the ultimate parent of the Combined Company. Era is one of the largest helicopter operators in the world and the longest serving helicopter transport operator in the U.S., primarily servicing offshore oil and gas production platforms, drilling rigs and other installations. The transaction was structured as an all-stock, reverse-triangular merger, whereby Era issued shares of Combined Company Common Stock to Old Bristow stockholders, allowing it to qualify as a tax free reorganization for U.S. federal income tax purposes. Following the Merger, Era changed its name to Bristow Group Inc., and its common stock continued to trade on the NYSE under the new ticker symbol VTOL.

While Era was the legal acquirer in the Merger, Old Bristow was determined to be the accounting acquirer, based upon the terms of the Merger and other considerations including that: (i) immediately following completion of the Merger, Old Bristow stockholders owned approximately 77% of the outstanding shares of Combined Company Common Stock and pre-Merger holders of Era common stock (“Era Common Stockholders”) owned approximately 23% of the outstanding shares of Combined Company Common Stock and (ii) the board of directors of the Company consists of eight directors, including six Old Bristow designees. The Merger was accounted for under the acquisition method of accounting under ASC 805, Business Combinations. The acquisition

method of accounting requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The Company completed its assessment of the fair value of assets acquired and liabilities assumed within the one-year period from the date of acquisition. The Company recorded measurement period adjustments due to additional information received primarily related to aircraft, redeemable noncontrolling interest and income taxes, resulting in an increase in bargain purchase gain of $5.7 million.

The acquisition date fair value of the consideration transferred consisted of the following (in thousands):



Fair value of Combined Company Common Stock issued ⁽¹⁾	$	106,440
Fair value of accelerated stock awards⁽²⁾	2,067
Fair value of exchanged stock awards ⁽³⁾	228
Total consideration transferred	$	108,735
Fair value of redeemable noncontrolling interest	1,501
Total fair value of Era	$	110,236

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⁽¹⁾	Represents the fair value of Combined Company Common Stock retained by Era Common Stockholders based on the closing market price of Era shares on June 11, 2020, the acquisition date.


⁽²⁾	Represents the fair value of restricted share awards of Combined Company Common Stock held by Era employees that were accelerated upon consummation of the Merger.


⁽³⁾	Represents the amount of the fair value of restricted share awards of Combined Company Common Stock held by Era employees relating to the pre-Merger vesting period.

The following table summarizes the fair values of assets acquired and liabilities assumed as of the date of acquisition, June 11, 2020 (in thousands):



Assets acquired:
Cash and cash equivalents	$	120,236
Accounts receivable from non-affiliates	35,079
Prepaid expenses and other current assets	17,598
Inventories	8,826
Property and equipment	223,256
Right-of-use assets	8,395
Other assets	14,792
Total assets acquired	$	428,182
Liabilities assumed:
Accounts payable	$	9,686
Accrued wages, benefits and related taxes	8,319
Income taxes payable	1,791
Deferred revenue	236
Current portion of operating lease liabilities	1,711
Other accrued liabilities	18,474
Short-term borrowings and current maturities of long-term debt	17,485
Long-term debt, less current maturities	136,704
Other liabilities and deferred credits	1,404
Deferred taxes	34,198
Long-term operating lease liabilities	6,845
Total liabilities and redeemable noncontrolling interest assumed	$	236,853

Net assets acquired	$	191,329

The Merger resulted in a gain on bargain purchase due to the estimated fair value of the identifiable net assets acquired exceeding the purchase consideration transferred by $81.1 million and is shown as a gain on bargain purchase on the condensed

consolidated statements of operations. The bargain purchase was a result of a combination of factors including depressed oil and gas prices and market volatility linked to the COVID-19 pandemic between the initial announcement and consummation of the Merger.

Specifically, the Era share price declined from $8.59 to $5.16 between the last trading day prior to the Merger announcement and the date the Merger closed. The aggregate Merger consideration was based on an exchange ratio that was fixed and did not fluctuate in the event that the value of Old Bristow’s common stock increased or Era’s common stock decreased, between the date of the Merger agreement and consummation of the Merger.

The following unaudited supplemental pro forma combined financial information presents the Company’s results of operations for the three and six months ended September 30, 2020, as though the Merger had occurred on November 1, 2019, the effective date of Old Bristow’s emergence from the Chapter 11 Cases. The unaudited pro forma financial information is as follows (in thousands)⁽¹⁾:



	Successor
	Three Months Ended September 30, 2020			Six Months Ended September 30, 2020
Total revenues	$	304,640		$	609,963
Net income	$	(34,333	)	$	(10,015	)
Net income attributable to Bristow Group Inc.	$	(34,200	)	$	(9,828	)

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(1) As a result of the Merger, the Company was required to dispose of its investment in Lider which occurred on August 2020. The Company had recorded an impairment in June 2020 of $18.7 million related to the future disposition of the investment. This impairment has been excluded from the pro forma combined Net income and Net income attributable to Bristow Group Inc. due to its nonrecurring nature.

The amounts of revenue and earnings of Era included in the Company’s condensed consolidated statements of operations from the acquisition date of June 11, 2020 are as follows (in thousands):



	Successor
	Three Months Ended September 30, 2020			June 11, 2020 - September 30, 2020
Total revenues	$	41,817		$	50,677
Net loss	$	(954	)	$	(5,247	)