TEXT-S&P: Bristow Group rating unchanged by stake in Cougar

Wed Sep 5, 2012 12:32pm EDT

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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