TEXT-S&P: Bristow Group rating unchanged by stake in Cougar
Sept 5 - Standard & Poor's Ratings Services said today its ratings on Houston-based Bristow Group Inc. (BB/Negative/--) remain unchanged, including the 'BBB-' senior secured debt rating, after the company announced that it is acquiring a 40% economic interest and 25% voting interest in Cougar Helicopters Inc. (not rated) along with certain aircraft and facilities used by Cougar in its operations. The acquisition price is $250 million, plus earn-out potential over the next three years of up to $40 million. Bristow is funding the transaction through an interim $250 million, 364-day term loan facility, with repayment to come from a combination of cash on hand, proceeds from future financing, and cash flow from operations. Ratings are unchanged because we continue to think that Bristow will generate nearly $300 million in EBITDA in fiscal 2013, resulting in leverage in the mid-3x area. We consider this measure to be appropriate for the current rating. However, if the company is unable to pass along higher operating costs, we believe that gross margins could decline to below 27%, which could result in leverage above our downgrade target of 3.75x.
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