e424b3
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-147690
PROSPECTUS
$350,000,000
Bristow Group Inc.
Offer to Exchange
registered
71/2% Senior
Notes due 2017
for all outstanding
71/2% Senior
Notes due 2017
Exchange
Notes:
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will be freely tradable and otherwise substantially identical to
the Outstanding Notes;
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will accrue interest at
71/2%
per annum, payable semiannually on each March 15 and
September 15; and
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will not be listed on any securities exchange or on any
automated dealer quotation system, but may be sold in the
over-the-counter market, in negotiated transactions or through a
combination of those methods.
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The
exchange offer:
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expires at 5:00 p.m., New York City time, on March 3,
2008, unless sooner terminated or extended; and
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is not conditioned upon any minimum principal amount of
Outstanding Notes being tendered.
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You
should note that:
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we will exchange all Outstanding Notes that are validly tendered
and not validly withdrawn for an equal principal amount of
Exchange Notes that we have registered under the Securities Act
of 1933;
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you may withdraw tenders of Outstanding Notes at any time prior
to the expiration of the exchange offer;
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the exchange of Outstanding Notes for Exchange Notes in the
exchange offer should not be a taxable event for
U.S. federal income tax purposes; and
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the exchange offer is subject to customary conditions, which we
may waive in our sole discretion.
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Please consider carefully the risk factors beginning on
page 17 of this prospectus before participating in the
exchange offer.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The date of this prospectus is January 30, 2008.
This prospectus is part of a registration statement we filed
with the Securities and Exchange Commission. You should rely
only on the information we have provided or incorporated by
reference in this prospectus. We have not authorized anyone to
provide you with additional or different information. We are not
making an offer of these securities in any jurisdiction where
the offer is not permitted. You should assume that the
information in this prospectus is accurate only as of the date
on the front of this prospectus and that any information we have
incorporated by reference is accurate only as of the date of the
document incorporated by reference.
TABLE OF
CONTENTS
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i
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ii
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Each broker dealer that receives Exchange Notes pursuant to
this exchange offer in exchange for securities acquired for its
own account as a result of market making or other trading
activities must acknowledge that it will deliver a prospectus in
connection with any resale of such new securities. The letter of
transmittal attached as an exhibit to the registration statement
of which this prospectus forms a part states that by so
acknowledging and by delivering a prospectus, a broker dealer
will not be deemed to admit that it is an underwriter within the
meaning of the Securities Act of 1933, as amended. This
prospectus, as it may be amended or supplemented from time to
time, may be used by such a broker dealer in connection with
resales of such new securities. We have agreed that, starting on
the date of the completion of the exchange offer to which this
prospectus relates for up to 180 days following completion
of the exchange offer (or such earlier date as eligible
broker-dealers no longer own Exchange Notes), we will make this
prospectus available to any broker dealer for use in connection
with any such resale. See Plan of Distribution.
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any
document we file at the Public Reference Room of the SEC,
100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at
1-800-SEC-0330
for further information on the public reference rooms. Our SEC
filings are also available to the public on the SECs
website at
http://www.sec.gov
and on our website at
http://www.bristowgroup.com.
However, the information on our website does not constitute a
part of this prospectus. Reports and other information
concerning us can also be inspected at the offices of the New
York Stock Exchange, 20 Broad Street, New York, New York
10005. Our common stock is listed and traded on the New York
Stock Exchange under the trading symbol BRS.
i
This prospectus is part of a registration statement we have
filed with the SEC relating to the Notes. As permitted by SEC
rules, this prospectus does not contain all of the information
we have included in the registration statement and the
accompanying exhibits and schedules we file with the SEC. You
may refer to the registration statement, exhibits and schedules
for more information about us and these securities.
The information included in the documents described below is
incorporated by reference and is considered to be a part of this
prospectus. The most recent information that we file with the
SEC automatically updates and supersedes older information. We
are incorporating by reference into this prospectus (excluding
any information that was furnished to (and not filed with) the
SEC the following documents (File
No. 001-31617).
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our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007, which was filed
with the SEC on May 22, 2007;
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our Quarterly Reports on
Form 10-Q
for the quarterly periods ended June 30 and September 30,
2007, which were filed with the SEC on August 2 and
November 5, 2007, respectively;
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our Current Reports on
Form 8-K
filed with the SEC on April 5 and 26, 2007; May 8 and 25, 2007;
June 4 and 13, 2007; July 6 and 10, 2007; November 13,
2007; December 26, 2007; and January 22, 2008.
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Until the termination of the exchange offer described in this
prospectus, we will also incorporate by reference all documents
that we may file in the future under Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended,
or the Exchange Act, excluding any information therein that was
furnished to (and not filed with) the SEC.
We will provide you without charge a copy of any and all
documents that have been incorporated by reference into this
prospectus, except that exhibits to such documents will not be
provided unless they are specifically incorporated by reference
into such documents. Requests for copies of any such document
should be directed to:
Bristow Group Inc.
2000 W. Sam Houston Pkwy S., Suite 1700
Houston, Texas 77042
Attention: Corporate Secretary
Telephone number is
(713) 267-7600
To obtain timely delivery of any of our documents, you must make
your request to us no later than February 25, 2008. Unless
sooner terminated, the exchange offer will expire at
5:00 p.m., New York City time, on March 3, 2008. The
exchange offer can be extended by us in our sole discretion, but
we currently do not intend to extend the expiration date. Please
read The Exchange Offer for more detailed
information.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements
within the meaning of Section 27A of the Securities Act and
Section 21 E of the Securities Exchange Act of 1934.
Forward-looking statements are statements about our future
business, strategy, operations, capabilities and results; use of
proceeds; financial projections; plans and objectives of our
management; expected actions by us and by third parties,
including our customers, competitors and regulators; and other
matters. Some of the forward-looking statements can be
identified by the use of words such as believes,
belief, expects, plans,
anticipates, intends,
projects, estimates, may,
might, would, could or other
similar words; however, all statements in this prospectus, other
than statements of historical fact or historical financial
results are forward-looking statements.
Our forward-looking statements reflect our views and assumptions
on the date we are filing this prospectus regarding future
events and operating performance. We believe that they are
reasonable, but they involve known and unknown risks,
uncertainties and other factors, many of which may be beyond our
control, that may cause actual results to differ materially from
any future results, performance or achievements
ii
expressed or implied by the forward-looking statements.
Accordingly, you should not put undue reliance on any
forward-looking statements. Factors that could cause our
forward-looking statements to be incorrect and actual events or
our actual results to differ from those that are anticipated
include all of the following:
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the risks and uncertainties described under Risk
Factors;
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the level of activity in the oil and natural gas industry is
lower than anticipated;
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production-related activities become more sensitive to variances
in commodity prices;
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the major oil companies do not continue to expand
internationally;
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market conditions are weaker than anticipated;
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we are not able to re-deploy our aircraft to regions with the
greater demand;
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we do not achieve the anticipated benefit of our fleet renewal
program; and
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the outcome of the DOJ antitrust investigation, which is
ongoing, has a greater than anticipated financial or business
impact.
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All forward-looking statements in this prospectus are qualified
by these cautionary statements and are only made as of the date
of this prospectus. We do not undertake any obligation, other
than as required by law, to update or revise any forward-looking
statements, whether as a result of new information, future
events or otherwise.
iii
PROSPECTUS
SUMMARY
This summary highlights certain information contained
elsewhere in this prospectus. This summary does not contain all
of the information you should consider before deciding whether
to participate in this exchange offer. You should carefully read
the entire prospectus, and the documents incorporated by
reference in their entirety, including Risk Factors,
before deciding whether to participate in the exchange offer. We
use the pronouns we, our and
us and the terms Bristow Group and the
Company to refer collectively to Bristow Group Inc.
and its consolidated subsidiaries and affiliates, unless the
context indicates otherwise. We also own interests in other
entities that we do not consolidate for financial reporting
purposes, which we refer to as unconsolidated affiliates.
Bristow Group, Bristow Aviation Holdings Limited (Bristow
Aviation), its consolidated subsidiaries and affiliates,
and the unconsolidated affiliates are each separate
corporations, limited liability companies or other legal
entities, and our use of the terms we,
our and us does not suggest that we have
abandoned their separate identities or the legal protections
given to them as separate legal entities. Our fiscal year ends
March 31, and we refer to fiscal years based on the end of
such period. For example, the fiscal year ended March 31,
2007 is referred to as fiscal year 2007. Notes
to Consolidated Financial Statements refers to the
Notes to Consolidated Financial Statements for the fiscal
years ended March 31, 2007, 2006 and 2005
incorporated by reference.
Overview
We are the leading provider of helicopter services to the
worldwide offshore energy industry based on the number of
aircraft operated. We are one of two helicopter service
providers to the offshore energy industry with global
operations. We have major operations in the U.S. Gulf of
Mexico and the North Sea, and operations in most of the other
major offshore oil and gas producing regions of the world,
including Alaska, Australia, Mexico, Nigeria, Russia and
Trinidad. We have a long history in the helicopter services
industry through Bristow Helicopters Ltd. and Offshore
Logistics, Inc., having been founded in 1955 and 1969,
respectively.
We provide helicopter services to a broad base of major,
independent, international and national energy companies.
Customers charter our helicopters to transport personnel between
onshore bases and offshore platforms, drilling rigs and
installations. A majority of our helicopter revenue is
attributable to oil and gas production activities, which have
historically provided a more stable source of revenue than
exploration and development related activities. As of
September 30, 2007, we operated 404 aircraft (including 369
owned aircraft, 27 leased aircraft and 8 aircraft operated for
one of our customers; 12 of the owned aircraft are held for
sale) and our unconsolidated affiliates operated 144 aircraft in
addition to those aircraft leased from us. In the six months
ended September 30, 2007, our Helicopter Services segment
contributed approximately 94% of our gross revenue.
On April 2, 2007, we acquired all of the common equity of
Helicopter Adventures, Inc., a leading flight training provider
with operations located in Titusville, Florida, and Concord,
California, for $15 million in cash. We also assumed
$5.7 million in debt as part of this transaction. Upon
purchase, Helicopter Adventures was renamed Bristow Academy
Inc., which, when combined with our existing training facilities
in Norwich, England, forms a central core of our new Global
Training division within the Helicopter Services segment.
Bristow Academy operates 53 aircraft (including 42 owned and 11
leased aircraft) and employs 122 people, including 48
flight instructors and is the only school approved to provide
helicopter flight training to the commercial pilot level by both
the U.S. Federal Aviation Administration and the European
Joint Aviation Authority. The Global Training division will
support, coordinate, standardize, and in the case of the Bristow
Academy schools, directly manage all flight and maintenance
training activities within the Helicopter Services segment. We
believe that this strategic entry into the ab initio
aviation training business provides us with a strategic
advantage over competitors. We expect profitability of Bristow
Academy to improve in future periods, although the primary
strategic value to the Company of this business is the supply of
pilots for use in our global operations. For example, Bristow
Academy provided 31 pilots to our helicopter services operations
in the first six months of fiscal year 2008. Bristow Academy
represented 1% of consolidated revenue for the
1
six months ended September 30, 2007. On November 2,
2007, we purchased Vortex Helicopters, Inc., a helicopter
training company located in New Iberia, Louisiana, resulting in
an expansion of Bristow Academy.
On November 2, 2007, we sold our Grasso Production
Management (Grasso) business, which comprised our
entire Production Management Services segment, for approximately
$22.5 million, subject to post-closing adjustments. We sold
Grasso for approximately book value with a net loss of
approximately $6.0 million related to taxes on
non-deductible goodwill and transaction costs which will be
recorded in our fiscal quarter ending December 31, 2007.
The financial results for our Production Management Services
segment will be classified as discontinued operations beginning
in our fiscal quarter ending December 31, 2007. The
Production Management Services segment had current assets,
goodwill, total assets, current liabilities and total
liabilities of $21.9 million, $13.8 million,
$36.1 million, $6.5 million and $6.6 million,
respectively, as of September 30, 2007. In conjunction with
the sale of Grasso, we agreed to continue to provide helicopter
services to Grasso through December 31, 2010. In the six
months ended September 30, 2007, Grasso contributed
approximately 6% of gross revenue.
Aircraft
Fleet Expansion
In response to significant demand for our helicopter services,
we are expanding our fleet of aircraft. As of September 30,
2007, we had 32 aircraft on order and options to acquire an
additional 42 aircraft. The additional aircraft on order are
expected to provide incremental fleet capacity. We expect that
these additional aircraft on order will increase our
profitability by replacing some of the smaller aircraft we
currently own with larger aircraft that can transport more
passengers and allow us to generate more revenue. All of the
aircraft under option and 26 of the 32 aircraft on order are
large-or medium-sized aircraft, as compared with our existing
fleet, of which about 46% consists of large- or medium-sized
aircraft.
As of September 30, 2007, we had commitments to purchase 1
small, 10 medium, 16 large and 5 training aircraft and options
to purchase an additional 24 medium and 18 large aircraft. Of
the aircraft on order, 16 are expected to be delivered during
the second half of fiscal year 2008, including 5 training
aircraft. Twelve of these 16 aircraft have been dedicated to
customers for specific projects, including 10 under signed
contracts. During the six months ended September 30, 2007,
we spent $221.1 million on aircraft and related equipment.
We expect to spend an additional $276.5 million to acquire
the aircraft that were on order as of
September 30, 2007.
2
The chart below presents (1) the number of helicopters in
our fleet (comprising 369 owned aircraft, including 12 held for
sale, 27 leased aircraft and 8 aircraft operated for one of our
customers) and their distribution among the business units of
our Helicopter Services segment as of September 30, 2007;
(2) the number of helicopters we had on order or under
option as of September 30, 2007; and (3) the
percentage of gross revenues that each of our segments and
business units provided during the six months ended
September 30, 2007. For additional information regarding
our commitments and options to acquire aircraft, see
Managements Discussion and Analysis of Financial
Condition and Results of Operations Liquidity and
Capital Resources Future Cash
Requirements Capital Commitments set forth in
our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007 and the Quarterly
Report on
Form 10-Q
for the quarterly period ended September 30, 2007,
incorporated herein by reference.
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Percentage of
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Aircraft in Consolidated Fleet
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Revenue for the
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Helicopters
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Fixed
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Six Months Ended
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Small
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Medium
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Large
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Wing
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Total
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September 30, 2007
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Helicopter Services
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North America
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134
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28
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4
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1
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167
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23
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%
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South and Central America
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2
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33
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1
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36
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7
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%
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Europe
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1
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10
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39
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50
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34
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West Africa
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12
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27
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2
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7
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48
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15
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%
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Southeast Asia
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3
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12
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9
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24
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%
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Other International
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13
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10
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3
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26
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EH Centralized Operations
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1
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%
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Bristow Academy
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52
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1
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53
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1
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%
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Production Management(1)
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6
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%
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Total(2)
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204
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123
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65
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12
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404
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100
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%
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Aircraft not currently in fleet:
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On order(3)
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6
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10
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16
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32
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Under option
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24
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18
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42
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(1) |
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On November 2, 2007 we sold our Production Management
Services business. |
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(2) |
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Includes 12 aircraft held for sale. |
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(3) |
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Small aircraft on order include orders for 5 training aircraft. |
We expect that the additional aircraft on order and any aircraft
we acquire pursuant to options will generally be deployed evenly
across our global business units, but with a bias towards those
business units where we expect higher growth, such as our Other
International and Southeast Asia units.
OUR
INDUSTRY
Increased Demand for Helicopter Services. We
are currently experiencing significant demand for our helicopter
services, and in certain of our markets, we are unable to meet
the full demand and have been forced to decline customer orders.
Based on our current contract level and discussions with our
customers about their future needs for aircraft related to their
oil and gas production and exploration plans, we anticipate the
demand for helicopter services will continue at a very high
level for the near term. Further, based on the projects planned
by our customers in the markets in which we currently operate,
we anticipate global demand for our services will grow in the
long term and exceed the supply of aircraft we and our
competitors currently have in our fleets and on order. In
addition, this high level of demand has allowed us to increase
the rates we charge for our services over the past several years.
Limited Aircraft Supply. Currently, helicopter
manufacturers are indicating very limited supply availability
during the next two years. We expect that this tightness in
aircraft availability from the manufacturers and
3
the lack of suitable aircraft in the secondary market, coupled
with the increase in demand for helicopter services, should
create market conditions conducive for us to continue to
increase the rates we charge for our services. We believe that
our recent aircraft acquisitions and commitments position us to
benefit from the current market conditions and to deploy new
aircraft on order or under option at these favorable rates and
contract terms.
Aircraft Resale Market. Unlike equipment in
most sectors of the energy services industry, helicopters have
applications in numerous other markets, including air medical,
tourism, firefighting, corporate transportation, traffic
monitoring, police and military. Accordingly, we are able to
sell used aircraft into these other markets which are not
typically affected by the same economic drivers as the offshore
energy industry. Our experience has been that the after market
is relatively liquid given the significant number of helicopters
in use in these other industries globally during normal market
conditions. Helicopters generally retain a high portion of their
original value as a substantial portion of a helicopters
value resides in its dynamic components, such as rotors and
engines, which are periodically overhauled, replaced or
upgraded. In addition, these other markets place demand on
aircraft supply which tends to support relatively stable values.
We believe that the availability of these markets will permit us
to rationalize our asset base if there is a decline in demand
for our helicopter services.
Classes of Helicopters. Helicopters are
generally classified as small (four to eight passengers), medium
(12 to 15 passengers) and large helicopters (18 to 25
passengers), each of which serves a different transportation
need of the offshore energy industry. Small helicopters are
generally used for daytime flights on shorter routes and to
reach production facilities that cannot accommodate medium and
large helicopters. With more than 4,000 active production
facilities, many of which are unable to accommodate medium or
large helicopters, the U.S. Gulf of Mexico is a significant
market for helicopters of this type. Medium and large
helicopters, which can fly in a wider variety of operating
conditions and over longer distances and carry larger payloads
than small helicopters, are most commonly used for crew changes
on large offshore production facilities and drilling rigs. With
their ability to carry greater payloads, travel greater
distances and move at higher speeds, medium and large
helicopters are preferred in international markets, where the
offshore facilities tend to be larger, the drilling locations
tend to be more remote and the onshore infrastructure tends to
be more limited.
OUR
STRENGTHS
We believe that we possess a number of strengths, including:
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We have a global footprint. We operate in 22
countries and have the largest fleet of helicopters serving the
offshore energy market in the world. We have the largest fleet
in the U.S. Gulf of Mexico and also have a strong market
position in other key markets, including the North Sea, Nigeria
and Australia. This global footprint allows us to provide our
offshore energy customers with consistent, high-quality service,
reduces our exposure to any one market and provides us with
flexibility in deploying our aircraft to the most attractive
markets.
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We have a record of safe operations and operate a modern,
well-maintained fleet. We have a record of safe
operations, including fewer accidents per 100,000 flight hours
over the past five years than the industry average for the
U.S. Gulf of Mexico and the North Sea. We continuously
maintain and improve the quality of the equipment that we
operate and apply state-of-the-art safety technologies across
our global organization. As of September 30, 2007, the
average age of the helicopters in our consolidated fleet was
approximately 15 years. The average age of our fleet has
been reduced with the addition of 16 new aircraft in the six
months ended September 30, 2007, and will be further
reduced with the expected addition of 16 new aircraft in the
second half of fiscal year 2008 and the periodic retirement of
older aircraft.
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We have strong, long-term relationships with our
customers. We have strong, long-term
relationships with our customers, which include major,
independent, international and national energy companies. We are
the largest provider of helicopter services by revenue for the
Shell Companies and the
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BP Group companies. In addition, we have entered into
global agreements with ConocoPhillips and the BP Group that
provide for information sharing regarding future aircraft
requirements, coordination of our respective operations and
business volume discount arrangements. Our close relationships
with these companies have allowed us to expand our aircraft
fleet by allowing us to identify specific projects that require
new aircraft prior to committing capital for aircraft purchases.
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We have a history of consistent revenue and Adjusted EBITDA
growth. We have a history of consistent revenue
growth, including 10.5% compounded annual growth rate over the
past four fiscal years and 16.4% from the six months ended
September 30, 2006 to the six months ended
September 30, 2007. Our growth has translated into
increases in Adjusted EBITDA (as defined under Summary
Historical Financial Information) of 11.8% compounded
annually over the past four fiscal years and a 41.3% increase
from the six months ended September 30, 2008 to the six
months ended September 30, 2007. The majority of our
revenue is attributable to production activity. Our revenues are
driven primarily by offshore operating expenses, which over the
last twelve years have been relatively stable, including during
a downturn in the energy industry. The ongoing nature of
production work makes it less volatile than exploration and
development work, which is more reactive to changes or expected
changes in commodity prices. Accordingly, we have experienced
less volatility in demand than other sectors of the energy
services industry. In addition, most of our contracts provide
that the customer will reimburse us for cost increases
associated with the contract, including fuel cost increases.
Lastly, our pricing structure, consisting of a fixed reservation
fee plus additional fees for each hour flown, fixes a percentage
of our revenue stream in the short-term, stabilizing the impact
of short-term fluctuations in flight hours by customers.
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We have a strong balance sheet that provides financial
flexibility. Pro forma for this offering, our
balance-sheet debt as a percentage of total capital was 39.2% at
September 30, 2007. Under our syndicated secured credit
facilities, we have an undrawn $100 million revolving
credit facility and $21.2 million available under a
$25 million letter of credit facility as of the date of
this prospectus. We believe that this capital structure provides
us with the financial flexibility to pursue opportunities to
grow our business, including through the aircraft fleet
expansion program described above.
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We have significant asset coverage. Since a
substantial portion of a helicopters value resides in its
dynamic components, and these dynamic components are
periodically overhauled, replaced or upgraded, our helicopters
generally retain a high portion of their original value. Pro
forma for application of net proceeds from this offering, net
property, plant and equipment as of September 30, 2007 was
$1,150.2 million. As of September 30, 2007, we had an
additional $659.7 million in cash, accounts receivable and
inventories, bringing our asset coverage ratio to approximately
2.98x our pro forma long-term debt levels. If we experience a
decline in demand for our helicopter services, this coverage
allows us the option of actively managing our debt levels by
monetizing a marginal amount of our helicopters and reducing our
debt levels accordingly. Based on the relatively stable value of
helicopters and their liquid aftermarket, we believe that the
fair market value of these aircraft currently exceeds their book
value, although future market conditions could vary.
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We have an experienced management team. Our
management team has extensive experience in the energy services
industry and helicopter services sector. We train each of these
managers on our corporate values, including safety, quality,
integrity and profitability, and their performance is evaluated
using key performance indicators which directly link to those
values. Our senior management team is composed of nine
executives who have an average of 31 years of relevant
experience.
|
5
OUR
STRATEGY
Our goal is to advance our position as the leading helicopter
services provider to the offshore energy industry. We intend to
employ the following strategies to achieve this goal:
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Strategically position our company as the preferred provider
of helicopter services. We position our company
as the preferred provider of helicopter services by maintaining
strong relationships with our customers and providing
high-quality service. We focus on maintaining relationships with
our customers local and corporate management. We believe
that this focus helps us to provide our customers with the right
aircraft in the right place at the right time and to better
anticipate customer needs, which in turn allows us to better
manage our fleet. We also leverage our close relationships with
our customers to establish mutually beneficial operating
practices and safety standards worldwide. By applying standard
operating and safety practices across our global operations, we
are able to provide our customers with consistent, high-quality
service in each of their areas of operation. By better
understanding our customers needs and by virtue of our
global operations and safety standards, we have effectively
competed against other helicopter service providers based on
customer service, safety and reliability, and not just price.
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Integrate our global operations. Beginning in
fiscal year 2006, we identified and implemented a number of
changes in our business to integrate our global organization,
and we intend to continue to identify and implement further
integration opportunities. These changes included changes in our
senior management team, the integration of our operations among
previously independently managed businesses, improvements in
global asset allocation and other changes in our corporate
operations. We anticipate that these improvements will result in
revenue growth, and may also generate cost savings.
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Grow our business internationally. We plan to
grow our business in most of the markets in which we operate. We
expect this growth to be particularly strong in international
markets outside our three largest markets (U.S. Gulf of
Mexico, North Sea and Nigeria), which represented 65% of our
fiscal year 2007 revenues. Although we have a footprint in most
major oil and gas producing regions of the world, we have the
opportunity to expand and deepen our presence in many of these
markets, for example Southeast Asia. We anticipate this growth
to result primarily from the deployment of new aircraft into
markets where we expect they will be most profitably employed,
as well as by executing opportunistic acquisitions. Our
acquisition-related growth may include increasing our role and
participation with existing unconsolidated affiliates and may
include increasing our position in existing markets or expanding
into new markets.
|
Consistent with our desire to maintain a conservative use of
leverage to fund growth, we raised $222.6 million of
capital through the sale of our 5.50% mandatory convertible
preferred stock completed in September and October 2006.
Additionally, we raised $345.4 million through the sale of
71/2% senior
notes due 2017 completed in June and November 2007. As of
September 30, 2007, we had commitments to purchase 16
large, 10 medium, 1 small and 5 training aircraft and options to
purchase an additional 18 large aircraft and 24 medium aircraft.
Depending on market conditions, we expect to exercise some or
all of these options to purchase aircraft and may elect to
expand our business through acquisition, including acquisitions
currently under consideration. We intend to use proceeds from
this offering to fund these expenditures.
OUR
CORPORATE OFFICES AND INTERNET ADDRESS
Our principal executive offices are located at
2000 W. Sam Houston Pkwy. S., Suite 1700,
Houston, Texas, 77042. Our telephone number is
(713) 267-7600.
Our website address is www.bristowgroup.com. Information
contained on our website does not constitute part of this
prospectus.
6
THE
EXCHANGE OFFER
On June 13, 2007, we completed a private offering of
$300 million principal amount of
71/2% Senior
Notes due 2017, and on November 13, 2007 we completed a
private offering of $50 million principal amount of
71/2% senior
notes due 2017, which we collectively refer to as the
Outstanding Notes. We sold the Outstanding Notes in
transactions exempt from or not subject to the registration
requirements under the Securities Act. Accordingly, the
Outstanding Notes are subject to transfer restrictions. In
general, you may not offer or sell the Outstanding Notes unless
either they are registered under the Securities Act or the offer
or sale is exempt from or not subject to registration under the
Securities Act and applicable state securities laws.
In connection with the sale of the Outstanding Notes, we entered
into a Registration Rights Agreement with the initial purchasers
of the Outstanding Notes. We agreed to use our reasonable best
efforts to have the registration statement of which this
prospectus is a part declared effective by the SEC within
360 days after the issue date of the Outstanding Notes and
to keep the exchange offer open for not less than 20 business
days after the date notice thereof is mailed to the holders. In
the exchange offer, you are entitled to exchange your
Outstanding Notes for notes registered under the Securities Act
with substantially identical terms, except that the existing
transfer restrictions will be removed, which notes we refer to
as the Exchange Notes. You should read the
discussion under the headings Terms of the Exchange
Notes and Description of the Exchange Notes
for further information about the Exchange Notes. We refer to
the Outstanding Notes and the Exchange Notes (separately or
collectively as the context indicates) as the Notes.
We have summarized the terms of the exchange offer below. You
should read the discussion under the heading The Exchange
Offer for further information about the exchange offer and
resale of the Exchange Notes. If you fail to exchange your
Outstanding Notes for Exchange Notes in the exchange offer, the
existing transfer restrictions will remain in effect and the
market value of your Outstanding Notes likely will be adversely
affected because of a smaller float and reduced liquidity.
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Expiration Date |
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Unless sooner terminated, the exchange offer will expire at
5:00 p.m., New York City time, on March 3, 2008, or
such later date and time to which we extend it. |
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Withdrawal of Tenders |
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You may withdraw your tender of Outstanding Notes at any time
prior to the expiration date. We will return to you, without
charge, promptly after the expiration or termination of the
exchange offer any Outstanding Notes that you tendered but that
were not accepted for exchange. |
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Conditions to the Exchange Offer |
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We will not be required to accept Outstanding Notes for exchange
if, in our reasonable judgment, the exchange offer, or the
making of any exchange by a holder of Outstanding Notes, would: |
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violate applicable law or any applicable
interpretation of the staff of the SEC; or
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be impaired by any action or proceeding that has
been instituted or threatened in any court or by or before any
governmental agency with respect to the exchange offer.
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The exchange offer is not conditioned upon any minimum aggregate
principal amount of Outstanding Notes being tendered. |
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Please read The Exchange Offer Conditions to
the Exchange Offer for more information about the
conditions to the exchange offer. |
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Procedures for Tendering Outstanding Notes |
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If you wish to participate in the exchange offer, you must
complete, sign and date the letter of transmittal that we are
providing |
7
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with this prospectus and mail or deliver the letter of
transmittal, together with the Outstanding Notes, to the
exchange agent prior to the expiration date. If your Outstanding
Notes are held through The Depository Trust Company (DTC),
you may effect delivery of the Outstanding Notes by book-entry
transfer. |
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In the alternative, if your Outstanding Notes are held through
DTC, you may participate in the exchange offer through
DTCs automated tender offer program. If you tender under
this program, you will agree to be bound by the letter of
transmittal as though you had signed it. |
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By signing or agreeing to be bound by the letter of transmittal,
you will represent to us that, among other things: |
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any Exchange Notes that you receive will be acquired
in the ordinary course of your business;
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you have no arrangement or understanding with any
person to participate in the distribution of the Outstanding
Notes or the Exchange Notes within the meaning of the Securities
Act of 1933;
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you are not our affiliate, as defined in
Rule 405 of the Securities Act, or, if you are our
affiliate, you will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent
applicable;
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if you are not a broker-dealer, you are not engaged
in, and do not intend to engage in, the distribution of the
Exchange Notes;
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if you are a broker-dealer, you will receive
Exchange Notes in exchange for Outstanding Notes that you
acquired for your own account as a result of market-making
activities or other trading activities, and you will deliver a
prospectus in connection with any resale of such Exchange Notes;
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if you are a broker-dealer, you did not purchase the
Outstanding Notes to be exchanged for the Exchange Notes from
us; and
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you are not acting on behalf of any person who could
not truthfully and completely make the foregoing representations.
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|
Special Procedures for Beneficial Owners |
|
If you own a beneficial interest in Outstanding Notes that are
registered in the name of a broker, dealer, commercial bank,
trust company or other nominee and you wish to tender the
Outstanding Notes in the exchange offer, please contact the
registered holder as soon as possible and instruct it to tender
on your behalf and to comply with our instructions described in
this prospectus. |
|
Guaranteed Delivery Procedures |
|
You must tender your Outstanding Notes according to the
guaranteed delivery procedures described in The Exchange
Offer Guaranteed Delivery Procedures if any of
the following apply: |
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you wish to tender your Outstanding Notes but they
are not immediately available;
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8
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you cannot deliver your Outstanding Notes, the
letter of transmittal or any other required documents to the
exchange agent prior to the expiration date; or
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you cannot comply with the applicable procedures
under DTCs automated tender offer program prior to the
expiration date.
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Consequences of Failure to Exchange Your Outstanding Notes |
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Subject only to limited exceptions applicable to persons to whom
the exchange offer is not available, if you do not exchange your
Outstanding Notes in the exchange offer, you will no longer be
entitled to registration rights. You will not be able to offer
or sell the Outstanding Notes unless they are later registered,
sold pursuant to an exemption from registration or sold in a
transaction not subject to the Securities Act or state
securities laws. Other than in connection with the exchange
offer or as specified in the Registration Rights Agreement, we
are not obligated to, nor do we currently anticipate that we
will, register the Outstanding Notes under the Securities Act.
See The Exchange Offer Consequences of Failure
to Exchange. |
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United States Federal Income Tax Consequences |
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We believe that the exchange of Outstanding Notes for Exchange
Notes in the exchange offer should not be a taxable event for
U.S. federal income tax purposes. Please read Certain
United States Federal Income Tax Considerations. |
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Use of Proceeds |
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We will not receive any cash proceeds from the issuance of
Exchange Notes in the exchange offer. |
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Plan of Distribution |
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All broker-dealers who receive Exchange Notes in the exchange
offer have a prospectus delivery obligation. Based on SEC
no-action letters, broker-dealers who acquired the Outstanding
Notes as a result of
market-making
or other trading activities may use this exchange offer
prospectus, as supplemented or amended, in connection with the
resales of the Exchange Notes. We have agreed to make this
prospectus available to any broker-dealer delivering a
prospectus as required by law in connection with the resales of
the Exchange Notes for up to 180 days following the
completion of the exchange offer. |
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Broker-dealers who acquired the Outstanding Notes from us may
not rely on SEC staff interpretations in no-action letters and
instead must comply with the registration and prospectus
delivery requirements of the Securities Act, including being
named as selling noteholders, in order to resell the Outstanding
Notes or the Exchange Notes (or such earlier date as eligible
broker-dealers no longer own Exchange Notes). |
9
THE
EXCHANGE AGENT
We have appointed U.S. Bank National Association as
exchange agent for the exchange offer. Please direct questions
and requests for assistance, requests for additional copies of
this prospectus or of the letter of transmittal and requests for
the notice of guaranteed delivery to the exchange agent. If you
are not tendering under DTCs automated tender offer
program, you should send the letter of transmittal and any other
required documents to the exchange agent as follows:
U.S. Bank
National Association
1-800-934-6802
By
Overnight Delivery, Courier or Mail:
(overnight delivery or courier recommended;
if by mail, registered or certified mail
recommended)
60
Livingston Avenue
St. Paul, MN 55107
Attention: Specialized Finance
Registered
or Certified Mail:
60
Livingston Avenue
St. Paul, MN 55107
Attention: Specialized Finance
By
Facsimile Transmission (eligible institutions
only):
651-495-8158
Confirm by
Telephone:
1-800-934-6802
TERMS OF
THE EXCHANGE NOTES
The Exchange Notes will be freely tradable and otherwise
substantially identical to the Outstanding Notes. The Exchange
Notes will not have registration rights or provisions for
additional interest. The Exchange Notes will evidence the same
debt as the Outstanding Notes, and the Outstanding Notes and the
Exchange Notes will be governed by the same indenture. The
Outstanding Notes and the Exchange Notes will vote together as a
single class under the indenture.
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Issuer |
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Bristow Group Inc. |
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Exchange Notes Offered |
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$350 million principal amount of registered
71/2% Senior
Notes due 2017. |
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Maturity Date |
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September 15, 2017. |
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Interest Payments |
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Interest will accrue on the Exchange Notes from
September 15, 2007 and will be payable semi-annually, on
each March 15 and September 15, with the first payment on
March 15, 2008. |
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Subsidiary Guarantees |
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The Exchange Notes will initially be jointly and severally
guaranteed on a senior unsecured basis by certain of our U.S.
subsidiaries. |
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Ranking and Subordination |
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The Exchange Notes will be our unsecured senior obligations and
will rank: |
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equally in right of payment with our outstanding
61/8% Senior
Notes due 2013 and any of our and the guarantors future
indebtedness;
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will be effectively subordinated to all of our and
the guarantors existing and future secured indebtedness to
the extent of the value of the collateral securing such
indebtedness, including indebtedness under our credit
facilities; and
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will rank senior to all of our and the
guarantors existing and future subordinated indebtedness.
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In addition, the Exchange Notes will be effectively subordinated
to the existing and future liabilities, including trade
payables, of our non-guarantor subsidiaries. As of
September 30, 2007, our non-guarantor subsidiaries had
approximately $385.9 million of total liabilities
(including trade payables but excluding intercompany liabilities
and guarantees). Revenue related to our non-guarantor
subsidiaries constituted 66% of our operating revenue during the
six months ended September 30, 2007, and our non-guarantor
subsidiaries held approximately 50% of our consolidated assets
as of September 30, 2007. |
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Optional Redemption |
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We may redeem any of the Exchange Notes at any time on or after
September 15, 2012, in whole or in part, in cash, at the
redemption prices described in Description of the Exchange
Notes Optional Redemption, plus accrued and
unpaid interest to the date of redemption. |
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At any time prior to September 15, 2010, we may redeem up
to 35% of the aggregate principal amount of the Exchange Notes
issued under the indenture with the net proceeds of certain
equity offerings at a redemption price equal to 107.5% of the
principal amount of the Exchange Notes plus accrued and unpaid
interest to the date of redemption. We may make that redemption
only if, after the redemption, at least 65% of the aggregate
principal amount of notes issued under the indenture (including
the existing
71/2% senior
notes) remains outstanding. |
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In addition, at any time prior to September 15, 2012, we
may redeem all, but not less than all, of the Exchange Notes at
a redemption price equal to the principal amount plus the
Applicable Premium (as defined in Description of the
Exchange Notes Optional Redemption) and
accrued and unpaid interest, if any, to the redemption date. |
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Change of Control |
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If we experience a Change of Control together with a Ratings
Event (as defined under Description of the Exchange
Notes Repurchase at the Option of Holders), we
will be required to make an offer to repurchase the outstanding
Exchange Notes at a price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest to the date of
repurchase. |
11
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Certain Covenants |
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The terms of the Exchange Notes will restrict our ability and
the ability of our restricted subsidiaries to, among other
things: |
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incur additional indebtedness or issue preferred
stock;
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pay dividends or make other distributions to our
stockholders;
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purchase or redeem capital stock or subordinated
indebtedness;
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make investments;
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create liens;
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incur restrictions on the ability of our restricted
subsidiaries to pay dividends or make other payments to us;
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sell assets;
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consolidate or merge with or into other companies or
transfer all or substantially all of our assets; and
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engage in transactions with affiliates.
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These limitations will be subject to a number of important
qualifications and exceptions. See Description of the
Exchange Notes Certain Covenants. In addition,
many of the covenants will terminate before the new notes mature
if one or more of two specified ratings agencies assign the new
notes investment grade ratings in the future and no event of
default exists under the indenture. Any covenants that cease to
apply to us as a result of achieving these ratings will not be
restored, even if the credit rating assigned to the Exchange
Notes later falls below these ratings. See Description of
the Exchange Notes Certain Investment Grade
Covenants. |
RISK
FACTORS
An investment in the Notes involves significant risks. You
should carefully consider all of the information contained in
this prospectus. In particular, you should evaluate the specific
risk factors set forth under the section entitled Risk
Factors.
12
Summary
Historical Financial Information
The following summary financial data as of and for each of the
five years ended March 31, 2007 is derived from our audited
consolidated financial statements. Our historical financial data
as of and for each of the six months ended September 30,
2007 and 2006 are derived from our unaudited consolidated
financial statements and, in our opinion, have been prepared on
the same basis as the audited consolidated financial statements
and include all adjustments, consisting of normal recurring
adjustments, necessary for a fair statement of this information.
Our consolidated financial statements for each of the three
years ended March 31, 2007 appear elsewhere in this
prospectus.
You should read the following information in conjunction with
the other information contained in our consolidated financial
statements, including the notes thereto, that are set forth in
our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007 and the Quarterly
Report on
Form 10-Q
for the quarterly period ended September 30, 2007,
incorporated herein by reference.
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Six Months Ended September 30,
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Fiscal Year Ended March 31,
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2007
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2006
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2007
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2006
|
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2005
|
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2004
|
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2003
|
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(In thousands, except ratios)
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Statement of Operations Data:(1)
|
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|
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Total gross revenue(2)
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$
|
518,338
|
|
|
$
|
445,271
|
|
|
$
|
897,861
|
|
|
$
|
768,940
|
|
|
$
|
673,646
|
|
|
$
|
617,001
|
|
|
$
|
601,550
|
|
Direct cost(2)(3)
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|
$
|
326,600
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|
|
$
|
287,341
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|
|
$
|
681,191
|
|
|
$
|
591,043
|
|
|
$
|
518,139
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|
|
$
|
475,449
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|
|
$
|
467,776
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|
Consolidated operating income(4)
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|
$
|
80,465
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|
|
$
|
61,921
|
|
|
$
|
115,303
|
|
|
$
|
73,795
|
|
|
$
|
77,608
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|
|
$
|
88,725
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|
|
$
|
65,366
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Earnings from unconsolidated affiliates, net
|
|
|
7,508
|
|
|
|
3,287
|
|
|
|
11,423
|
|
|
|
6,758
|
|
|
|
9,600
|
|
|
|
11,039
|
|
|
|
12,054
|
|
Interest income(5)
|
|
|
6,247
|
|
|
|
2,359
|
|
|
|
8,950
|
|
|
|
4,159
|
|
|
|
3,188
|
|
|
|
1,689
|
|
|
|
1,523
|
|
Interest expense
|
|
|
(9,456
|
)
|
|
|
(6,107
|
)
|
|
|
(10,940
|
)
|
|
|
(14,689
|
)
|
|
|
(15,665
|
)
|
|
|
(16,829
|
)
|
|
|
(14,904
|
)
|
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,205
|
)
|
|
|
|
|
Other income (expense), net(6)
|
|
|
786
|
|
|
|
(6,093
|
)
|
|
|
(8,998
|
)
|
|
|
4,612
|
|
|
|
(1,126
|
)
|
|
|
(7,810
|
)
|
|
|
(3,284
|
)
|
Provision for income taxes(7)
|
|
|
(28,475
|
)
|
|
|
(18,271
|
)
|
|
|
(40,366
|
)
|
|
|
(16,607
|
)
|
|
|
(21,835
|
)
|
|
|
(19,402
|
)
|
|
|
(18,554
|
)
|
Minority interest
|
|
|
(453
|
)
|
|
|
(792
|
)
|
|
|
(1,200
|
)
|
|
|
(219
|
)
|
|
|
(210
|
)
|
|
|
(1,382
|
)
|
|
|
(1,797
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
56,622
|
|
|
$
|
36,304
|
|
|
$
|
74,172
|
|
|
$
|
57,809
|
|
|
$
|
51,560
|
|
|
$
|
49,825
|
|
|
$
|
40,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
2.13
|
|
|
$
|
1.54
|
|
|
$
|
2.87
|
|
|
$
|
2.48
|
|
|
$
|
2.24
|
|
|
$
|
2.21
|
|
|
$
|
1.80
|
|
Diluted
|
|
|
1.87
|
|
|
|
1.52
|
|
|
|
2.74
|
|
|
|
2.45
|
|
|
|
2.21
|
|
|
|
2.15
|
|
|
|
1.67
|
|
Balance Sheet Data:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents
|
|
$
|
276,439
|
|
|
$
|
268,275
|
|
|
$
|
184,188
|
|
|
$
|
122,482
|
|
|
$
|
146,440
|
|
|
$
|
85,679
|
|
|
$
|
56,800
|
|
Working capital
|
|
|
502,221
|
|
|
|
421,337
|
|
|
|
368,006
|
|
|
|
283,337
|
|
|
|
270,747
|
|
|
|
235,691
|
|
|
|
101,082
|
|
Total assets
|
|
|
1,899,243
|
|
|
|
1,469,142
|
|
|
|
1,505,803
|
|
|
|
1,176,413
|
|
|
|
1,149,576
|
|
|
|
1,046,828
|
|
|
|
906,031
|
|
Total debt
|
|
|
557,335
|
|
|
|
260,543
|
|
|
|
259,082
|
|
|
|
265,296
|
|
|
|
262,080
|
|
|
|
255,534
|
|
|
|
232,818
|
|
Stockholders investment
|
|
|
942,322
|
|
|
|
794,437
|
|
|
|
871,657
|
|
|
|
537,697
|
|
|
|
492,993
|
|
|
|
429,952
|
|
|
|
350,206
|
|
Statement of Cash Flows Data:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
43,498
|
|
|
$
|
48,699
|
|
|
$
|
104,430
|
|
|
$
|
39,265
|
|
|
$
|
104,473
|
|
|
$
|
83,331
|
|
|
$
|
62,387
|
|
Net cash used in investing activities
|
|
|
(236,978
|
)
|
|
|
(99,966
|
)
|
|
|
(264,335
|
)
|
|
|
(54,180
|
)
|
|
|
(46,539
|
)
|
|
|
(62,582
|
)
|
|
|
(48,181
|
)
|
Net cash provided by (used in) financing activities
|
|
|
283,262
|
|
|
|
195,259
|
|
|
|
215,682
|
|
|
|
(5,394
|
)
|
|
|
2,763
|
|
|
|
3,539
|
|
|
|
(1,109
|
)
|
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(8)
|
|
$
|
118,234
|
|
|
$
|
83,662
|
|
|
$
|
170,470
|
|
|
$
|
131,856
|
|
|
$
|
140,009
|
|
|
$
|
128,072
|
|
|
$
|
108,556
|
|
Capital expenditures
|
|
|
221,095
|
|
|
|
108,556
|
|
|
|
304,776
|
|
|
|
154,262
|
|
|
|
90,023
|
|
|
|
67,855
|
|
|
|
55,031
|
|
Ratio of Adjusted EBITDA to Adjusted Interest Expense(8)(9)
|
|
|
8.0
|
x
|
|
|
10.3
|
x
|
|
|
10.5
|
x
|
|
|
8.1
|
x
|
|
|
8.6
|
x
|
|
|
7.4
|
x
|
|
|
7.6
|
x
|
Ratio of total debt to Adjusted EBITDA(8)(10)
|
|
|
2.7
|
x
|
|
|
1.7
|
x
|
|
|
1.5
|
x
|
|
|
2.0
|
x
|
|
|
1.9
|
x
|
|
|
2.0
|
x
|
|
|
2.1
|
x
|
Debt as a percentage of book capitalization(11)
|
|
|
37.0
|
%
|
|
|
24.6
|
%
|
|
|
22.8
|
%
|
|
|
32.9
|
%
|
|
|
34.5
|
%
|
|
|
36.8
|
%
|
|
|
38.8
|
%
|
Ratio of earnings to fixed charges(12)
|
|
|
5.1
|
x
|
|
|
5.4
|
x
|
|
|
5.5
|
x
|
|
|
4.4
|
x
|
|
|
5.1
|
x
|
|
|
4.1
|
x
|
|
|
4.4
|
x
|
Helicopters in fleet
|
|
|
404
|
|
|
|
332
|
|
|
|
345
|
|
|
|
331
|
|
|
|
320
|
|
|
|
332
|
|
|
|
335
|
|
Average revenue per helicopter
|
|
$
|
1,283
|
|
|
$
|
1,341
|
|
|
$
|
2,602
|
|
|
$
|
2,323
|
|
|
$
|
2,105
|
|
|
$
|
1,858
|
|
|
$
|
1,796
|
|
|
|
|
(1) |
|
Amounts included Grasso, which was sold on November 2, 2007
and will be classified as discontinued operations starting with
the fiscal quarter ending December 31, 2007. Grasso had
revenue and operating income of $32.6 million and
$2.0 million, respectively, for the six months ended
September 30, 2007. |
|
(2) |
|
Gross revenue includes reimbursable revenue of
$49.5 million, $48.4 million, $95.9 million,
$80.2 million, $64.7 million, $58.9 million and
$51.0 million for the six months ended September 30,
2007 and 2006 and for fiscal years 2007, 2006, 2005, 2004 and
2003, respectively. Direct cost includes reimbursable |
13
|
|
|
|
|
expense of $47.0 million, $47.8 million,
$94.7 million, $78.5 million, $63.3 million,
$58.1 million and $50.5 million for the six months
ended September 30, 2007 and 2006 and for fiscal years
2007, 2006, 2005, 2004 and 2003, respectively. |
|
(3) |
|
During the six months ended September 30, 2007, we reserved
a $5.4 million accrual for sales tax contingency in Nigeria. |
|
(4) |
|
Includes professional fees in connection with the Internal
Review and DOJ matter of $3.1 million, $5.0 million,
$13.1 million and $2.2 million for the six months
ended September 30, 2006 and for fiscal years 2007, 2006
and 2005, respectively. During the six months ended
September 30, 2007, we reversed $1.0 million of
previously accrued settlement costs due to the fact that we
settled the investigation with the SEC and incurred
$0.5 million in professional fees in connection with the
DOJ matter. |
|
(5) |
|
Includes interest income earned on cash balances generated
through our 5.50% mandatory convertible preferred stock offering
in September and October 2006 and the Outstanding Notes. |
|
(6) |
|
Includes foreign currency transaction gains of $0.7 million
for the six months ended September 30, 2007 and losses of
$6.1 million, $9.8 million, $1.3 million,
$7.9 million and $2.9 million for the six months ended
September 30, 2006, fiscal years 2007, 2005, 2004 and 2003,
respectively, and foreign currency transaction gains of
$5.4 million for fiscal year 2006. Includes a gain of
$2.5 million recognized upon the sale of our 50% interest
in a Brazilian joint venture during fiscal year 2007 and an
impairment charge of $1.0 million recorded during fiscal
year 2006 to reduce the recorded value of this investment, as we
expected at that time that our investment would not be
recoverable. Includes the expense of previously deferred
acquisition costs of $1.9 million in fiscal year 2007. |
|
(7) |
|
Includes $2.5 million in additional tax expense during
fiscal year 2007 recorded as a result of the sale of the assets
of Turbo Engines, Inc. in December 2006 (See
Managements Discussion and Analysis of Financial
Condition and Results of Operating Business Unit
Operating Results Fiscal Year 2007 Compared to
Fiscal Year 2006 Helicopter Services
North America set forth in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007, incorporated
herein by reference.). Includes the impact of the reversal of
reserves for tax contingencies of $0.9 million,
$1.5 million, $3.4 million, $11.4 million,
$3.7 million and $3.5 million in the six months ended
September 30, 2007 and 2006 and fiscal years 2007, 2006,
2005 and 2004, respectively in connection with the expiration of
the related statutes of limitations. |
|
(8) |
|
Adjusted EBITDA means earnings before interest expense, taxes,
depreciation and amortization, loss on extinguishment of debt
and non-cash compensation adjusted for non-cash components of
net income (minority interest in earnings and equity in earnings
from unconsolidated affiliates (over) under dividends received).
Adjusted EBITDA is not a measure of financial performance or
liquidity under GAAP. Accordingly, it should not be considered
as a substitute for net income, operating income, net cash
provided by operating activities or any other operating or
liquidity measure prepared in accordance with GAAP.
Additionally, our Adjusted EBITDA computation may not be
comparable to other similarly titled measures of other
companies. We believe that Adjusted EBITDA and the ratios
provide additional information regarding our ability to meet our
future debt service, capital expenditures and working capital
requirements. While we believe that Adjusted EBITDA may provide
additional information with respect to our ability to meet our
future debt service, capital expenditures and working capital
requirements, certain functional or legal requirements of our
business may require us to use our available funds for other
purposes. |
14
The following table reconciles Adjusted EBITDA to net cash
provided by operating activities for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended September 30,
|
|
Fiscal Year Ended March 31,
|
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2003
|
|
|
(In thousands)
|
|
Adjusted EBITDA
|
|
$
|
118,234
|
|
|
$
|
83,662
|
|
|
$
|
170,470
|
|
|
$
|
131,856
|
|
|
$
|
140,009
|
|
|
$
|
128,072
|
|
|
$
|
108,556
|
|
Cash items (deducted from) added to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income tax
|
|
|
(14,636
|
)
|
|
|
(8,627
|
)
|
|
|
(20,383
|
)
|
|
|
(15,191
|
)
|
|
|
(19,995
|
)
|
|
|
(7,059
|
)
|
|
|
(23,083
|
)
|
Interest expense
|
|
|
(9,456
|
)
|
|
|
(6,107
|
)
|
|
|
(10,940
|
)
|
|
|
(14,689
|
)
|
|
|
(15,665
|
)
|
|
|
(16,829
|
)
|
|
|
(14,904
|
)
|
Losses (gains) on asset dispositions
|
|
|
170
|
|
|
|
(4,665
|
)
|
|
|
(10,618
|
)
|
|
|
(102
|
)
|
|
|
(8,039
|
)
|
|
|
(3,943
|
)
|
|
|
(3,734
|
)
|
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,205
|
)
|
|
|
|
|
Increase (decrease) in cash from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(29,400
|
)
|
|
|
(3,172
|
)
|
|
|
(1,428
|
)
|
|
|
(34,718
|
)
|
|
|
(8,612
|
)
|
|
|
10,984
|
|
|
|
533
|
|
Inventories
|
|
|
(13,460
|
)
|
|
|
(5,241
|
)
|
|
|
(10,225
|
)
|
|
|
(12,518
|
)
|
|
|
(5,127
|
)
|
|
|
(4,111
|
)
|
|
|
(6,545
|
)
|
Prepaid expenses and other
|
|
|
(5,676
|
)
|
|
|
(3,798
|
)
|
|
|
(6,634
|
)
|
|
|
(5,925
|
)
|
|
|
(724
|
)
|
|
|
5,232
|
|
|
|
(3,541
|
)
|
Accounts payable
|
|
|
4,635
|
|
|
|
(7,949
|
)
|
|
|
(10,688
|
)
|
|
|
15,944
|
|
|
|
6,889
|
|
|
|
(5,156
|
)
|
|
|
1,621
|
|
Accrued liabilities
|
|
|
2,230
|
|
|
|
7,099
|
|
|
|
5,771
|
|
|
|
(35,397
|
)
|
|
|
11,090
|
|
|
|
(3,192
|
)
|
|
|
(12,735
|
)
|
Other liabilities and deferred credits
|
|
|
(7,241
|
)
|
|
|
(502
|
)
|
|
|
(811
|
)
|
|
|
9,933
|
|
|
|
(538
|
)
|
|
|
795
|
|
|
|
(2,558
|
)
|
Other non-cash items
|
|
|
(1,902
|
)
|
|
|
(2,001
|
)
|
|
|
(84
|
)
|
|
|
72
|
|
|
|
5,185
|
|
|
|
(15,257
|
)
|
|
|
18,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
43,498
|
|
|
$
|
48,699
|
|
|
$
|
104,430
|
|
|
$
|
39,265
|
|
|
$
|
104,473
|
|
|
$
|
83,331
|
|
|
$
|
62,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
|
Adjusted Interest Expense means interest expense adjusted to add
capitalized interest and deduct amortization of deferred loan
costs. Adjusted Interest Expense is not a measure of financial
performance or liquidity under GAAP, but is used as a component
of the conditions to debt incurrence, restricted payments and
certain other events under the indenture governing the notes.
Accordingly, it should not be considered as a substitute for
interest expense or any other operating or liquidity measure
prepared in accordance with GAAP. We believe that Adjustment
Interest Expense provides additional information regarding our
ability to meet our future debt service, capital expenditures
and working capital requirements. While we believe that Adjusted
Interest Expense may provide additional information with respect
to our ability to meet our future debt service, capital
expenditures and working capital requirements, certain
functional or legal requirements of our business may require us
to use our available funds for other purposes. The following
table reconciles Adjusted Interest Expense to interest expense
for the periods presented: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended September 30,
|
|
Fiscal Year Ended March 31,
|
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2003
|
|
|
(In thousands)
|
|
Interest expense
|
|
$
|
9,456
|
|
|
$
|
6,107
|
|
|
$
|
10,940
|
|
|
$
|
14,689
|
|
|
$
|
15,665
|
|
|
$
|
16,829
|
|
|
$
|
14,904
|
|
Capitalized interest
|
|
|
5,927
|
|
|
|
2,492
|
|
|
|
6,353
|
|
|
|
2,439
|
|
|
|
1,277
|
|
|
|
1,240
|
|
|
|
|
|
Amortization of deferred financing costs
|
|
|
(622
|
)
|
|
|
(498
|
)
|
|
|
(995
|
)
|
|
|
(885
|
)
|
|
|
(662
|
)
|
|
|
(708
|
)
|
|
|
(542
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Interest Expense
|
|
$
|
14,761
|
|
|
$
|
8,101
|
|
|
$
|
16,298
|
|
|
$
|
16,243
|
|
|
$
|
16,280
|
|
|
$
|
17,361
|
|
|
$
|
14,362
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(10) |
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The Ratio of total debt to Adjusted EBITDA presented for the six
months ended September 30, 2007 and 2006 is calculated
based on Adjusted EBITDA for the twelve months ended
September 30, 2007 and |
15
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|
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2006. Adjusted EBITDA for the twelve months ended
September 30, 2007 is calculated by adding the amounts for
fiscal year 2007 and the six months ended September 30,
2007 and then deducting the amount for the six months ended
September 30, 2006. Adjusted EBITDA for the twelve months
ended September 30, 2006 is calculated by adding the
amounts for fiscal year 2006 and the six months ended
September 30, 2006 and then deducting Adjusted EBITDA for
the six months ended September 30, 2005, which totaled
$62.6 million. |
|
(11) |
|
Book capitalization includes total debt, minority interest and
stockholders investment. |
|
(12) |
|
For purposes of determining the ratios of earnings to fixed
charges, earnings are defined as net income before provision for
income taxes and minority interest, undistributed earnings of
unconsolidated equity affiliates, amortization of capitalized
interest and fixed charges, less capitalized interest. Fixed
charges consist of interest (whether expensed or capitalized),
amortization of debt issuance costs, and the estimated interest
portion of rental expense deemed to be representative of
interest. |
16
RISK
FACTORS
In considering whether to participate in the exchange
offer, you should consider carefully all of the information that
we have included or incorporated by reference into this
prospectus. In particular, you should consider carefully the
risk factors described below.
Risks
Relating to the Exchange Offer
If you
fail to exchange your Outstanding Notes, the existing transfer
restrictions will remain in effect and the market value of your
Outstanding Notes may be adversely affected because they may be
more difficult to sell.
If you fail to exchange your Outstanding Notes for Exchange
Notes under the exchange offer, then you will continue to be
subject to the existing transfer restrictions on the Outstanding
Notes. In general, the Outstanding Notes may not be offered or
sold unless they are registered or exempt from registration
under the Securities Act and applicable state securities laws.
Except in connection with this exchange offer or as required by
the Exchange and Registration Rights Agreement, we do not intend
to register resales of the Outstanding Notes.
The tender of Outstanding Notes under the exchange offer will
reduce the principal amount of the Outstanding Notes
outstanding. Due to the corresponding reduction in liquidity,
this may have an adverse effect upon, and increase the
volatility of, the market price of any Outstanding Notes that
you continue to hold following completion of the exchange offer.
Risks
Relating to Our Customers and Contracts
The
demand for our services is substantially dependent on the level
of offshore oil and gas exploration, development and production
activity.
We provide helicopter services to companies engaged in offshore
oil and gas exploration, development and production activities.
As a result, demand for our services, as well as our revenue and
our profitability, are substantially dependent on the worldwide
levels of activity in offshore oil and gas exploration,
development and production. These activity levels are
principally affected by trends in, and expectations regarding,
oil and gas prices, as well as the capital expenditure budgets
of oil and gas companies. We cannot predict future exploration,
development and production activity or oil and gas price
movements. Historically, the prices for oil and gas and activity
levels have been volatile and are subject to factors beyond our
control, such as:
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the supply of and demand for oil and gas and market expectations
for such supply and demand;
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actions of the Organization of Petroleum Exporting Countries
(OPEC) and other oil producing countries to control
prices or change production levels;
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general economic conditions, both worldwide and in particular
regions;
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governmental regulation;
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the price and availability of alternative fuels;
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weather conditions, including the impact of hurricanes and other
weather-related phenomena;
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advances in exploration, development and production technology;
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the policies of various governments regarding exploration and
development of their oil and gas reserves; and
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the worldwide political environment, including the war in Iraq,
uncertainty or instability resulting from an escalation or
additional outbreak of armed hostilities or other crises in the
Middle East or the other geographic areas in which we operate
(including, but not limited to, Nigeria), or further acts of
terrorism in the U.S. or elsewhere.
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17
The
implementation by our customers of cost-saving measures could
reduce the demand for our services.
Oil and gas companies are continually seeking to implement
measures aimed at greater cost savings. As part of these
measures, these companies are attempting to improve cost
efficiencies with respect to helicopter transportation services.
For example, these companies may reduce staffing levels on both
old and new installations by using new technology to permit
unmanned installations and may reduce the frequency of
transportation of employees by increasing the length of shifts
offshore. In addition, these companies could initiate their own
helicopter or other alternative transportation methods. The
continued implementation of these kinds of measures could reduce
the demand for helicopter services and have a material adverse
effect on our business, financial condition and results of
operations.
We are
highly dependent upon the level of activity in North America and
the North Sea.
For the six months ended September 30, 2007 and in fiscal
years 2007, 2006, and 2005 approximately 54%, 53%, 53% and 51%,
respectively, of our gross revenue was derived from helicopter
services provided to customers operating in North America and
the North Sea. The U.S. Gulf of Mexico and the North Sea
are mature exploration and production regions that have
experienced substantial seismic survey and exploration activity
for many years. Hurricanes Katrina and Rita have resulted in, or
may result in, the plugging and abandonment of many wells in the
U.S. Gulf of Mexico. Because a large number of oil and gas
prospects in these regions have already been drilled, additional
prospects of sufficient size and quality could be more difficult
to identify. In addition, the U.S. governments
exercise of authority under the Outer Continental Shelf Lands
Act, as amended, to restrict the availability of offshore oil
and gas leases could adversely impact exploration and production
activity in the U.S. Gulf of Mexico. If activity in oil and
gas exploration, development and production in either North
America or the North Sea materially declines, our business,
financial condition and results of operations could be
materially and adversely affected. We cannot predict the levels
of activity in these areas.
Our
industry is highly competitive and cyclical, with intense price
competition.
Our industry has historically been cyclical and is affected by
the volatility of oil and gas price levels. There have been
periods of high demand for our services, followed by periods of
low demand for our services. Changes in commodity prices can
have a dramatic effect on demand for our services, and periods
of low activity intensify price competition in the industry and
often result in our aircraft being idle for long periods of time.
We
depend on a small number of large offshore energy industry
customers for a significant portion of our
revenues.
We derive a significant amount of our revenue from a small
number of national oil companies and major and independent oil
and gas companies. Our loss of one of these significant
customers, if not offset by sales to new or other existing
customers, could have a material adverse effect on our business,
financial condition and results of operations. Additionally, a
change in policy by national oil companies could adversely
affect us. See Managements Discussion and Analysis
of Financial Condition and Results of Operations, included
in our Annual report on
Form 10-K
for the fiscal year ended March 31, 2007 and the Quarterly
Report on
Form 10-Q
for the quarterly period ended September 30, 2007,
incorporated herein by reference.
Our
contracts generally can be terminated or downsized by our
customers without penalty.
Many of our fixed-term contracts contain provisions permitting
early termination by the customer for any reason and generally
without penalty, and with limited notice requirements. In
addition, many of our contracts permit our customers to decrease
the number of aircraft under contract with a corresponding
decrease in the fixed monthly payments without penalty. As a
result, you should not place undue reliance on our customer
contracts or the terms of those contracts.
18
We may
not be able to obtain customer contracts with acceptable terms
covering some of our new helicopters, and some of our new
helicopters may replace existing helicopters already under
contract, which could adversely affect the utilization of our
existing fleet.
We are substantially expanding our fleet of helicopters. Many of
our new helicopters may not be covered by customer contracts
when they are placed into service, and we cannot assure you as
to when we will be able to utilize these new helicopters or on
what terms. To the extent our helicopters are covered by a
customer contract when they are placed into service, many of
these contracts are for a short term, requiring us to seek
renewals more frequently. Alternatively, we expect that some of
our customers may request new helicopters in lieu of our
existing helicopters, which could adversely affect the
utilization of our existing fleet.
Risks
Relating to Our Internal Review and Governmental
Investigations
The
SEC investigation, any related proceedings in other countries
and the consequences of the activities identified in the
Internal Review could result in civil or criminal proceedings,
the imposition of fines and penalties, the commencement of
third-party litigation, the incurrence of expenses, the loss of
business and other adverse effects on our company.
In February 2005, we voluntarily advised the staff of the SEC
that the Audit Committee of our board of directors had engaged
special outside counsel to undertake a review of certain
payments made by two of our affiliated entities in a foreign
country. The review of these payments, which initially focused
on Foreign Corrupt Practices Act matters, was subsequently
expanded by such special outside counsel to cover operations in
other countries and other issues (the Internal
Review). As a result of the findings of the Internal
Review (which was completed in late 2005), our quarter ended
December 31, 2004 and prior financial statements were
restated. We also provided the SEC with documentation resulting
from the Internal Review which eventually resulted in a formal
SEC investigation. In September 2007, we consented to the
issuance of an administrative
cease-and-desist
order by the SEC, in final settlement of the SEC investigation.
The SEC did not impose any fine or other monetary sanction upon
the Company. Without admitting or denying the SECs
findings, we consented to be ordered not to engage in future
violations of certain provisions of the federal securities laws
involving improper foreign payments, internal controls and books
and records. For further information on the restatements, see
our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2005.
As a result of the disclosure and remediation of a number of
activities identified in the Internal Review, we may encounter
difficulties conducting business in certain foreign countries
and retaining and attracting additional business with certain
customers. We cannot predict the extent of these difficulties;
however, our ability to continue conducting business in these
countries and with these customers and through agents may be
significantly impacted. We could still face legal and
administrative proceedings, the institution of administrative,
civil injunctive or criminal proceedings involving us
and/or
current or former employees, officers
and/or
directors who are within the jurisdictions of such authorities,
the imposition of fines and other penalties, remedies
and/or
sanctions, including precluding us from participating in
business operations in their countries. It is also possible that
we may become subject to claims by third parties, possibly
resulting in litigation. The matters identified in the Internal
Review and their effects could have a material adverse effect on
our business, financial condition and results of operations.
In addition, we face legal actions relating to remedial actions
which we have taken as a result of the Internal Review, and may
face further legal action of this type in the future. In
November 2005, two of our consolidated foreign affiliates were
named in a lawsuit filed with the High Court of Lagos State,
Nigeria by Mr. Benneth Osita Onwubalili and his affiliated
company, Kensit Nigeria Limited, which allegedly acted as agents
of our affiliates in Nigeria. The claimants allege that an
agreement between the parties was terminated without
justification and seek damages of $16.3 million. We have
responded to this claim and are continuing to investigate this
matter.
As we continue to operate our compliance program, other
situations involving foreign operations, similar to those
matters disclosed to the SEC in February 2005 and described
above, could arise that warrant further investigation and
subsequent disclosures. As a result, new issues may be
identified that may impact our financial statements and lead us
to take other remedial actions or otherwise adversely impact us.
19
During fiscal years 2005, 2006 and 2007, and the six months
ended September 30, 2006, we incurred approximately
$2.2 million, $10.5 million, $3.1 million and
$0.1 million, respectively, in legal and other professional
costs in connection with the Internal Review. During the six
months ended September 30, 2007, we reversed
$1.0 million of previously accrued settlement costs due to
the fact that we settled the investigation with the SEC.
Following the previously disclosed settlement with the SEC
regarding improper payments made by foreign affiliates of the
Company in Nigeria, outside counsel to the Company was contacted
by the Department of Justice (DOJ) and was asked to
provide certain information regarding our Audit Committees
related Internal Review. We previously provided disclosure
regarding the Internal Review in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2005. In addition, we
were requested to enter into an agreement with the DOJ that
would toll the statute of limitations relating to these matters.
We intend to be responsive to the DOJs requests. At this
time, it is not possible to predict what the outcome of the
DOJs investigation into these matters will be for the
Company.
The
disclosure and remediation of activities identified in the
Internal Review could result in the loss of business
relationships and adversely affect our business..
As a result of the disclosure and remediation of a number of
activities identified in the Internal Review, we may encounter
difficulties conducting business in certain foreign countries
and retaining and attracting additional business with certain
customers. We cannot predict the extent of these difficulties;
however, our ability to continue conducting business in these
countries and with these customers and through agents may be
significantly impacted. In addition, applicable governmental
authorities may preclude us from bidding on contracts to provide
services in the countries where improper activities took place.
The
DOJ investigation or any related proceedings in other countries
could result in criminal proceedings and the imposition of fines
and penalties, the commencement of third-party litigation, the
incurrence of expenses, the loss of business and other adverse
effects on our company.
In June 2005, one of our subsidiaries received a document
subpoena from the DOJ. The subpoena related to a grand jury
investigation of potential antitrust violations among providers
of helicopter transportation services in the U.S. Gulf of
Mexico. The subpoena focused on activities during the period
from January 1, 2000 to June 13, 2005. We believe we
have submitted to the DOJ substantially all documents responsive
to the subpoena. We have had discussions with the DOJ and
provided documents related to our operations in the U.S. as
well as internationally. We intend to continue to provide
additional information as required by the DOJ in connection with
the investigation. There is no assurance that, after review of
any information furnished by us or by third parties, the DOJ
will not ultimately conclude that violations of
U.S. antitrust laws have occurred. The period of time
necessary to resolve the DOJ investigation is uncertain, and
this matter could require significant management and financial
resources that could otherwise be devoted to the operation of
our business.
The outcome of the DOJ investigation and any related legal
proceedings in other countries could include civil injunctive or
criminal proceedings involving us or our current or former
officers, directors or employees, the imposition of fines and
other penalties, remedies
and/or
sanctions, including potential disbarments, and referrals to
other governmental agencies. In addition, in cases where
anti-competitive conduct is found by the government, there is a
greater likelihood for civil litigation to be brought by third
parties seeking recovery. Any such civil litigation could have
serious consequences for our company, including the costs of the
litigation and potential orders to pay restitution or other
damages or penalties, including potentially treble damages, to
any parties that were determined to be injured as a result of
any impermissible anti-competitive conduct. Any of these adverse
consequences could have a material adverse effect on our
business, financial condition and results of operations. The DOJ
investigation, any related proceedings in other countries and
any third-party litigation, as well as any negative outcome that
may result from the investigation, proceedings or litigation,
could also negatively impact our relationships with customers
and our ability to generate revenue.
20
In connection with this matter, we incurred $0.5 million,
$1.9 million and $2.6 million in legal and other
professional fees for the six months ended September 30,
2007 and in the fiscal years 2007 and 2006, respectively, and
significant expenditures may continue to be incurred in the
future.
Risks
Relating to Our Business
Our
future growth depends on the level of international oil and gas
activity and our ability to operate outside of North America and
the North Sea.
Our future growth will depend significantly on our ability to
expand into international markets outside of North America and
the North Sea. Expansion of our business depends on our ability
to operate in these regions.
Expansion of our business outside of North America and the North
Sea may be adversely affected by:
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local regulations restricting foreign ownership of helicopter
operators;
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requirements to award contracts to local operators; and
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the number and location of new drilling concessions granted by
foreign sovereigns.
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We cannot predict the restrictions or requirements that may be
imposed in the countries in which we operate. If we are unable
to continue to operate or retain contracts in operations outside
of North America and the North Sea, our future business,
financial condition and results of operations may be adversely
affected, and our operations outside of North America and the
North Sea may not grow.
In
order to grow our business, we may require additional capital in
the future, which may not be available to us.
Our business is capital intensive, and to the extent we do not
generate sufficient cash from operations, we will need to raise
additional funds through public or private debt or equity
financings to execute our growth strategy. Adequate sources of
capital funding may not be available when needed, or may not be
available on favorable terms. If we raise additional funds by
issuing equity securities, dilution to the holdings of existing
stockholders may result. If funding is insufficient at any time
in the future, we may be unable to acquire additional aircraft,
take advantage of business opportunities or respond to
competitive pressures, any of which could harm our business. See
discussion of our capital commitments in Managements
Discussion and Analysis of Financial Condition and Results of
Operations Liquidity and Capital
Resources Future Cash Requirements
included in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007 and the Quarterly
Report on
Form 10-Q
for the quarterly period ended September 30, 2007,
incorporated herein by reference.
Our
operations outside of North America and the North Sea are
subject to additional risks.
During fiscal years 2007, 2006 and 2005, approximately 40%, 38%
and 40%, respectively, of our gross revenue was attributable to
helicopter services provided to oil and gas customers operating
outside of North America and the North Sea. Operations in
most of these areas are subject to various risks inherent in
conducting business in international locations, including:
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political, social and economic instability, including risks of
war, general strikes and civil disturbances;
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physical and economic retribution directed at
U.S. companies and personnel;
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governmental actions that restrict payments or the movement of
funds or result in the deprivation of contract rights;
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the taking of property without fair compensation; and
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the lack of well-developed legal systems in some countries which
could make it difficult for us to enforce our contractual rights.
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21
For example, there has been continuing unrest in Nigeria, where
we derived 15% of our gross revenues during the six months ended
September 30, 2007 and 14% of our gross revenue in each of
fiscal years 2007, 2006 and 2005. This unrest has adversely
affected our results of operations in Nigeria in fiscal year
2007, and any future unrest in Nigeria or our other operating
regions could adversely affect our business, financial condition
and results of operations in those periods. We cannot predict
whether any of these events will continue to occur in the future
in Nigeria or occur in the future elsewhere.
Foreign
exchange risks and controls may affect our financial position
and results of operations.
Through our operations outside the U.S., we are exposed to
currency fluctuations and exchange rate risks. The majority of
both our revenue and expenses from our Europe business unit is
denominated in British pounds sterling. Our foreign exchange
rate risk is even greater when our revenue is denominated in a
currency different from that associated with the corresponding
expenses. In addition, some of our contracts provide for payment
in currencies other than British pounds sterling or
U.S. dollars. We attempt to minimize our exposure to
foreign exchange rate risk by contracting the majority of our
services, other than in our Europe business unit, in
U.S. dollars. As a result, a strong U.S. dollar may
increase the local cost of our services that are provided under
U.S. dollar-denominated contracts, which may reduce the
demand for our services in foreign countries. Generally, we do
not enter into hedging transactions to protect against foreign
exchange risks related to our gross revenue.
Because we maintain our financial statements in
U.S. dollars, our financial results are vulnerable to
fluctuations in the exchange rate between the U.S. dollar
and foreign currencies, such as the British pound sterling. In
preparing our financial statements, we must convert all
non-U.S. dollar
currencies to U.S. dollars. The effect of foreign currency
translation is reflected in a component of stockholders
investment, while foreign currency transaction gains or losses
and translation of currency amounts not deemed permanently
reinvested are credited or charged to income and reflected in
other income (expense). In the past three fiscal years, our
stockholders investment has decreased by as much as
$20.7 million and increased by as much as
$27.1 million, as a result of translation adjustments. In
addition, during this period our results of operations have
included foreign currency gains or losses ranging from a loss of
$9.8 million to a gain of $5.4 million. Changes in
exchange rates could cause significant changes in our financial
position and results of operations in the future.
We operate in countries with foreign exchange controls including
Brazil, Egypt, India, Kazakhstan, Malaysia, Nigeria, Russia and
Turkmenistan. These controls may limit our ability to repatriate
funds from our international operations and unconsolidated
affiliates or otherwise convert local currencies into
U.S. dollars. These limitations could adversely affect our
ability to access cash from these operations.
See further discussion of foreign exchange risks and controls
under Quantitative and Qualitative Disclosure About Market
Risk in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007 and the Quarterly
Report on
Form 10-Q
for the quarterly period ended September 30, 2007,
incorporated herein by reference.
We
operate in many international areas through entities that we do
not control.
We conduct many of our international operations through entities
in which we have a minority investment or through strategic
alliances with foreign partners. For example, we have acquired
interests in, and in some cases have lease and service
agreements with, entities that operate aircraft in Egypt,
Mexico, Norway, and the U.K. We provide engineering and
administrative support to certain of these entities. We derive
significant amounts of lease revenue, service revenue and
dividend income from these entities. In fiscal years 2007, 2006
and 2005, we derived approximately $2.6 million,
$2.7 million and $3.4 million, respectively, of
dividend income from our unconsolidated affiliates. More
significantly, in fiscal years 2007, 2006 and 2005, we received
approximately $56.8 million, $56.2 million and
$66.4 million, respectively, of revenues from the provision
of aircraft and other services to unconsolidated affiliates, of
which approximately $8.6 million, $8.0 million and
$9.7 million, respectively, was derived from our former
joint venture in a South American country (see discussion of the
sale of our ownership interest in this joint venture in March
2007 under
22
Business Operating Results South and Central
America included in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007 and the Quarterly
Report on
Form 10-Q
for the quarterly period ended September 30, 2007,
incorporated herein by reference). Because we do not own a
majority or maintain voting control of our unconsolidated
affiliates, we do not have the ability to control their
policies, management or affairs. The interests of persons who
control these entities or partners may differ from ours, and may
cause such entities to take actions that are not in our best
interest. If we are unable to maintain our relationships with
our partners in these entities, we could lose our ability to
operate in these areas, potentially resulting in a material
adverse effect on our business and results of operations.
Labor
problems could adversely affect us.
Approximately 300 pilots in our North America business unit and
substantially all of our employees in the U.K., Nigeria and
Australia are represented under collective bargaining or union
agreements. Periodically, certain groups of our employees who
are not covered by a collective bargaining agreement consider
entering into such an agreement. In addition, many of the
employees of our affiliates are represented by collective
bargaining agreements. Any disputes over the terms of these
agreements or our potential inability to negotiate acceptable
contracts with the unions that represent our employees under
these agreements could result in strikes, work stoppages or
other slowdowns by the affected workers.
We are currently involved in negotiations with unions
representing our pilots and engineers in the U.K., and we
currently expect that labor rates under our existing contracts
could increase 4-5% starting in July 2007 through June 2008. We
expect to be able to pass these costs on to our customers
through annual contract escalation charges built into existing
contracts or through rate increases as customer contracts come
up for renewal.
We are also currently involved in the annual contract
negotiations with the unions in Nigeria and anticipate that we
will increase certain benefits for union personnel as a result
of these negotiations.
If our unionized workers engage in a strike, work stoppage or
other slowdown, or other employees elect to become unionized or
existing labor agreements are renegotiated on, or future labor
agreements contain, terms that are unfavorable to us, we could
experience a disruption of our operations or higher ongoing
labor costs which could adversely affect our business, financial
condition and results of operations.
Our
failure to attract and retain qualified personnel could have an
adverse affect on us.
Our ability to attract and retain qualified pilots, mechanics
and other highly-trained personnel is an important factor in
determining our future success. For example, many of our
customers require pilots with very high levels of flight
experience. The market for these experienced and highly-trained
personnel is competitive and may become more competitive.
Accordingly, we cannot assure you that we will be successful in
our efforts to attract and retain such personnel. Some of our
pilots, mechanics and other personnel, as well as those of our
competitors, are members of the U.S. or U.K. military
reserves who have been, or could be, called to active duty. If
significant numbers of such personnel are called to active duty,
it would reduce the supply of such workers and likely increase
our labor costs. Additionally, our fleet expansion program will
require us to retain additional pilots, mechanics and other
flight-related personnel. Finally, as a result of the disclosure
and remediation of activities identified in the Internal Review,
we may have difficulty attracting and retaining qualified
personnel, and we may incur increased expenses. Our failure to
attract and retain qualified personnel could have a material
adverse effect on our current business and our growth strategy.
Helicopter
operations involve risks that may not be covered by our
insurance or may increase our operating costs.
The operation of helicopters inherently involves a degree of
risk. Hazards such as harsh weather and marine conditions,
mechanical failures, crashes and collisions are inherent in our
business and may result in personal injury, loss of life, damage
to property and equipment and suspension or reduction of
operations. Our aircraft have been involved in accidents in the
past, some of which have included loss of life and property
damage. We may experience similar accidents in the future.
23
We attempt to protect ourselves against these losses and damage
by carrying insurance, including hull and liability, general
liability, workers compensation, and property and casualty
insurance. Our insurance coverage is subject to deductibles and
maximum coverage amounts, and we do not carry insurance against
all types of losses, including business interruption. We cannot
assure you that our existing coverage will be sufficient to
protect against all losses, that we will be able to maintain our
existing coverage in the future or that the premiums will not
increase substantially. In addition, future terrorist activity,
risks of war, accidents or other events could increase our
insurance premiums. The loss of our liability insurance
coverage, inadequate coverage from our liability insurance or
substantial increases in future premiums could have a material
adverse effect on our business, financial condition and results
of operations.
We are
subject to government regulation that limits foreign ownership
of aircraft companies.
We are subject to governmental regulation that limits foreign
ownership of aircraft companies. In the U.S., our aircraft may
be subject to deregistration under the Federal Aviation Act, and
we may lose our ability to operate within the U.S. if
persons other than citizens of the U.S. should come to own
or control more than 25% of our voting interest, if the
president of our company is not a U.S. citizen, if
two-thirds or more of our directors are not U.S. citizens
or if our company is not under the actual control of
U.S. citizens. Deregistration of our aircraft for any
reason, including foreign ownership in excess of permitted
levels, would have a material adverse effect on our ability to
conduct operations within our North America business unit. In
the U.K., we are subject to regulation under English and
European statutes and regulations and are required to hold an
operating license issued by the CAA in order to operate in the
U.K. To operate under this license, the company through which we
conduct operations in the U.K., Bristow Helicopters Ltd., must
be owned directly or through majority ownership by European
Union nationals, and must at all times be effectively controlled
by them. Bristow Helicopters Ltd. is a wholly owned subsidiary
of Bristow Aviation. We own 49% of, and hold certain put/call
rights over additional, shares of common stock of Bristow
Aviation. If we were considered to have majority ownership of or
control over Bristow Helicopters Ltd., either presently or in
the future (including following the exercise of the put/call
option), Bristow Helicopters Ltd. could lose its operating
license, which would have a material adverse effect on our
ability to operate in the U.K.
Changes in these statutes or regulations, administrative
requirements or their interpretation may have a material adverse
effect on our business or financial condition or on our ability
to continue operations in these areas. Additionally, changes in
local laws, regulations or administrative requirements or their
interpretation in other international locations where we operate
may have a material adverse effect on our business or financial
condition or on our ability to continue operations in these
areas.
We cannot assure you that there will be no changes in aviation
laws, regulations or administrative requirements or the
interpretations thereof, that could restrict or prohibit our
ability to operate in certain regions. Any such restriction or
prohibition on our ability to operate may have a material
adverse effect on our business, financial condition and results
of operations.
See further discussion in Managements Discussion and
Analysis of Financial Condition and Results of Operations
set forth in our Annual Report on Form 10K for the fiscal
year ended March 31, 2007 and the Quarterly Report on
Form 10-Q
for the quarterly period ended September 30, 2007,
incorporated herein by reference.
Actions
taken by agencies empowered to enforce governmental regulations
could increase our costs and reduce our ability to operate
successfully.
Our operations are regulated by governmental agencies in the
various jurisdictions in which we operate. These agencies have
jurisdiction over many aspects of our business, including
personnel, aircraft and ground facilities. Statutes and
regulations in these jurisdictions also subject us to various
certification and reporting requirements and inspections
regarding safety, training and general regulatory compliance.
Other statutes and regulations in these jurisdictions regulate
the offshore operations of our customers. The agencies empowered
to enforce these statutes and regulations may suspend, curtail
or modify our operations. A suspension or substantial
curtailment of our operations for any prolonged period, and any
substantial modification of our
24
current operations, may have a material adverse effect on our
business, financial condition and results of operations.
See further discussion in Business Government
Regulation and Business
Environmental set forth in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007, incorporated
herein by reference.
We
face substantial competition.
The helicopter business is highly competitive. Chartering of
helicopters is usually done on the basis of competitive bidding
among those providers having the necessary equipment,
operational experience and resources. Factors that affect
competition in our industry include price, reliability, safety,
professional reputation, availability, equipment and quality of
service.
In our North America business unit, we face competition from a
number of providers, including one U.S. competitor with a
comparable number of helicopters servicing the U.S. Gulf of
Mexico. We have several significant competitors in the
U.S. Gulf of Mexico, two significant competitors in the
North Sea and one significant competitor in Nigeria.
Certain of our customers have the capability to perform their
own helicopter operations should they elect to do so, which has
a limiting effect on our rates. The loss of a significant number
of our customers or termination of a significant number of our
contracts could materially adversely affect our business,
financial condition and results of operations.
As a result of significant competition, we must continue to
provide safe and efficient service or we will lose market share,
which could have a material adverse effect on our business,
financial condition and results of operations. The loss of a
significant number of our customers or termination of a
significant number of our contracts could have a material
adverse effect on our business, financial condition and results
of operations.
Our
operations are subject to weather-related and seasonal
fluctuations.
Generally, our operations can be impaired by harsh weather
conditions. Poor visibility, high wind, heavy precipitation and
sand storms can affect the operation of helicopters and result
in a reduced number of flight hours. A significant portion of
our operating revenue is dependent on actual flight hours, and a
substantial portion of our direct cost is fixed. Thus, prolonged
periods of harsh weather can have a material adverse effect on
our business, financial condition and results of operations.
In the Gulf of Mexico, the months of December through March have
more days of harsh weather conditions than the other months of
the year. Heavy fog during those months often limits visibility.
In addition, in the Gulf of Mexico, June through November is
tropical storm and hurricane season. When a tropical storm or
hurricane is about to enter or begins developing in the Gulf of
Mexico, flight activity may increase because of evacuations of
offshore workers. However, during a tropical storm or hurricane,
we are unable to operate in the area of the storm. In addition,
as a significant portion of our facilities are located along the
coast of the U.S. Gulf of Mexico, tropical storms and
hurricanes may cause substantial damage to our property in these
locations, including helicopters. Additionally, we incur costs
in evacuating our aircraft, personnel and equipment prior to
tropical storms and hurricanes.
The fall and winter months have fewer hours of daylight,
particularly in the North Sea and Alaska. While some of our
aircraft are equipped to fly at night, we generally do not do
so. In addition, drilling activity in the North Sea and Alaska
is lower during the winter months than the rest of the year.
Anticipation of harsh weather during this period causes many oil
companies to limit activity during the winter months.
Consequently, flight hours are generally lower during these
periods, typically resulting in a reduction in operating revenue
during those months. Accordingly, our reduced ability to operate
in harsh weather conditions and darkness may have a material
adverse effect on our business, financial condition and results
of operations.
25
Environmental
regulations and liabilities may increase our costs and adversely
affect us.
Our operations are subject to U.S. federal, state and
local, and foreign environmental laws and regulations that
impose limitations on the discharge of pollutants into the
environment and establish standards for the treatment, storage,
recycling and disposal of toxic and hazardous wastes. The nature
of the business of operating and maintaining helicopters
requires that we use, store and dispose of materials that are
subject to environmental regulation. Environmental laws and
regulations change frequently, which makes it impossible for us
to predict their cost or impact on our future operations.
Liabilities associated with environmental matters could have a
material adverse effect on our business, financial condition and
results of operations. We could be exposed to strict, joint and
several liability for cleanup costs, natural resource damages
and other damages as a result of our conduct that was lawful at
the time it occurred or the conduct of, or conditions caused by,
prior operators or other third parties. Additionally, any
failure by us to comply with applicable environmental laws and
regulations may result in governmental authorities taking action
against our business that could adversely impact our operations
and financial condition, including the:
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issuance of administrative, civil and criminal penalties;
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denial or revocation of permits or other authorizations;
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imposition of limitations on our operations; and
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performance of site investigatory, remedial or other corrective
actions.
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For additional information see Business
Environmental and Business Legal
Proceedings set forth in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007, incorporated
herein by reference.
Our
dependence on a small number of helicopter manufacturers poses a
significant risk to our business and prospects.
We contract with a small number of manufacturers for most of our
aircraft expansion and replacement needs. If any of these
manufacturers faced production delays due to, for example,
natural disasters or labor strikes, we may experience a
significant delay in the delivery of previously ordered
aircraft, which would adversely affect our revenues and
profitability and could jeopardize our ability to meet the
demands of our customers. We have limited alternatives to find
alternate sources of new aircraft.
A
shortfall in availability of aircraft components and parts
required for maintenance and repairs of our aircraft and
supplier cost increases could adversely affect us.
In connection with the required routine maintenance and repairs
performed on our aircraft in order for them to stay fully
operational and available for use in our operations, we rely on
a few key vendors for the supply and overhaul of certain key
components fitted to our aircraft. Currently those vendors are
working at or near full capacity supporting the aircraft
production lines and the maintenance requirements of the
aircraft operators who are also operating at near capacity in
certain industries, including operators such as us who support
the energy industry. These vendors are therefore experiencing
backlogs in manufacturing schedules and some parts are in
limited supply from time to time. Lead times for ordering
certain critical components are extending into longer time
periods, and this could have an adverse impact upon our ability
to maintain and repair our aircraft. Our inability to perform
timely maintenance and repairs can result in our aircraft being
underutilized which could have an adverse impact on our
operating results. Furthermore, our operations in remote
locations, where delivery of these components and parts could
take a significant period of time, may also impact our ability
to maintain and repair our aircraft. While every effort is made
to mitigate such impact, this may pose a risk to our operating
results. Additionally, supplier cost increases for critical
aircraft components and parts also pose a risk to our operating
results. Cost increases are passed through to our customers
through rate increases where possible, including as a component
of contract escalation charges. However, as certain of our
contracts are long-term in nature, cost increases may not be
adjusted in our contract rates until the contracts are up for
renewal.
26
Risks
Relating to the Notes
The
risks described in this Risks Relating to the Notes
that apply to the Exchange Notes also apply to any Outstanding
Notes not tendered by the Exchange Notes in the exchange
offer.
Our
substantial indebtedness could adversely affect our financial
condition and impair our ability to fulfill our obligations
under the Notes.
Following the completion of the offering of the Outstanding
Notes, we had substantial debt and substantial debt service
requirements. As of September 30, 2007, as adjusted to give
effect to the November 13, 2007
71/2% notes
offering, we had approximately $608.0 million of
outstanding indebtedness.
Our level of indebtedness may have important consequences to our
business and to you, including:
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making it more difficult for us to satisfy our obligations with
respect to the Notes;
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impairing our ability to obtain additional financing in the
future for working capital, capital expenditures, acquisitions
or other general corporate purposes or to repurchase the Notes
from you upon a change of control;
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requiring us to dedicate a substantial portion of our cash flow
to the payment of principal and interest on our indebtedness,
which reduces the availability of our cash flow to fund working
capital, capital expenditures, acquisitions and other general
corporate purposes;
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subjecting us to the risk of increased sensitivity to interest
rate increases on our indebtedness with variable interest rates,
including our borrowings under our credit facilities;
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increasing the possibility of an event of default under the
financial and operating covenants contained in our debt
instruments; and
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limiting our ability to adjust to rapidly changing market
conditions, reducing our ability to withstand competitive
pressures and making us more vulnerable to a downturn in general
economic conditions or our business than our competitors with
less debt.
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If we are unable to generate sufficient cash flow from
operations in the future to service our debt, we may be required
to refinance all or a portion of our existing debt, including
the Notes, or to obtain additional financing. We cannot assure
you that any such refinancing would be possible or that any
additional financing could be obtained. Our inability to obtain
such refinancing or financing may have a material adverse effect
on us.
There
may be no public market for the Exchange Notes.
The Exchange Notes will be new securities for which currently
there is no trading market. We do not intend to apply for the
Exchange Notes to be listed on any securities exchange or to
arrange for any quotation system to quote them. The liquidity of
any market for the Exchange Notes will depend on the number of
holders of those Exchange Notes, the interest of securities
dealers in making a market in those securities and other
factors. Accordingly, we cannot assure you as to:
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the liquidity of any such market that may develop;
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your ability to sell your Exchange Notes; or
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the price at which you would be able to sell your Exchange Notes.
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If such a market were to exist, the Exchange Notes could trade
at prices that may be lower than the principal amount or
purchase price, depending on many factors, including prevailing
interest rates, the market for similar notes and our financial
performance. If an active market does not develop or is not
maintained, the price and liquidity of the Exchange Notes may be
adversely affected.
27
Despite
our and our subsidiaries current levels of indebtedness,
we may incur substantially more debt, which could further
exacerbate the risks associated with our substantial
indebtedness.
We had $100 million of availability for borrowings under
our existing credit facilities as of September 30, 2007,
subject to our maintenance of covenants and other conditions.
Although the agreements governing our credit facilities and the
indentures governing our
61/8% senior
notes due 2013 and the Outstanding Notes contain restrictions on
the incurrence of additional indebtedness, these restrictions
are subject to a number of qualifications and exceptions, and we
could incur substantial additional indebtedness. In addition to
amounts that we may borrow under our existing credit facilities,
the indentures governing our
61/8% notes
and the Outstanding Notes also allow us to borrow significant
amounts of money from other sources. Also, these restrictions do
not prevent us from incurring obligations that do not constitute
indebtedness as defined in the relevant agreement.
If we incur additional indebtedness, the related risks that we
now face could intensify.
To
service our indebtedness, including the Notes, we will continue
to require a significant amount of cash, and our ability to
generate cash depends on many factors beyond our
control.
Our ability to make scheduled payments of principal or interest
with respect to our indebtedness, including the Notes, will
depend on our ability to generate cash and on our financial
results. Our ability to generate cash depends on the demand for
our services, which is subject to levels of activity in offshore
oil and gas exploration, development and production, general
economic conditions, and financial, competitive, regulatory and
other factors affecting our operations, many of which are beyond
our control. We cannot assure you that our operations will
generate sufficient cash flow or that future borrowings will be
available to us under our credit facilities or otherwise in an
amount sufficient to enable us to pay our indebtedness,
including the Notes, or to fund our other liquidity needs.
We are
dependent on our subsidiaries and our unconsolidated affiliates
for our cash flow.
We are a holding company with no material assets other than
cash, our equity interests in our subsidiaries, our interests in
our unconsolidated affiliates and our indebtedness from those
subsidiaries and affiliates. Our subsidiaries and our
unconsolidated affiliates conduct substantially all of our
operations and directly own substantially all of our assets.
Therefore, our operating cash flow and ability to meet our debt
obligations, including the Notes, will depend on the cash flow
provided by our subsidiaries and our unconsolidated affiliates
in the form of loans, dividends, aircraft leases, maintenance
charges, reimbursable expenses or other payments to us as a
shareholder, equity holder, service provider or lender. The
ability of our subsidiaries and our unconsolidated affiliates to
make such payments to us will depend on their earnings, tax
considerations, legal restrictions and restrictions under their
indebtedness. Our non-guarantor subsidiaries are not obligated
to make funds available for payment of the Notes. Although the
indenture will limit the ability of our guarantor subsidiaries
to enter into consensual restrictions on their ability to pay
dividends and make other payments, the limitations are subject
to a number of significant qualifications and exceptions.
The
Notes will continue to be structurally subordinated to all
indebtedness of our subsidiaries that are not guarantors of the
Notes.
We derive substantially all of our revenue from our consolidated
subsidiaries and our unconsolidated affiliates. While certain of
our U.S. subsidiaries will guarantee the Notes, our
non-U.S. subsidiaries,
many of which are significant, will not guarantee the Notes. You
will not have any claim as a creditor against our subsidiaries
that are not guarantors of the Notes. Accordingly, all
obligations of our non-guarantor subsidiaries will have to be
satisfied before any of the assets of such subsidiaries would be
available for distribution, upon a liquidation or otherwise, to
us or a guarantor of the Notes. As of September 30, 2007,
our non-guarantor subsidiaries had approximately
$385.9 million of total liabilities (including trade
payables but excluding intercompany liabilities and guarantees).
Revenue related to our non-guarantor subsidiaries constituted
66% of our operating revenue during the six months ended
September 30, 2007, and our non-guarantor subsidiaries held
approximately 50% of our consolidated assets as of
September 30, 2007. Under the indenture governing the
Notes, our non-guarantor subsidiaries will be permitted to incur
substantial amounts of additional indebtedness, which would be
structurally senior to the Notes.
28
Similar to our non-guarantor subsidiaries, you will not have any
claim as a creditor against our unconsolidated affiliates. We
own less than 50% of the equity of our unconsolidated affiliates
and some of our subsidiaries so that, in addition to the claims
of creditors of those entities, the equity interests of our
partners or other shareholders in any dividend or other
distribution made by these entities would need to be satisfied
on a proportionate basis with us. These unconsolidated
affiliates and subsidiaries may also be subject to restrictions
on their ability to distribute cash to us in their financing or
other agreements, and as a result, we may not be able to access
their cash flow to service our debt obligations, including the
Notes.
The
Notes and the guarantees will continue to be unsecured and
effectively subordinated to our and our subsidiary
guarantors secured indebtedness.
The Notes and the related subsidiary guarantees will not be
secured by any of our assets. As of September 30, 2007, we
and our subsidiary guarantors had no secured debt outstanding.
In addition, the indentures governing our
61/8% notes
and the Notes will permit the incurrence of additional debt,
some of which may be secured debt. Holders of our secured debt
will have claims that are effectively senior to your claims as
holders of the Notes to the extent of the value of the assets
securing the secured debt. The Notes will be effectively
subordinated to all secured debt.
If we become insolvent or are liquidated, or if payment under
any secured debt is accelerated, the lender thereunder would be
entitled to exercise the remedies available to a secured lender.
Accordingly, the lender will have priority over any claim for
payment under the Notes or the guarantees to the extent of the
assets that constitute their collateral. If this were to occur,
it is possible that there would be no assets remaining from
which claims of the holders of the Notes could be satisfied.
Further, if any assets did remain after payment of these
lenders, the remaining assets might be insufficient to satisfy
the claims of the holders of the Notes and holders of other
unsecured debt that is deemed the same class as the Notes, and
potentially all other general creditors who would participate
ratably with holders of the Notes.
Restrictive
covenants in our debt agreements may restrict the manner in
which we can operate our business.
Our existing credit facilities and the indentures governing our
61/8% notes
and the Notes limit, among other things, our ability and the
ability of our restricted subsidiaries to:
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borrow money or issue guarantees;
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pay dividends, redeem capital stock or make other restricted
payments;
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incur liens to secure indebtedness;
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make certain investments;
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sell certain assets;
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enter into transactions with our affiliates; or
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merge with another person or sell substantially all of our
assets.
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If we fail to comply with these covenants, we would be in
default under our existing credit facilities and the indentures
governing our
61/8% notes
and the Notes, and the principal and accrued interest on our
61/8% notes
and the Notes and our other outstanding indebtedness may become
due and payable. See Description of Other
Indebtedness and Description of the Exchange
Notes Certain Covenants. In addition, our
credit facilities contain, and our future indebtedness
agreements may contain, additional affirmative and negative
covenants, which are generally more restrictive than those
contained in the indenture for the Notes.
As a result of these covenants, our ability to respond to
changes in business and economic conditions and to obtain
additional financing, if needed, may be significantly
restricted, and we may be prevented from engaging in
transactions that might otherwise be considered beneficial to
us. Our existing credit facilities also require, and our future
credit facilities may require, us to maintain specified
financial ratios and satisfy certain financial condition tests.
Our ability to meet these financial ratios and tests can be
affected by events beyond
29
our control, and we cannot assure you that we will meet those
tests. The breach of any of these covenants could result in a
default under our existing credit facilities. Upon the
occurrence of an event of default under our existing or future
credit facilities, the lenders could elect to declare all
amounts outstanding under such credit facilities, including
accrued interest or other obligations, to be immediately due and
payable. There can be no assurance that our assets would be
sufficient to repay in full that indebtedness and our other
indebtedness, including the Notes.
The instruments governing certain of our indebtedness, including
our existing credit facilities and the indentures governing our
61/8% notes
and the Notes, contain cross-default provisions. Under these
provisions, a default under one instrument governing our
indebtedness may constitute a default under our other
instruments of indebtedness that contain cross-default
provisions.
A
court could subordinate or void the obligations under our
subsidiaries guarantees.
Under the U.S. federal bankruptcy laws and comparable
provisions of state fraudulent conveyance laws, a court could
void obligations under the subsidiary guarantees, subordinate
those obligations to other obligations of our subsidiary
guarantors or require you to repay any payments made pursuant to
the subsidiary guarantees, if:
(1) fair consideration or reasonably equivalent value was
not received in exchange for the obligation; and
(2) at the time the obligation was incurred, the obligor:
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was insolvent or rendered insolvent by reason of the obligation;
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was engaged in a business or transaction for which its remaining
assets constituted unreasonably small capital; or
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intended to incur, or believed that it would incur, debts beyond
its ability to pay them as the debts matured.
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The measure of insolvency for these purposes will depend upon
the law of the jurisdiction being applied. Generally, however, a
company will be considered insolvent if:
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the sum of its debts, including contingent liabilities, is
greater than the saleable value of all of its assets at a fair
valuation;
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the present fair saleable value of its assets was less than the
amount that would be required to pay its probable liability on
its existing debts, including contingent liabilities, as they
become absolute and matured; or
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it could not pay its debts as they become due.
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Moreover, regardless of solvency, a court might void the
guarantees, or subordinate the guarantees, if it determined that
the transaction was made with intent to hinder, delay or defraud
creditors.
Each subsidiary guarantee contains a provision intended to limit
the guarantors liability to the maximum amount that it
could incur without causing the incurrence of obligations under
its subsidiary guarantee to be a fraudulent transfer. This
provision, however, may not be effective to protect the
subsidiary guarantees from attack under fraudulent transfer law.
The indenture requires that certain subsidiaries must guarantee
the Notes in the future. These considerations will also apply to
these future guarantees.
We may
not have the ability to repurchase the Notes upon a change of
control as required by the indenture.
Upon the occurrence of a Change of Control together with a
Ratings Event (each as defined in Description of the
Exchange Notes), we will be required to offer to purchase
all of the outstanding Notes at
30
101% of their principal amount plus accrued and unpaid interest
to the date of repurchase. Upon such a change of control, we may
not have sufficient funds available to repurchase all of the
Notes tendered pursuant to this requirement. A change of control
is an event of default under our existing credit facilities and
would prevent our use of the facilities to pay for the Notes
tendered in the change of control offer. Further, the occurrence
of a change of control would allow the lenders under our
existing credit facilities to accelerate the maturity thereof.
Our failure to repurchase the Notes would be a default under the
indenture, which would, in turn, be a default under our existing
credit facilities and, potentially, other debt. If any debt were
to be accelerated, we may be unable to repay these amounts and
make the required repurchase of the Notes. See Description
of the Exchange Notes Repurchase at the Option of
Holders.
PRIVATE
PLACEMENTS
On June 13, 2007 and November 13, 2007, we completed
private offerings totaling $350 million principal amount of
71/2% Senior
Notes due 2017 to the initial purchasers of the Outstanding
Notes in transactions exempt from or not subject to registration
under the Securities Act. The initial purchasers then offered
and resold the Outstanding Notes to qualified institutional
buyers and
non-U.S. persons.
We received net proceeds of approximately $345.4 million
from the private placements. We have used, and expect to
continue using, the net proceeds to purchase additional aircraft
and potentially acquire additional businesses.
USE OF
PROCEEDS
We will not receive any cash proceeds from the issuance of the
Exchange Notes. In consideration for issuing the Exchange Notes,
we will receive in exchange a like principal amount of
Outstanding Notes. The Outstanding Notes surrendered in exchange
for the Exchange Notes will be retired and canceled and cannot
be reissued. Accordingly, issuance of the Exchange Notes will
not result in any change in our capitalization.
31
SELECTED
HISTORICAL FINANCIAL INFORMATION
The following selected financial data as of and for each of the
five years ended March 31, 2007 is derived from our audited
consolidated financial statements. The selected financial data
as of and for each of the six months ended September 30,
2007 and 2006 are derived from our unaudited consolidated
financial statements and, in our opinion, have been prepared on
the same basis as the audited consolidated financial statements
and include all adjustments, consisting of normal recurring
adjustments, necessary for a fair statement of this information.
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Six Months Ended
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September 30,
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Fiscal Year Ended March 31
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2007
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2006
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2007
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2006
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2005
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2004
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2003
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(In thousands, except ratios)
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Statement of Operations Data:(1)
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Total gross revenue(2)
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$
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518,338
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$
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445,271
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$
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897,861
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$
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768,940
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$
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673,646
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$
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617,001
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$
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601,550
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Direct cost(2)(3)
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$
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326,600
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$
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287,341
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$
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681,191
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$
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591,043
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$
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518,139
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$
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475,449
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$
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467,776
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Consolidated operating income(4)
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$
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80,465
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$
|
61,921
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$
|
115,303
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$
|
73,795
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$
|
77,608
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$
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88,725
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$
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65,366
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Earnings from unconsolidated affiliates, net
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7,508
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|
3,287
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11,423
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|
|
6,758
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|
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|
9,600
|
|
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|
11,039
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12,054
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Interest income(5)
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6,247
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|
2,359
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8,950
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|
4,159
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|
3,188
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|
1,689
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1,523
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Interest expense
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(9,456
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)
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(6,107
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)
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(10,940
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)
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|
(14,689
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)
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(15,665
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)
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|
(16,829
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)
|
|
|
(14,904
|
)
|
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,205
|
)
|
|
|
|
|
Other income (expense), net(6)
|
|
|
786
|
|
|
|
(6,093
|
)
|
|
|
(8,998
|
)
|
|
|
4,612
|
|
|
|
(1,126
|
)
|
|
|
(7,810
|
)
|
|
|
(3,284
|
)
|
Provision for income taxes(7)
|
|
|
(28,475
|
)
|
|
|
(18,271
|
)
|
|
|
(40,366
|
)
|
|
|
(16,607
|
)
|
|
|
(21,835
|
)
|
|
|
(19,402
|
)
|
|
|
(18,554
|
)
|
Minority interest
|
|
|
(453
|
)
|
|
|
(792
|
)
|
|
|
(1,200
|
)
|
|
|
(219
|
)
|
|
|
(210
|
)
|
|
|
(1,382
|
)
|
|
|
(1,797
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
56,622
|
|
|
$
|
36,304
|
|
|
$
|
74,172
|
|
|
$
|
57,809
|
|
|
$
|
51,560
|
|
|
$
|
49,825
|
|
|
$
|
40,404
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
2.13
|
|
|
$
|
1.54
|
|
|
$
|
2.87
|
|
|
$
|
2.48
|
|
|
$
|
2.24
|
|
|
$
|
2.21
|
|
|
$
|
1.80
|
|
Diluted
|
|
|
1.87
|
|
|
|
1.52
|
|
|
|
2.74
|
|
|
|
2.45
|
|
|
|
2.21
|
|
|
|
2.15
|
|
|
|
1.67
|
|
Balance Sheet Data:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash and cash equivalents
|
|
$
|
276,439
|
|
|
$
|
268,275
|
|
|
$
|
184,188
|
|
|
$
|
122,482
|
|
|
$
|
146,440
|
|
|
$
|
85,679
|
|
|
$
|
56,800
|
|
Working capital
|
|
|
502,221
|
|
|
|
421,337
|
|
|
|
368,006
|
|
|
|
283,337
|
|
|
|
270,747
|
|
|
|
235,691
|
|
|
|
101,082
|
|
Total assets
|
|
|
1,899,243
|
|
|
|
1,469,142
|
|
|
|
1,505,803
|
|
|
|
1,176,413
|
|
|
|
1,149,576
|
|
|
|
1,046,828
|
|
|
|
906,031
|
|
Total debt
|
|
|
557,335
|
|
|
|
260,543
|
|
|
|
259,082
|
|
|
|
265,296
|
|
|
|
262,080
|
|
|
|
255,534
|
|
|
|
232,818
|
|
Stockholders investment
|
|
|
942,322
|
|
|
|
794,437
|
|
|
|
871,657
|
|
|
|
537,697
|
|
|
|
492,993
|
|
|
|
429,952
|
|
|
|
350,206
|
|
Statement of Cash Flows Data:(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
43,498
|
|
|
$
|
48,699
|
|
|
$
|
104,430
|
|
|
$
|
39,265
|
|
|
$
|
104,473
|
|
|
$
|
83,331
|
|
|
$
|
62,387
|
|
Net cash used in investing activities
|
|
|
(236,978
|
)
|
|
|
(99,966
|
)
|
|
|
(264,335
|
)
|
|
|
(54,180
|
)
|
|
|
(46,539
|
)
|
|
|
(62,582
|
)
|
|
|
(48,181
|
)
|
Net cash provided by (used in) financing activities
|
|
|
283,262
|
|
|
|
195,259
|
|
|
|
215,682
|
|
|
|
(5,394
|
)
|
|
|
2,763
|
|
|
|
3,539
|
|
|
|
(1,109
|
)
|
32
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
September 30,
|
|
|
Fiscal Year Ended March 31
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(In thousands, except ratios)
|
|
|
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(8)
|
|
$
|
118,234
|
|
|
$
|
83,662
|
|
|
$
|
170,470
|
|
|
$
|
131,856
|
|
|
$
|
140,009
|
|
|
$
|
128,072
|
|
|
$
|
108,556
|
|
Capital expenditures
|
|
|
221,095
|
|
|
|
108,556
|
|
|
|
304,776
|
|
|
|
154,262
|
|
|
|
90,023
|
|
|
|
67,855
|
|
|
|
55,031
|
|
Ratio of Adjusted EBITDA to Adjusted Interest Expense(8)(9)
|
|
|
8.0
|
x
|
|
|
10.3
|
x
|
|
|
10.5
|
x
|
|
|
8.1
|
x
|
|
|
8.6
|
x
|
|
|
7.4
|
x
|
|
|
7.6
|
x
|
Ratio of total debt to Adjusted EBITDA(8)(10)
|
|
|
2.7
|
x
|
|
|
1.7
|
x
|
|
|
1.5
|
x
|
|
|
2.0
|
x
|
|
|
1.9
|
x
|
|
|
2.0
|
x
|
|
|
2.1
|
x
|
Debt as a percentage of book capitalization(11)
|
|
|
37.0
|
%
|
|
|
24.6
|
%
|
|
|
22.8
|
%
|
|
|
32.9
|
%
|
|
|
34.5
|
%
|
|
|
36.8
|
%
|
|
|
38.8
|
%
|
Ratio of earnings to fixed charges(12)
|
|
|
5.1
|
x
|
|
|
5.4
|
x
|
|
|
5.5
|
x
|
|
|
4.4
|
x
|
|
|
5.1
|
x
|
|
|
4.1
|
x
|
|
|
4.4
|
x
|
Helicopters in fleet
|
|
|
404
|
|
|
|
332
|
|
|
|
345
|
|
|
|
331
|
|
|
|
320
|
|
|
|
332
|
|
|
|
335
|
|
Average revenue per helicopter
|
|
$
|
1,283
|
|
|
$
|
1,341
|
|
|
$
|
2,602
|
|
|
$
|
2,323
|
|
|
$
|
2,105
|
|
|
$
|
1,858
|
|
|
$
|
1,796
|
|
|
|
|
(1) |
|
Amounts included Grasso, which was sold on November 2, 2007
and will be classified as discontinued operations starting with
the fiscal quarter ending December 31, 2007. Grasso had
revenue and operating income of $32.6 million and
$2.0 million, respectively, for the six months ended
September 30, 2007. |
|
(2) |
|
Gross revenue includes reimbursable revenue of
$49.5 million, $48.4 million, $95.9 million,
$80.2 million, $64.7 million, $58.9 million and
$51.0 million for the six months ended September 30,
2007 and 2006 and for fiscal years 2007, 2006, 2005, 2004 and
2003, respectively. Direct cost includes reimbursable expense of
$47.0 million, $47.8 million, $94.7 million,
$78.5 million, $63.3 million, $58.1 million and
$50.5 million for the six months ended September 30,
2007 and 2006 and for fiscal years 2007, 2006, 2005, 2004 and
2003, respectively. |
|
(3) |
|
During the six months ended September 30, 2007, we reserve
a $5.4 million accrual for sales tax contingencies in
Nigeria. |
|
(4) |
|
Includes professional fees in connection with the Internal
Review and DOJ matter of $3.1 million, $5.0 million,
$13.1 million and $2.2 million for the six months
ended September 30, 2006 and fiscal years 2007, 2006 and
2005, respectively. During the six months ended
September 30, 2007, we reserved $1.0 million of
previously accrued settlement costs due to the fact that we
settled the investigation with the SEC and incurred
$0.5 million in professional fees in connection with the
DOJ matter. |
|
(5) |
|
Includes interest income earned on cash balances generated
through our 5.50% mandatory convertible preferred stock offering
in September and October 2006 and the Outstanding Notes. |
|
(6) |
|
Includes foreign currency transaction gains of $0.7 million
for the six months ended September 30, 2007, and losses of
$6.1 million, $9.8 million, $1.3 million,
$7.9 million and $2.9 million for the six months ended
September 30, 2006 and fiscal years 2007, 2005, 2004 and
2003, respectively, and foreign currency transaction gains of
$5.4 million for fiscal year 2006. Includes a gain of
$2.5 million recognized upon the sale of our 50% interest
in a Brazilian joint venture during fiscal year 2007 and an
impairment charge of $1.0 million recorded during fiscal
year 2006 to reduce the recorded value of this investment, as we
expected at that time that our investment would not be
recoverable. Includes the expense of previously deferred
acquisition costs of $1.9 million in fiscal year 2007. |
|
(7) |
|
Includes $2.5 million in additional tax expense during
fiscal year 2007 recorded as a result of the sale of the assets
of Turbo Engines, Inc. in December 2006 (See
Managements Discussion and Analysis of Financial
Condition and Results of Operating Business Unit
Operating Results Fiscal Year 2007 Compared to
Fiscal Year 2006 Helicopter Services
North America set forth in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007, incorporated herein by
reference). Includes the impact of the reversal of reserves for
tax contingencies of $0.9 million, $1.5 million,
$3.4 million, $11.4 million, $3.7 million and
$3.5 million in the six months ended September 30,
2007 and 2006 and |
33
|
|
|
|
|
fiscal years 2007, 2006, 2005 and 2004, respectively in
connection with the expiration of the related statutes of
limitations. |
|
(8) |
|
Adjusted EBITDA means earnings before interest expense, taxes,
depreciation and amortization, loss on extinguishment of debt
and non-cash compensation adjusted for non-cash components of
net income (minority interest in earnings and equity in earnings
from unconsolidated affiliates (over) under dividends received).
Adjusted EBITDA is not a measure of financial performance or
liquidity under GAAP. Accordingly, it should not be considered
as a substitute for net income, operating income, net cash
provided by operating activities or any other operating or
liquidity measure prepared in accordance with GAAP.
Additionally, our Adjusted EBITDA computation may not be
comparable to other similarly titled measures of other
companies. We believe that Adjusted EBITDA and the ratios
provide additional information regarding our ability to meet our
future debt service, capital expenditures and working capital
requirements. While we believe that Adjusted EBITDA may provide
additional information with respect to our ability to meet our
future debt service, capital expenditures and working capital
requirements, certain functional or legal requirements of our
business may require us to use our available funds for other
purposes. |
The following table reconciles Adjusted EBITDA to net cash
provided by operating activities for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
September 30,
|
|
Fiscal Year Ended March 31,
|
|
|
2007
|
|
2006
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2003
|
|
|
(In thousands)
|
|
Adjusted EBITDA
|
|
$
|
118,234
|
|
|
$
|
83,662
|
|
|
$
|
170,470
|
|
|
$
|
131,856
|
|
|
$
|
140,009
|
|
|
$
|
128,072
|
|
|
$
|
108,556
|
|
Cash items (deducted from) added to Adjusted EBITDA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income tax
|
|
|
(14,636
|
)
|
|
|
(8,627
|
)
|
|
|
(20,383
|
)
|
|
|
(15,191
|
)
|
|
|
(19,995
|
)
|
|
|
(7,059
|
)
|
|
|
(23,083
|
)
|
Interest expense
|
|
|
(9,456
|
)
|
|
|
(6,107
|
)
|
|
|
(10,940
|
)
|
|
|
(14,689
|
)
|
|
|
(15,665
|
)
|
|
|
(16,829
|
)
|
|
|
(14,904
|
)
|
Losses (gains) on asset dispositions
|
|
|
170
|
|
|
|
(4,665
|
)
|
|
|
(10,618
|
)
|
|
|
(102
|
)
|
|
|
(8,039
|
)
|
|
|
(3,943
|
)
|
|
|
(3,734
|
)
|
Loss on extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,205
|
)
|
|
|
|
|
Increase (decrease) in cash from:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(29,400
|
)
|
|
|
(3,172
|
)
|
|
|
(1,428
|
)
|
|
|
(34,718
|
)
|
|
|
(8,612
|
)
|
|
|
10,984
|
|
|
|
533
|
|
Inventories
|
|
|
(13,460
|
)
|
|
|
(5,241
|
)
|
|
|
(10,225
|
)
|
|
|
(12,518
|
)
|
|
|
(5,127
|
)
|
|
|
(4,111
|
)
|
|
|
(6,545
|
)
|
Prepaid expenses and other
|
|
|
(5,676
|
)
|
|
|
(3,798
|
)
|
|
|
(6,634
|
)
|
|
|
(5,925
|
)
|
|
|
(724
|
)
|
|
|
5,232
|
|
|
|
(3,541
|
)
|
Accounts payable
|
|
|
4,635
|
|
|
|
(7,949
|
)
|
|
|
(10,688
|
)
|
|
|
15,944
|
|
|
|
6,889
|
|
|
|
(5,156
|
)
|
|
|
1,621
|
|
Accrued liabilities
|
|
|
2,230
|
|
|
|
7,099
|
|
|
|
5,771
|
|
|
|
(35,397
|
)
|
|
|
11,090
|
|
|
|
(3,192
|
)
|
|
|
(12,735
|
)
|
Other liabilities and deferred credits
|
|
|
(7,241
|
)
|
|
|
(502
|
)
|
|
|
(811
|
)
|
|
|
9,933
|
|
|
|
(538
|
)
|
|
|
795
|
|
|
|
(2,558
|
)
|
Other non-cash items
|
|
|
(1,902
|
)
|
|
|
(2,001
|
)
|
|
|
(84
|
)
|
|
|
72
|
|
|
|
5,185
|
|
|
|
(15,257
|
)
|
|
|
18,777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
43,498
|
|
|
$
|
48,699
|
|
|
$
|
104,430
|
|
|
$
|
39,265
|
|
|
$
|
104,473
|
|
|
$
|
83,331
|
|
|
$
|
62,387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9) |
|
Adjusted Interest Expense means interest expense adjusted to add
capitalized interest and deduct amortization of deferred loan
costs. Adjusted Interest Expense is not a measure of financial
performance or liquidity under GAAP, but is used as a component
of the conditions to debt incurrence, restricted payments and
certain other events under the indenture governing the notes.
Accordingly, it should not be considered as a substitute for
interest expense or any other operating or liquidity measure
prepared in accordance with GAAP. We believe that Adjusted
Interest Expense provides additional information regarding our
ability to meet our future debt service, capital expenditures
and working capital requirements. While we believe that Adjusted
Interest Expense may provide additional information with respect
to our ability to meet our future debt service, capital
expenditures and working capital requirements, |
34
|
|
|
|
|
certain functional or legal requirements of our business may
require us to use our available funds for other purposes. The
following table reconciles Adjusted Interest Expense to interest
expense for the periods presented: |
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
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|
|
|
|
September 30,
|
|
|
Fiscal Year Ended March 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(In thousands)
|
|
|
Interest expense
|
|
$
|
9,456
|
|
|
$
|
6,107
|
|
|
$
|
10,940
|
|
|
$
|
14,689
|
|
|
$
|
15,665
|
|
|
$
|
16,829
|
|
|
$
|
14,904
|
|
Capitalized interest
|
|
|
5,927
|
|
|
|
2,492
|
|
|
|
6,353
|
|
|
|
2,439
|
|
|
|
1,277
|
|
|
|
1,240
|
|
|
|
|
|
Amortization of deferred financing costs
|
|
|
(622
|
)
|
|
|
(498
|
)
|
|
|
(995
|
)
|
|
|
(885
|
)
|
|
|
(662
|
)
|
|
|
(708
|
)
|
|
|
(542
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Interest Expense
|
|
$
|
14,761
|
|
|
$
|
8,101
|
|
|
$
|
16,298
|
|
|
$
|
16,243
|
|
|
$
|
16,280
|
|
|
$
|
17,361
|
|
|
$
|
14,362
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10) |
|
The Ratio of total debt to Adjusted EBITDA presented for the six
months ended September 30, 2007 and 2006 is calculated
based on Adjusted EBITDA for the twelve months ended
September 30, 2007 and 2006. Adjusted EBITDA for the twelve
months ended September 30, 2007 is calculated by adding the
amounts for fiscal year 2007 and the six months ended
September 30, 2007 and then deducting the amount for the
six months ended September 30, 2006. Adjusted EBITDA for
the twelve months ended September 30, 2006 is calculated by
adding the amounts for fiscal year 2006 and the six months ended
September 30, 2006 and then deducting Adjusted EBITDA for
the six months ended September 30, 2005, which totaled
$62.6 million. |
|
(11) |
|
Book capitalization includes total debt, minority interest and
stockholders investment. |
|
(12) |
|
For purposes of determining the ratios of earnings to fixed
charges, earnings are defined as net income before provision for
income taxes and minority interest, undistributed earnings of
unconsolidated equity affiliates, amortization of capitalized
interest and fixed charges, less capitalized interest. Fixed
charges consist of interest (whether expensed or capitalized),
amortization of debt issuance costs, and the estimated interest
portion of rental expense deemed to be representative of
interest. |
DESCRIPTION
OF OTHER INDEBTEDNESS
The following is a summary of certain of our other indebtedness.
This summary does not purport to be complete and is qualified in
its entirety by reference to the provisions in the documents
governing such indebtedness, some of which are filed as exhibits
to our reports filed with the SEC. See Where You Can Find
More Information.
61/8% Senior
Notes due 2013
On June 20, 2003, we completed an offering of
$230.0 million aggregate principal amount outstanding of
the
61/8% notes.
The
61/8% notes
are unsecured and are guaranteed by certain of our
U.S. subsidiaries. The indenture to the
61/8% notes
restricts, among other things, our payment of cash dividends to
stockholders; repurchase of our capital stock or subordinated
indebtedness; incurrence of additional indebtedness or issuance
of disqualified stock (as defined in the indenture);
making of loans, guarantees or investments; creation of liens or
security interests; sale of assets; merger or consolidation with
another company, or sale of all or substantially all of our
assets; and entrance into transactions with affiliates. In
addition, holders of the
61/8% notes
may require us to repurchase all or part of their notes
following a change of control (as defined in the
indenture) of our company. Certain of these restrictions will
cease to apply following the
61/8% notes
receiving an investment grade rating from Moodys and
Standard & Poors, so long as no event of default
has occurred and is continuing. The
61/8% notes
are redeemable at our option; however, any payment or
re-financing of these notes prior to June 2008 is subject to a
make-whole premium and any payment or re-financing after June
2008 but prior to June 2011 is subject to a prepayment premium
(approximately 103%, 102% and 101% in June 2008, 2009 and 2010,
respectively). See Note 5 in the Notes to
Consolidated Financial Statements included in our Annual
Report on
Form 10-K
for the fiscal year ended March 31, 2007
35
and the Quarterly Reports on
Form 10-Q
for the quarterly period ended September 30, 2007,
incorporated herein by reference.
Senior
Secured Credit Facilities
In August 2006, we entered into syndicated senior secured credit
facilities which consist of a $100 million revolving credit
facility (with a subfacility of $25 million for letters of
credit) and a $25 million letter of credit facility. The
aggregate commitments under the revolving credit facility may be
increased to $200 million at our option following our
61/8% notes
receiving an investment grade credit rating from Moodys or
Standard & Poors (so long as the rating of the
other rating agency of such notes is no lower than one level
below investment grade). As of September 30, 2007, our
Moodys and Standard & Poors ratings were
Ba2 and BB, respectively, which are two levels below the
investment grade ratings of Baa3 and BBB-, respectively. In May
2007 and November 2007, we amended the Credit Facilities to
increase the amount of permitted additional indebtedness to
$325 million and $375 million, respectively. The
revolving credit facility may be used for general corporate
purposes, including working capital and acquisitions. The letter
of credit facility is used to issue letters of credit supporting
or securing performance of statutory obligations, surety or
appeal bonds, bid or performance bonds and similar obligations.
Borrowings under the revolving credit facility bear interest at
an interest rate equal to, at our option, either the Base Rate
or LIBOR (or EURIBO, in the case of Euro-denominated borrowings)
plus the applicable margin. Base Rate means the
higher of (1) the prime rate and (2) the Federal Funds
rate plus 0.5% per annum. The applicable margin for borrowings
range from 0.0% and 2.5% depending on whether the Base Rate or
LIBOR is used, and is determined based on our credit rating.
Fees owed on letters of credit issued under either the revolving
credit facility or the letter of credit facility are equal to
the margin for LIBOR borrowings. Based on our current ratings,
the margins on Base Rate and LIBOR borrowings were 0.0% and
1.25%, respectively, as of September 30, 2007. There is
also a commitment fee of 0.25% on undrawn borrowing capacity.
Interest is payable at least quarterly, and the Credit
Facilities mature in August 2011. Our obligations under the
Credit Facilities are guaranteed by certain of our principal
domestic subsidiaries and secured by the accounts receivable,
inventory and equipment (excluding aircraft and their
components) of Bristow Group Inc. and the guarantor
subsidiaries, and the capital stock of certain of our principal
foreign subsidiaries.
In addition, the Credit Facilities include covenants which are
customary for these types of facilities, including certain
financial covenants and restrictions on the ability of Bristow
Group Inc. and its subsidiaries to enter into certain
transactions, including those that could result in the
incurrence of additional liens and indebtedness; the making of
loans, guarantees or investments; sales of assets; payments of
dividends or repurchases of our capital stock; and entering into
transactions with affiliates.
In addition, the Credit Facilities contain various financial
covenants, including, among others:
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|
|
|
|
a covenant to maintain a leverage ratio not greater than
4.00:1.00;
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|
|
|
a covenant to maintain an interest coverage ratio of not less
than 3.00:1.00;
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|
|
|
a covenant not to permit our consolidated net worth at any time
to be less than an amount equal to the sum of
(i) $485,216,000, plus (ii) as of the end of each
fiscal quarter, 50% of our positive cumulative consolidated net
income since March 31, 2006; plus (iii) 100% of the
amount by which our total stockholders investment is
increased as a result of any public or private offering of
capital stock;
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|
a covenant that during the time certain permitted investments
exceed 5% of our consolidated net tangible assets, we will
maintain a ratio of collateral asset value to senior secured
debt of at least 1.20:1.00;
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restrictions on conducting hedging transactions except in the
ordinary course of business;
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|
|
restrictions on amending our material agreements; and
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|
|
|
restrictions on making changes to our accounting practices.
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36
As of September 30, 2007, we had $3.8 million in
letters of credit outstanding under the letter of credit
facility and no borrowings or letters of credit outstanding
under the revolving credit facility.
Term
Loan
Two limited recourse term loans were created in connection with
sale and lease transactions for two aircraft entered into with
Heliair in fiscal year 1999. These limited recourse term loans
were secured by both aircraft and our guarantee of the
underlying lease obligations. In addition, we provided asset
value guarantees totaling up to $3.8 million, payable at
the expiration of the leases depending on the value received for
the aircraft at the time of disposition. As a result of these
guarantees and the terms of the underlying leases, for financial
statement purposes, the aircraft and associated term loans were
reflected on our consolidated balance sheet. In May 2007, BriLog
Leasing Ltd., a subsidiary of ours, completed a new
$18.7 million term loan financing, the proceeds of which
were used to purchase the two aircraft from Heliair in May and
July 2007. Heliair used the sale proceeds to repay the limited
recourse term loans concurrently. This financing and aircraft
purchase did not involve the transfer of cash. See Note 3
in the Notes to Consolidated Financial Statements
included in our Annual Report
Form 10-K
for the fiscal year ended March 31, 2007 and Note 5 in
the Quarterly Report on
Form 10-Q
for the quarterly period ended September 30, 2007,
incorporated herein by reference, for a discussion of our
relationship with Heliair.
The new term loan is repayable by BriLog in quarterly
installments with the first payment of $0.3 million having
been made in June 2007, which will be followed by thirty-two
consecutive quarterly principal payments of $0.6 million,
the first of which was paid in September 2007. Interest is
payable on the new term loan at LIBOR plus a margin of 1.25%
(about 6.48% as of September 30, 2007). The new term loan
is secured by the two aircraft and we have provided a parent
guarantee of the loan.
Sakhalin
Debt
On July 16, 2004, we assumed various existing debt
liabilities that were outstanding and secured against assets
purchased as part of our acquisition of a business in Sakhalin,
Russia. See Note 2 in the Notes to Consolidated
Financial Statements included in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2007 and the Quarterly
Report on
Form 10-Q
for the quarterly period ended September 30, 2007,
incorporated herein by reference for further discussion of our
acquisition. Two promissory notes totaling $1.0 million as
of September 30, 2007 are being repaid over five years at
an interest rate of 8.5% and are scheduled to be fully paid in
2009 and 2010. The other liabilities assumed include a finance
lease on an aircraft totaling $2.4 million as of
September 30, 2007, with an interest rate of 8.5% and
expiring in fiscal year 2009 with a final termination payment of
$2.0 million.
RLR
Note
RLR financed 90% of the purchase price of six aircraft acquired
in July 2003 through a five-year term loan of $31.8 million
with a bank requiring monthly principal and interest payments of
$0.3 million and a balloon payment of $18.3 million
due July 11, 2008 (the RLR Note). The RLR Note
is secured by the six aircraft. The company and other
shareholder have guaranteed 49% and 51%, respectively, of the
RLR Note outstanding as of the most recent July anniversary
date. As of September 30, 2007, the company and other
shareholder had guaranteed $10.3 million and
$10.7 million, respectively. In addition, we have given the
bank a put option, which the bank may exercise if the aircraft
are not returned to the U.S. within 30 days of a
default on the RLR Note. Any such exercise would require us to
purchase the RLR Note from the bank. We simultaneously entered
into a similar agreement with the other RLR shareholder, which
requires that, in event of exercise by the bank of its put
option to us, the other shareholder will be required to purchase
51% of the RLR Note from us. As of September 30, 2007, a
liability of $0.7 million representing the fair value of
this guarantee was reflected in our balance sheet in other
liabilities and deferred credits.
37
U.K.
Facilities
As of September 30, 2007, Bristow Aviation had a
£6.0 million ($12.2 million) facility for bank
guarantees, of which £0.1 million ($0.2 million)
was outstanding, and a £1.0 million
($2.0 million) net overdraft facility, under which no
borrowings were outstanding. Both facilities are with a U.K.
bank. The letter of credit facility is provided on an
uncommitted basis, and outstanding letters of credit bear fees
at a rate of 0.7% per annum. Borrowings under the net overdraft
facility are payable upon demand and bear interest at the
banks base rate plus a spread that can vary between 1% and
3% per annum depending on the net overdraft amount. The net
overdraft facility will be reviewed by the bank annually on
August 31 and is cancelable at any time upon notification from
the bank. The facilities are guaranteed by certain of Bristow
Aviations subsidiaries and secured by a negative pledge of
Bristow Aviations assets.
THE
EXCHANGE OFFER
Participation in the exchange offer is voluntary, and we urge
you to consider carefully whether to accept. Please consult your
financial and tax advisors in making your own decision on what
action to take.
We are offering to issue new registered
71/2% Senior
Notes due 2017 in exchange for a like principal amount of our
outstanding
71/2% Senior
Notes due 2017. We refer to our offer to exchange the
Outstanding Notes for Exchange Notes as the exchange
offer. We may extend, delay or terminate the exchange
offer. Holders of Outstanding Notes who wish to exchange their
notes will need to complete the exchange offer documentation
related to the exchange.
Purpose
and Effect of the Exchange Offer
We sold the Outstanding Notes in transactions that were exempt
from or not subject to the registration requirements under the
Securities Act. Accordingly, the Outstanding Notes are subject
to transfer restrictions. In general, you may not offer or sell
the Outstanding Notes unless either they are registered under
the Securities Act or the offer or sale is exempt from or not
subject to registration under the Securities Act and applicable
state securities laws.
In connection with the sale of the Outstanding Notes, we entered
into a Registration Rights Agreement with the initial purchasers
of the Outstanding Notes. In that agreement, we agreed to file a
registration statement relating to an offer to exchange the
Outstanding Notes for Exchange Notes within 360 days after
the issue date of the Outstanding Notes and to use our
reasonable best efforts to have that registration statement
declared effective by the SEC within 360 days after the
issue date of the Outstanding Notes. We also agreed to keep the
exchange offer open for at least 20 business days after the
date of notice thereof is mailed to the holder. We are offering
the Exchange Notes under this prospectus in an exchange offer
for the Outstanding Notes to satisfy our obligations under the
Registration Rights Agreement.
If,
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on or prior to the time the exchange offer is completed,
existing SEC interpretations are changed such that the Exchange
Notes generally would not be freely transferable without
restriction under the Securities Act;
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the exchange offer has not been completed within 390 days
following the date the Outstanding Notes were first issued;
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|
any initial purchaser of the Outstanding Notes so requests with
respect to such Outstanding Notes (or Additional Notes) not
eligible to be exchanged for Exchange Notes in the exchange
offer; or
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|
any holder (other than a broker-dealer) electing to exchange the
Outstanding Notes acquired for its own account as a result of
market making activities or other trading activities for
Exchange Notes,
|
we will, pursuant to the terms of the Registration Rights
Agreement, use our reasonable best efforts to file with the SEC
a shelf registration statement to cover resales of the
Outstanding Notes.
38
Resale of
Exchange Notes
Based on interpretations of the SEC staff in no action
letters issued to third parties, we believe that each
Exchange Note issued in the exchange offer may be offered for
resale, resold and otherwise transferred by you without
compliance with the registration and prospectus delivery
provisions of the Securities Act if:
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you are not our affiliate within the meaning of
Rule 405 under the Securities Act;
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you acquire such Exchange Notes in the ordinary course of your
business; and
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you are not engaged in, do not intend to engage in and have no
arrangement or understanding with any person to participate in,
a distribution of Exchange Notes.
|
The SEC has not, however, considered the legality of our
exchange offer in the context of a no action letter,
and there can be no assurance that the staff of the SEC would
make a similar determination with respect to our exchange offer
as it has in other circumstances.
If you tender your Outstanding Notes in the exchange offer with
the intention of participating in any manner in a distribution
of the Exchange Notes, you:
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cannot rely on these interpretations by the SEC staff; and
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must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a
secondary resale transaction of the Exchange Notes.
|
Unless an exemption from registration is otherwise available,
the resale by any holder intending to distribute Exchange Notes
should be covered by an effective registration statement under
the Securities Act containing the selling holders
information required by Item 507 or Item 508, as
applicable, of
Regulation S-K
under the Securities Act. This prospectus may be used for an
offer to resell, resale or other retransfer of Exchange Notes
only as specifically described in this prospectus. We have
agreed to make the prospectus available in connection with
resales of the Exchange Notes for up to 90 days from the
completion of the exchange offer. Failure to comply with the
registration and prospectus delivery requirements by a holder
subject to these requirements could result in that holder
incurring liability for which it is not indemnified by us. With
respect to broker-dealers, only those that acquired the
Outstanding Notes for their own account as a result of
market-making activities or other trading activities may
participate in the exchange offer. Each broker-dealer that
receives Exchange Notes in exchange for Outstanding Notes
acquired for its own account as a result of market-making
activities or other trading activities may be deemed to be an
underwriter within the meaning of the Securities Act
and must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Notes. Please read
Plan of Distribution for more details regarding the
transfer of Exchange Notes.
Terms of
the Exchange Offer
Upon the terms and subject to the conditions described in this
prospectus and in the letter of transmittal, we will accept for
exchange any Outstanding Notes properly tendered and not
withdrawn prior to the expiration date of the exchange offer. We
will issue $1,000 principal amount of Exchange Notes in exchange
for each $1,000 principal amount of Outstanding Notes
surrendered under the exchange offer.
Outstanding Notes may be tendered only in integral multiples of
$1,000. The exchange offer is not conditioned upon any minimum
aggregate principal amount of Outstanding Notes being tendered
for exchange.
As of the date of this prospectus, $350.0 million principal
amount of Outstanding Notes is outstanding. This prospectus and
the letter of transmittal are being sent to all registered
holders of Outstanding Notes. There will be no fixed record date
for determining registered holders of Outstanding Notes entitled
to participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the
provisions of the Registration Rights Agreement, the applicable
requirements of the Securities Act and the Securities Exchange
Act of 1934 and the
39
rules and regulations of the SEC. Outstanding Notes that are not
tendered for exchange in the exchange offer will:
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remain outstanding;
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continue to accrue interest; and
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be entitled to the rights and benefits that holders have under
the indenture and, if applicable, the Registration Rights
Agreement.
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However, these Outstanding Notes will not be freely tradable.
Other than in connection with the exchange offer and as
specified in the Registration Rights Agreement, we are not
obligated to, nor do we currently anticipate that we will,
register the Outstanding Notes under the Securities Act. See
Consequences of Failure to Exchange
below.
By signing or agreeing to be bound by the letter of transmittal,
you acknowledge that, upon request, you will execute and deliver
any additional documents deemed by the exchange agent or us to
be necessary or desirable to complete the exchange, assignment
and transfer of the Outstanding Notes tendered by you, including
the transfer of such Outstanding Notes on the account books
maintained by DTC.
We will be deemed to have accepted for exchange properly
tendered Outstanding Notes when we have given oral or written
notice of the acceptance to the exchange agent and complied with
the applicable provisions of the Registration Rights Agreement.
The exchange agent will act as agent for the tendering holders
for the purposes of receiving the Exchange Notes from us.
If you tender Outstanding Notes in the exchange offer, you will
not be required to pay brokerage commissions or fees or, subject
to the instructions in the letter of transmittal, transfer taxes
with respect to the exchange of Outstanding Notes. We will pay
all charges and expenses, other than certain applicable taxes
described below, in connection with the exchange offer. It is
important that you read the section Fees and
Expenses for more details about fees and expenses incurred
in the exchange offer.
We will return any Outstanding Notes that we do not accept for
exchange for any reason without expense to the tendering holder
as promptly as practicable after the expiration or termination
of the exchange offer.
Expiration
Date
The exchange offer will expire at 5:00 p.m., New York City
time, on March 3, 2008, unless sooner terminated or, in our
sole discretion, we extend it.
Extensions;
Delay in Acceptance; Termination or Amendment
We reserve the right, at any time or at various times, to extend
the period of time during which the exchange offer is open.
During any extensions, all Outstanding Notes you have previously
tendered and not withdrawn will remain subject to the exchange
offer, and we may accept them for exchange. We do not currently
intend to extend the expiration date.
To extend the exchange offer, we will notify the exchange agent
orally or in writing of any extension. We also will make a
public announcement of the extension no later than
9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date. Without limiting
the manner in which we may choose to make public announcements
of any delay in acceptance, extension, termination or amendment
of the exchange offer, we have no obligation to publish,
advertise or otherwise communicate any such public announcement,
other than by making a timely release to an appropriate news
agency.
If any of the conditions described below under
Conditions to the Exchange Offer have not been satisfied,
we reserve the right, in our sole discretion to:
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delay accepting for exchange any Outstanding Notes;
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extend the exchange offer; or
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terminate the exchange offer.
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40
We will give oral or written notice of such delay, extension or
termination to the exchange agent. Subject to the terms of the
Registration Rights Agreement, we also reserve the right to
amend the terms of the exchange offer in any manner.
Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered holders of the
Outstanding Notes. If we amend the exchange offer in a manner
that we determine to constitute a material change, we will
promptly disclose that amendment by means of a prospectus
supplement. We will distribute the supplement to the registered
holders of the Outstanding Notes. Depending upon the
significance of the amendment and the manner of disclosure to
the registered holders, we will extend the exchange offer if the
exchange offer would otherwise expire during such period.
Conditions
to the Exchange Offer
Despite any other term of the exchange offer, if in our
reasonable judgment the exchange offer, or the making of any
exchange by a holder of Outstanding Notes, would violate
applicable law or any applicable interpretation of the staff of
the SEC or would be impaired by any action or proceeding that
has been instituted or threatened in any court or by or before
any governmental agency with respect to the exchange offer:
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we will not be required to accept for exchange, or exchange any
Exchange Notes for, any Outstanding Notes; and
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we may terminate the exchange offer before accepting any
Outstanding Notes for exchange.
|
In addition, we will not be obligated to accept for exchange the
Outstanding Notes of any holder that has not made to us:
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the representations described below under
Procedures for Tendering and in the letter of
transmittal; and
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such other representations as may be reasonably necessary under
applicable SEC rules, regulations or interpretations to make
available to us an appropriate form for registering the Exchange
Notes under the Securities Act.
|
We reserve the right to amend or terminate the exchange offer,
and to reject for exchange any Outstanding Notes not previously
accepted for exchange in the exchange offer, upon the occurrence
of any of the conditions to that exchange offer specified above.
We will give oral or written notice of any extension, amendment,
nonacceptance or termination to the holders of Outstanding Notes
as promptly as practicable.
These conditions are for our sole benefit, and we may assert
them or waive them in whole or in part at any time or at various
times in our sole discretion. Our failure at any time to
exercise any of these rights will not mean that we have waived
our rights. Each right will be deemed an ongoing right that we
may assert at any time or at various times.
In addition, we will not accept for exchange any Outstanding
Notes tendered, and will not issue Exchange Notes in exchange
for any such Outstanding Notes, if at that time any stop order
has been threatened or is in effect with respect to the
registration statement of which this prospectus constitutes a
part or the qualification of the indenture relating to the notes
under the Trust Indenture Act of 1939.
Procedures
for Tendering
How to
Tender Generally
Only a registered holder of Outstanding Notes may tender its
Outstanding Notes in the exchange offer. If you are a beneficial
owner of Outstanding Notes and wish to have the registered owner
tender on your behalf, please see How to Tender if
You Are a Beneficial Owner below. To tender in the
exchange offer, a holder must either comply with the procedures
for manual tender or comply with the automated tender offer
program procedures of DTC described below under
Tendering Through DTCs Automated Tender Offer
Program.
41
To complete a manual tender, a holder must:
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complete, sign and date the letter of transmittal or a facsimile
of the letter of transmittal;
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have the signature on the letter of transmittal guaranteed if
the letter of transmittal so requires; and
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mail or deliver the letter of transmittal or facsimile of the
letter of transmittal to the exchange agent prior to the
expiration date; and
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deliver, and the exchange agent must receive, before the
expiration date:
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the Outstanding Notes along with the letter of
transmittal, or
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a timely confirmation of book-entry transfer of the Outstanding
Notes into the exchange agents account at DTC according to
the procedure for book-entry transfer described below under
Book Entry Transfer.
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If you wish to tender your Outstanding Notes and cannot comply
with the requirement to deliver the letter of transmittal and
your Outstanding Notes (including by book-entry transfer) or use
the automated tender offer program of DTC described below before
the expiration date, you must tender your Outstanding Notes
according to the guaranteed delivery procedures described below.
To be tendered effectively, the exchange agent must receive any
physical delivery of the letter of transmittal and other
required documents at its address provided above under
Prospectus Summary The Exchange Agent
prior to the expiration date.
The tender by a holder that is not withdrawn prior to the
expiration date and our acceptance of that tender will
constitute a legally binding agreement between the holder and us
in accordance with the terms and subject to the conditions
described in this prospectus and in the letter of transmittal.
The method of delivery of Outstanding Notes, the letter of
transmittal and all other required documents to the exchange
agent is at your election and risk. Rather than mail these
items, we recommend that you use an overnight or courier
service. In all cases, you should allow sufficient time to
assure delivery to the exchange agent before the expiration
date. You should not send the letter of transmittal or
Outstanding Notes to us. You may request your broker, dealer,
commercial bank, trust company or other nominee to effect the
above transactions for you.
Book-Entry
Transfer
The exchange agent will make a request to establish an account
with respect to the Outstanding Notes at DTC for purposes of the
exchange offer promptly after the date of this prospectus. Any
financial institution participating in DTCs system may
make book-entry delivery of Outstanding Notes by causing DTC to
transfer such Outstanding Notes into the exchange agents
account at DTC in accordance with DTCs procedures for
transfer. If you are unable to deliver confirmation of the
book-entry tender of your Outstanding Notes into the exchange
agents account at DTC or all other documents required by
the letter of transmittal to the exchange agent on or prior to
the expiration date, you must tender your Outstanding Notes
according to the guaranteed delivery procedures described below.
Tendering
Through DTCs Automated Tender Offer Program
The exchange agent and DTC have confirmed that any financial
institution that is a participant in DTCs system may use
DTCs automated tender offer program to tender its
Outstanding Notes. Accordingly, participants in the program may,
instead of physically completing and signing the letter of
transmittal and delivering it to the exchange agent, transmit
their acceptance of the exchange offer electronically. They may
do so by causing DTC to transfer the Outstanding Notes to the
exchange agent in accordance with its procedures for transfer.
DTC will then send an agents message to the exchange agent.
42
An agents message is a message transmitted by
DTC to and received by the exchange agent and forming part of
the book-entry confirmation, stating that:
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DTC has received an express acknowledgment from a participant in
DTCs automated tender offer program that is tendering
Outstanding Notes that are the subject of such book-entry
confirmation;
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the participant has received and agrees to be bound by the terms
of the letter of transmittal or, in the case of an agents
message relating to guaranteed delivery, the participant has
received and agrees to be bound by the applicable notice of
guaranteed delivery; and
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we may enforce the agreement against the participant.
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How to
Tender if You Are a Beneficial Owner
If you beneficially own Outstanding Notes that are registered in
the name of a broker, dealer, commercial bank, trust company or
other nominee and you wish to tender those notes, you should
contact the registered holder as soon as possible and instruct
the registered holder to tender on your behalf. If you are a
beneficial owner and wish to tender on your own behalf, you
must, prior to completing and executing the letter of
transmittal and delivering your Outstanding Notes, either:
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make appropriate arrangements to register ownership of the
Outstanding Notes in your name; or
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obtain a properly completed bond power from the registered
holder of your Outstanding Notes.
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The transfer of registered ownership may take considerable time
and may not be completed prior to the expiration date.
Signatures
and Signature Guarantees
You must have signatures on a letter of transmittal or a notice
of withdrawal described below under Withdrawal
of Tenders guaranteed by an eligible
institution unless the Outstanding Notes are tendered:
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by a registered holder who has not completed the box entitled
Special Issuance Instructions or Special
Delivery Instructions on the letter of transmittal and the
Exchange Notes are being issued directly to the registered
holder of the Outstanding Notes tendered in the exchange offer
for those Exchange Notes; or
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for the account of an eligible institution.
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An eligible institution is a member firm of a
registered national securities exchange or of the National
Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United
States, or an eligible guarantor institution within
the meaning of
Rule 17Ad-15
under the Exchange Act, in each case that is a member of one of
the recognized signature guarantee programs identified in the
letter of transmittal.
When
Endorsements or Bond Powers Are Needed
If a person other than the registered holder of any Outstanding
Notes signs the letter of transmittal, the Outstanding Notes
must be endorsed properly or accompanied by a properly completed
bond power. The registered holder must sign the bond power as
the registered holders name appears on the Outstanding
Notes. An eligible institution must guarantee that signature.
If the letter of transmittal or any Outstanding Notes or bond
powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, those persons
should so indicate when signing. Unless we waive this
requirement, they also must submit evidence satisfactory to us
of their authority to deliver the letter of transmittal.
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Determinations
Under the Exchange Offer
We will determine, in our sole discretion, all questions as to
the validity, form, eligibility, time of receipt, acceptance of
tendered Outstanding Notes and withdrawal of tendered
Outstanding Notes. Our determinations will be final and binding.
We reserve the absolute right to reject any Outstanding Notes
not properly tendered or any Outstanding Notes our acceptance of
which would, in the opinion of our counsel, be unlawful. We also
reserve the absolute right to waive any defects, irregularities
or conditions of the exchange offer as to particular Outstanding
Notes. Our interpretation of the terms and conditions of the
exchange offer, including the instructions in the letter of
transmittal, will be final and binding on all parties.
Unless waived, any defects or irregularities in connection with
tenders of Outstanding Notes must be cured within the time we
determine. Neither we, the exchange agent nor any other person
will be under any duty to give notification of defects or
irregularities with respect to tenders of Outstanding Notes, nor
will we or those persons incur any liability for failure to give
such notification. Tenders of Outstanding Notes will not be
deemed made until such defects or irregularities have been cured
or waived. Any Outstanding Notes received by the exchange agent
that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned to
the tendering holder, unless otherwise provided in the letter of
transmittal, as soon as practicable following the expiration
date.
When
We Will Issue Exchange Notes
In all cases, we will issue Exchange Notes for Outstanding Notes
that we have accepted for exchange in the exchange offer only
after the exchange agent timely receives:
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Outstanding Notes or book-entry confirmation of such Outstanding
Notes into the exchange agents account at DTC; and
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a properly completed and duly executed letter of transmittal and
all other required documents or a properly transmitted
agents message.
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Return
of Outstanding Notes Not Accepted or Exchanged
If we do not accept any tendered Outstanding Notes for exchange
for any reason described in the terms and conditions of the
exchange offer or if Outstanding Notes are submitted for a
greater principal amount than the holder desires to exchange, we
will return the unaccepted or non-exchanged Outstanding Notes
without expense to their tendering holder. In the case of
Outstanding Notes tendered by book-entry transfer into the
exchange agents account at DTC according to the procedures
described above, such non-exchanged Outstanding Notes will be
credited to an account maintained with DTC. These actions will
occur as promptly as practicable after the expiration or
termination of the exchange offer.
Your
Representations to Us
By signing or agreeing to be bound by the letter of transmittal,
you will represent to us that, among other things:
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any Exchange Notes that you receive will be acquired in the
ordinary course of your business;
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you have no arrangement or understanding with any person to
participate in the distribution of the Outstanding Notes or the
Exchange Notes within the meaning of the Securities Act;
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you are not our affiliate, as defined in
Rule 405 of the Securities Act, or, if you are our
affiliate, you will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent
applicable;
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if you are not a broker-dealer, you are not engaged in, and do
not intend to engage in, the distribution of the Exchange Notes;
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if you are a broker-dealer, you will receive Exchange Notes in
exchange for Outstanding Notes that you acquired for your own
account as a result of market-making activities or other trading
activities, and
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you will deliver a prospectus in connection with any resale of
such Exchange Notes. It is understood that you are not admitting
that you are an underwriter within the meaning of
the Securities Act by acknowledging that you will deliver, and
by delivery of, a prospectus;
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if you are a broker-dealer, you did not purchase the Outstanding
Notes to be exchanged for the Exchange Notes from us; and
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you are not acting on behalf of any person who could not
truthfully and completely make the foregoing representations.
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If you tender in the exchange offer for the purpose of
participating in a distribution of the Exchange Notes:
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you cannot rely on the applicable interpretations of the
SEC; and
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you must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a
secondary resale transaction.
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Guaranteed
Delivery Procedures
If you wish to tender your Outstanding Notes but they are not
immediately available or if you cannot deliver your Outstanding
Notes (including by book-entry transfer), the letter of
transmittal or any other required documents to the exchange
agent or comply with the applicable procedures under DTCs
automated tender offer program prior to the expiration date, you
may tender if:
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the tender is made by or through an eligible institution;
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prior to 5:00 p.m., New York City time, on the expiration
date, the exchange agent receives from that eligible institution
either a properly completed and duly executed notice of
guaranteed delivery by facsimile transmission, mail, courier or
overnight delivery or a properly transmitted agents
message relating to a notice of guaranteed delivery;
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stating your name and address, the registration number or
numbers of your Outstanding Notes and the principal amount of
Outstanding Notes tendered;
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stating that the tender is being made thereby; and
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guaranteeing that, within three New York Stock Exchange trading
days after the expiration date of the exchange offer, the letter
of transmittal or facsimile thereof or agents message in
lieu thereof, together with the Outstanding Notes or a
book-entry confirmation, and any other documents required by the
letter of transmittal, will be deposited by the eligible
institution with the exchange agent; and
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the exchange agent receives such properly completed and executed
letter of transmittal or facsimile or agents message, as
well as all tendered Outstanding Notes in proper form for
transfer or a book-entry confirmation, and all other documents
required by the letter of transmittal, within three New York
Stock Exchange trading days after the expiration date.
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Upon request to the exchange agent, the exchange agent will send
a notice of guaranteed delivery to you if you wish to tender
your Outstanding Notes according to the guaranteed delivery
procedures described above.
Withdrawal
of Tenders
Except as otherwise provided in this prospectus, you may
withdraw your tender at any time prior to 5:00 p.m., New
York City time, on the expiration date unless we have previously
accepted your Outstanding Notes for exchange. For a withdrawal
to be effective:
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the exchange agent must receive a written notice of withdrawal
at one of the addresses listed above under Prospectus
Summary The Exchange Agent; or
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the withdrawing holder must comply with the appropriate
procedures of DTCs automated tender offer program.
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Any notice of withdrawal must:
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specify the name of the person who tendered the Outstanding
Notes to be withdrawn;
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identify the Outstanding Notes to be withdrawn, including the
registration number or numbers and the principal amount of such
Outstanding Notes;
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be signed by the person who tendered the Outstanding Notes in
the same manner as the original signature on the letter of
transmittal used to deposit those Outstanding Notes, or be
accompanied by documents of transfer sufficient to permit the
trustee to register the transfer into the name of the person
withdrawing the tender; and
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specify the name in which such Outstanding Notes are to be
registered, if different from that of the person who tendered
the Outstanding Notes.
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If Outstanding Notes have been tendered under the procedure for
book-entry transfer described above, any notice of withdrawal
must specify the name and number of the account at DTC to be
credited with the withdrawn Outstanding Notes and otherwise
comply with the procedures of DTC.
We will determine, in our sole discretion, all questions as to
the validity, form, eligibility and time of receipt of notice of
withdrawal, and our determination will be final and binding on
all parties. We will deem any Outstanding Notes so withdrawn not
to have been validly tendered for exchange for purposes of the
exchange offer.
Any Outstanding Notes that have been tendered for exchange but
that are not exchanged for any reason will be returned to their
holder without cost to the holder or, in the case of Outstanding
Notes tendered by book-entry transfer into the exchange
agents account at DTC according to the procedures
described above, such Outstanding Notes will be credited to an
account maintained with DTC for the Outstanding Notes. This
return or crediting will take place as soon as practicable after
withdrawal, rejection of tender or termination of the exchange
offer. You may retender properly withdrawn Outstanding Notes by
following one of the procedures described under
Procedures for Tendering above at any
time on or prior to 5:00 p.m. New York City time,
on the expiration date.
Fees and
Expenses
We will bear the expenses of soliciting tenders. The principal
solicitation is being made by mail; however, we may make
additional solicitation by facsimile, email, telephone or in
person by our officers and regular employees and those of our
affiliates.
We have not retained any dealer-manager in connection with the
exchange offer and will not make any payments to broker-dealers
or others soliciting acceptances of the exchange offer. We will,
however, pay the exchange agent reasonable and customary fees
for its services and reimburse it for its related reasonable
out-of-pocket expenses. We may also pay brokerage houses and
other custodians, nominees and fiduciaries the reasonable
out-of-pocket expenses incurred by them in forwarding copies of
this prospectus, letters of transmittal and related documents to
the beneficial owners of the Outstanding Notes and in handling
or forwarding tenders for exchange.
We will pay the cash expenses to be incurred in connection with
the exchange offer including:
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SEC registration fees;
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fees and expenses of the exchange agent and trustee;
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accounting and legal fees and printing costs; and
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related fees and expenses.
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Transfer
Taxes
We will pay all transfer taxes, if any, applicable to the
exchange of Outstanding Notes in the exchange offer. The
tendering holder will, however, be required to pay any transfer
taxes, whether imposed on the registered holder or any other
person, if:
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certificates representing Exchange Notes or Outstanding Notes
for principal amounts not tendered or accepted for exchange are
to be delivered to, or are to be issued in the name of, any
person other than the registered holder of Outstanding Notes
tendered;
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tendered Outstanding Notes are registered in the name of any
person other than the person signing the letter of
transmittal; or
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a transfer tax is imposed for any reason other than the exchange
of Outstanding Notes in the exchange offer.
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If satisfactory evidence of payment of any transfer taxes
payable by a tendering holder is not submitted with the letter
of transmittal, the amount of such transfer taxes will be billed
directly to that tendering holder. The exchange agent will
retain possession of Exchange Notes with a face amount at least
equal to the amount of the transfer taxes due until it receives
payment of the taxes.
Consequences
of Failure to Exchange
If you do not tender your Outstanding Notes for Exchange Notes
in the exchange offer, or if you tender your Outstanding Notes
but subsequently withdraw them, your Outstanding Notes will
remain outstanding and continue to accrue interest, but will not
retain any exchange or registration rights under the
Registration Rights Agreement (except in limited circumstances
involving the initial purchasers of the Outstanding Notes and
certain persons to whom the exchange offer is not available) or
accrue additional interest under that agreement. In addition,
your notes will remain subject to the existing restrictions on
transfer. In general, you may not offer or sell the Outstanding
Notes unless they are registered under the Securities Act or the
offer or sale is exempt from registration under the Securities
Act and applicable state securities laws. Except as required by
the Registration Rights Agreement, we do not intend to register
resales of the Outstanding Notes under the Securities Act.
The tender of Outstanding Notes in the exchange offer will
reduce the principal amount of the Outstanding Notes
outstanding. Due to the corresponding reduction in liquidity,
this may have an adverse effect upon, and increase the
volatility of, the market price of any Outstanding Notes that
you continue to hold following completion of the exchange
offer.
Accounting
Treatment
We will not recognize a gain or loss for accounting purposes
upon the consummation of the exchange offer. We will amortize
our expenses of the exchange offer over the term of Exchange
Notes in accordance with U.S. generally accepted accounting
principles.
Other
Participation in the exchange offer is voluntary, and you should
carefully consider whether to accept. You are urged to consult
your financial and tax advisors in making your decision on what
action to take. In the future, we may seek to acquire untendered
Outstanding Notes in open market or privately negotiated
transactions, through subsequent exchange offers or otherwise.
We have no present plan to acquire any Outstanding Notes that
are not tendered in the exchange offer or to file a registration
statement to permit resales of any untendered Outstanding Notes,
except as required by the Registration Rights Agreement.
47
DESCRIPTION
OF THE EXCHANGE NOTES
The Outstanding Notes were, and the Exchange Notes will be,
issued under the indenture dated as of June 13, 2007 (the
Indenture), among the Company, the Guarantors and
U.S. Bank National Association, as trustee (the
Trustee). The terms of the Notes include those
stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended
(the Trust Indenture Act). The Exchange Notes
will be subject to all such terms, and prospective investors are
referred to the Indenture and the Trust Indenture Act for a
statement thereof. We may issue an unlimited principal amount of
additional notes having identical terms and conditions as the
Notes (the Additional Notes), subject to compliance
with the covenant described below under
Certain Covenants Limitation on
Incurrence of Indebtedness and Issuance of Preferred
Stock. Any Additional Notes will be part of the same issue
as the Notes and will vote on all matters with the holders of
such Notes.
We are filing a registration statement to enable holders of
Outstanding Notes to exchange their Notes for publicly
registered Notes having substantially identical terms, except
for provisions relating to transfer restrictions and additional
interest. The Outstanding Notes, and the Exchange Notes issued
in the exchange offer, will constitute a single series of
securities under the Indenture and therefore will vote together
as a single class for purposes of determining whether holders of
the requisite percentage in aggregate principal amount thereof
have taken actions or exercised rights they are entitled to take
or exercise under the Indenture. We are required under specified
circumstances to file a shelf registration statement to cover
resales of the Outstanding Notes. If we fail to satisfy
specified obligations under the Registration Rights Agreement,
we may be required to pay additional interest (Additional
Interest) to holders of the Outstanding Notes.
The following description is a summary of the material
provisions of the Indenture and the Registration Rights
Agreement. It does not restate those agreements in their
entirety. We urge you to read the Indenture and the Registration
Rights Agreement because they, and not this description, define
your rights as holders of the Exchange Notes. Copies of the
Indenture and the Registration Rights Agreement are available as
set forth below under Additional
Information. As used in this Description of the
Exchange Notes, the Company means Bristow
Group Inc., but not any of its subsidiaries. The definitions of
certain terms used in the following summary are set forth below
under Registration Rights; Additional
Interest and Certain Definitions.
Certain defined terms used but not defined below under
Certain Definitions have the meanings
assigned to them in the Indenture.
Brief
Description of the Notes and the Subsidiary Guarantees
General
The Notes:
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are general unsecured, senior obligations;
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were issued in an aggregate principal amount of
$350 million, subject to our ability to issue Additional
Notes;
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mature on September 15, 2017;
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will be issued in denominations of $2,000 and integral multiples
of $1,000 thereafter;
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are represented by one or more registered notes in global form,
but in certain circumstances may be represented by notes in
definitive form;
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rank equally in right of payment to any other senior
Indebtedness of the Company;
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rank effectively junior in right of payment to any secured
Indebtedness of the Company;
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rank senior in right of payment to any subordinated Indebtedness
of the Company; and
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are unconditionally guaranteed on a senior basis by all of the
Companys material domestic Restricted Subsidiaries.
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The Subsidiary Guarantees:
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are general unsecured, senior obligations of the Guarantors;
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rank equally in right of payment to any other senior
Indebtedness of the Guarantors;
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rank effectively junior in right of payment to any secured
Indebtedness of the Guarantors; and
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rank senior in right of payment to any future subordinated
Indebtedness of the Guarantors.
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Not all of our Subsidiaries will guarantee the Notes. In the
event of a bankruptcy, liquidation or reorganization of any of
these non-guarantor Subsidiaries, the non-guarantor Subsidiaries
will pay the holders of their debt and their trade creditors
before they will be able to distribute any of their assets to
us. The Guarantors generated approximately 34% and 37% of our
operating revenue in the six months ended September 30,
2007 and fiscal year 2007, respectively, approximately 47% and
48% of operating income in the six months ended
September 30, 2007 and fiscal year 2007, respectively, and
held approximately 50% of our consolidated assets as of
September 30, 2007. As of September 30, 2007, on an as
adjusted basis after giving effect to the offering on
November 13, 2007 of $50 million of Notes and our use
of proceeds therefrom, the Notes and the Subsidiary Guarantees
would have ranked effectively junior in right of payment to
$385.9 million of Indebtedness and other liabilities,
including trade payables, of our non-guarantor Subsidiaries.
As of the Initial Issuance Date, all of the Companys
Subsidiaries were Restricted Subsidiaries. Under certain
circumstances, the Company will be able to designate current or
future Subsidiaries as Unrestricted Subsidiaries. Unrestricted
Subsidiaries will not be subject to many of the restrictive
covenants set forth in the Indenture.
Payments
on the Notes; Paying Agent and Registrar
We will pay principal of, premium, if any, and Additional
Interest, if any, on the Notes at the office or agency
designated by the Company in the Borough of Manhattan, The City
of New York, except that we may, at our option, pay interest on
the Notes by check mailed to holders of the Notes at their
registered address as it appears in the Registrars books.
We have initially designated the corporate trust office or
agency of the Trustee in New York, New York to act as our Paying
Agent and Registrar. We may, however, change the Paying Agent or
Registrar without prior notice to the holders of the Notes, and
the Company or any of its Restricted Subsidiaries may act as
Paying Agent or Registrar.
We will pay principal of, premium, if any, and Additional
Interest, if any, on, each Note in global form registered in the
name of or held by The Depository Trust Company
(DTC) or its nominee in immediately available funds
to DTC or its nominee, as the case may be, as the registered
holder of such global Note.
Transfer
and Exchange
A holder may transfer or exchange Notes in accordance with the
Indenture. The Registrar and the Trustee may require a holder,
among other things, to furnish appropriate endorsements and
transfer documents. No service charge will be imposed by the
Company, the Trustee or the Registrar for any registration of
transfer or exchange of Notes, but the Company may require a
holder to pay a sum sufficient to cover any transfer tax or
other governmental taxes and fees required by law or permitted
by the Indenture. The Company is not required to transfer or
exchange any Note selected for redemption. Also, the Company is
not required to transfer or exchange any Note for a period of
15 days before a selection of Notes to be redeemed.
The registered holder of a Note will be treated as the owner of
it for all purposes, and all references to holders
in this Description of Notes are to registered
holders unless otherwise indicated.
Principal,
Maturity and Interest
The Company issued the Initial Notes with a maximum aggregate
principal amount of $350.0 million, which includes
Additional Notes with an aggregate principal of
$50.0 million. The Company may issue
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Additional Notes from time to time. Any offering of Additional
Notes is subject to the covenant described below under
Certain Covenants Limitation on
Incurrence of Indebtedness and Issuance of Preferred
Stock. The Initial Notes and any Additional Notes
subsequently issued under the Indenture will be treated as a
single class for all purposes under the Indenture, including,
without limitation, waivers, amendments, redemptions and offers
to purchase. The Company will issue Exchange Notes in
denominations of $2,000 and integral multiples of $1,000. The
Notes mature on September 15, 2017.
Interest on the Exchange Notes will accrue from
September 15, 2007 at the rate of
71/2%
per annum and will be payable semiannually in arrears on March
15 and September 15, with the first payment on
March 15, 2008. The Company will make each interest payment
to the holders of record on the immediately preceding March 1
and September 1.
Interest on the Exchange Notes will accrue from the date of
original issuance of the Outstanding Notes or, if interest has
already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a
360-day year
comprised of twelve
30-day
months.
We also will pay Additional Interest to holders of the Notes if
we fail to complete the Exchange Offer described in the
Registration Rights Agreement within the time periods specified
in the Registration Rights Agreement or if certain other
conditions contained in the Registration Rights Agreement are
not satisfied. See Registration Rights;
Additional Interest.
Methods
of Receiving Payments on the Notes
If a holder of at least $1.0 million principal amount of
Notes has given wire transfer instructions to the Company, the
Company will pay all principal, interest and premium and
Additional Interest, if any, on that holders Notes in
accordance with those instructions. All other payments on Notes
will be made at the corporate trust office or agency of the
Trustee within the City and State of New York unless the Company
elects to make interest payments by check mailed at their
address set forth in the register of holders.
Subsidiary
Guarantees
The Companys payment obligations under the Notes are
jointly and severally guaranteed (the Subsidiary
Guarantees) by all of the Companys present material
domestic and certain future Subsidiaries (the
Guarantors). The subsidiaries guaranteeing the
71/2%
senior notes due 2017 are the same subsidiaries that are
currently guarantors of the
61/8%
senior notes due 2013. Initially, the Guarantors will be the
same Persons who currently guarantee the Companys
71/2% Senior
Notes due 2017, and neither Bristow Aviation nor its
Subsidiaries will be Guarantors. In the circumstances described
under Certain Covenants Additional
Subsidiary Guarantees, the Indenture requires certain of
the Companys Subsidiaries to execute supplements to the
Indenture providing for Subsidiary Guarantees. The obligations
of each Guarantor under its Subsidiary Guarantee will be a
general unsecured obligation of such Guarantor, ranking equal in
right of payment with all other senior indebtedness of such
Guarantor and senior in right of payment to any subordinated
indebtedness of such Guarantor.
No Guarantor may consolidate with or merge with or into (whether
or not such Guarantor is the surviving Person) another Person
(other than the Company or another Guarantor), whether or not
affiliated with such Guarantor, unless
(1) subject to the provisions of the following paragraph,
the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) shall execute a supplement
to the Indenture providing for a Guarantee and deliver an
Opinion of Counsel in accordance with the terms of the Indenture;
(2) immediately after giving effect to such transaction, no
Default or Event of Default exists; and
(3) no Default or Event of Default shall have occurred and
be continuing.
In the event of a sale or other disposition (including by way of
merger or consolidation) of all or substantially all of the
assets or all of the Capital Stock of any Guarantor owned by the
Company or its
50
Subsidiaries, then such Guarantor will be released and relieved
of any obligations under its Subsidiary Guarantee; provided,
however, that the Net Proceeds of such sale or other disposition
are applied in accordance with the applicable provisions of the
Indenture. See Certain Covenants
Limitation on Asset Sales. Upon Legal Defeasance or
Covenant Defeasance, each Guarantor will be released and
relieved of any obligations under its Subsidiary Guarantee. In
addition, in the event the Board of Directors designates a
Guarantor to be an Unrestricted Subsidiary, then such Guarantor
will be released and relieved of any obligations under its
Subsidiary Guarantee, provided that such designation is
conducted in accordance with the applicable provisions of the
Indenture.
Optional
Redemption
On and after September 15, 2012 the Notes will be subject
to redemption at any time at the option of the Company, in whole
or in part, at the redemption prices (expressed as percentages
of principal amount) set forth below, plus accrued and unpaid
interest and Additional Interest, if any, to the applicable
redemption date, if redeemed during the 12 month period
beginning on September 15 of the years indicated below:
|
|
|
|
|
Year
|
|
Percentage
|
|
|
2012
|
|
|
103.750%
|
|
2013
|
|
|
102.500%
|
|
2014
|
|
|
101.250%
|
|
2015 and thereafter
|
|
|
100.000%
|
|
On or prior to September 15, 2010, the Company may on one
or more occasions redeem up to 35% of the aggregate principal
amount of Notes (including any Additional Notes) issued at a
redemption price of 107.5% of the principal amount of the Notes,
plus accrued and unpaid interest and Additional Interest, if
any, to the redemption date, with the net cash proceeds of one
or more Qualified Equity Offerings, provided that:
(1) at least 65% of the aggregate principal amount of Notes
(including any Additional Notes) issued remains outstanding
immediately after the occurrence of each such
redemption; and
(2) each such redemption occurs within 180 days of the
date of the closing of each such Qualified Equity Offering.
Prior to September 15, 2012, the Company may at its option
redeem all, but not less than all, of the Notes at a redemption
price equal to 100% of the principal amount of the Notes plus
the Applicable Premium as of, and accrued and unpaid interest
and Additional Interest, if any, to, the redemption date.
Applicable Premium means, with respect to a
Note at any redemption date, the greater of (a) 1.0% of the
principal amount of such Note and (b) the excess of
(A) the present value at such redemption date of
(1) the redemption price of such Note on September 15,
2012 (such redemption price being described in the first
paragraph of this Optional Redemption
section exclusive of any accrued and unpaid interest and
Additional Interest, if any) plus (2) all required
remaining scheduled interest payments due on such Note through
September 15, 2012 (but excluding accrued and unpaid
interest and Additional Interest, if any, to the redemption
date), computed using a discount rate equal to the Adjusted
Treasury Rate, over (B) the principal amount of such Note
on such redemption date.
Adjusted Treasury Rate means, with respect to
any redemption date, (a) the yield, under the heading which
represents the average for the immediately preceding week,
appearing in the most recently published statistical release
designated H.15(519) or any successor publication
which is published weekly by the Board of Governors of the
Federal Reserve System and which establishes yields on actively
traded United States Treasury securities adjusted to constant
maturity under Treasury Constant Maturities, for the
maturity corresponding to the Comparable Treasury Issue (if no
maturity is within three months before or after
September 15, 2012, yields for the two published maturities
most closely corresponding to the Comparable Treasury Issue
shall be determined and the Adjusted Treasury Rate shall be
interpolated or extrapolated from such yields on a straight line
basis, rounding to the nearest month) or (b) if such
release (or any successor release) is not published during the
week preceding the calculation date or does not contain such
yields, the
51
rate per year equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date, in each case calculated
on the third Business Day (defined as each day that
is not a Saturday, Sunday or other day on which banking
institutions in Houston, Texas or New York, New York are
authorized or required by law, regulations or executive order to
be closed) immediately preceding the redemption date, plus 0.50%.
Comparable Treasury Issue means the United
States Treasury security selected by the Quotation Agent as
having a maturity comparable to the remaining term of the Notes
from the redemption date to September 15, 2012, that would
be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate
debt securities of a maturity most nearly equal to
September 15, 2012.
Comparable Treasury Price means, with respect
to any redemption date, if clause (b) of the Adjusted
Treasury Rate is applicable, the average of three, or such
lesser number as is obtained by the Trustee, Reference Treasury
Dealer Quotations for such redemption date.
Quotation Agent means the Reference Treasury
Dealer selected by the Trustee after consultation with the
Company.
Reference Treasury Dealer means Goldman,
Sachs & Co. and its successors and assigns, and two
other nationally recognized investment banking firms selected by
the Company that are primary U.S. Government securities
dealers.
Reference Treasury Dealer Quotations means,
with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue,
expressed in each case as a percentage of its principal amount,
quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time, on the third
Business Day immediately preceding such redemption date.
If the optional redemption date is on or after an interest
payment record date and on or before the related interest
payment date, the accrued and unpaid interest and Additional
Interest, if any, will be paid to the Person in whose name the
Note is registered at the close of business, on such record
date, and no Additional Interest will be payable to holders
whose Notes will be subject to redemption by the Company.
Selection
and Notice
If less than all of the Notes are to be redeemed at any time,
selection of Notes for redemption will be made by the Trustee on
a pro rata basis, by lot or by such method as the Trustee shall
deem fair and appropriate; provided, however, that no Notes of
$1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more
than 60 days before the redemption date to each holder of
Notes to be redeemed at its registered address. Notices of
redemption may not be conditional. If any Note is to be redeemed
in part only, the notice of redemption that relates to such Note
shall state the portion of the principal amount to be redeemed.
A new Note in principal amount equal to the unredeemed portion
will be issued in the name of the holder upon cancellation of
the original Note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date,
interest ceases to accrue on Notes or portions of them called
for redemption.
Mandatory
Redemption
Except as set forth below under Repurchase at
the Option of Holders, or Certain
Covenants Limitation on Asset Sales, the
Company is not required to make mandatory redemption or sinking
fund payments with respect to the Notes or to repurchase the
Notes at the option of the holders.
Repurchase
at the Option of Holders
If a Change of Control Trigger Event occurs, the Company will be
required to make an offer (a Change of Control
Offer) to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of each
52
holders Notes at an offer price in cash equal to 101% of
the aggregate principal amount, plus accrued and unpaid interest
and Additional Interest, if any, to the date of repurchase (the
Change of Control Payment). Within 30 days
following a Change of Control Trigger Event, the Company will
mail a notice to each holder of Notes and the Trustee describing
the transaction that constitutes the Change of Control Trigger
Event and offering to repurchase Notes on the date specified in
such notice, which date shall be no earlier than 30 days
and no later than 60 days from the date such notice is
mailed (the Change of Control Payment Date),
pursuant to the procedures required by the Indenture and
described in such notice. The Company will comply with the
requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations thereunder to the extent such laws and regulations
are applicable in connection with the repurchase of Notes as a
result of a Change of Control Trigger Event. To the extent that
the provisions of any securities laws or regulations conflict
with provisions of the Indenture, the Company will comply with
the applicable securities laws and regulations and will not be
deemed to have breached its obligations described in the
Indenture by virtue of the conflict.
On or before the Change of Control Payment Date, the Company
will, to the extent lawful:
(1) accept for payment all Notes or portions thereof (in
integral multiples of $1,000) properly tendered pursuant to the
Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the
Change of Control Payment in respect of all Notes or portions
thereof so tendered; and
(3) deliver or cause to be delivered to the Trustee the
Notes so accepted together with an Officers Certificate
stating the aggregate principal amount of Notes or portions of
Notes being purchased by the Company.
The Paying Agent will promptly mail to each holder of Notes so
tendered the Change of Control Payment for such Notes, and the
Trustee will promptly authenticate and mail (or cause to be
transferred by book entry) to each holder a new Note equal in
principal amount to any unpurchased portion of the Notes
surrendered, if any; provided, however, that each such new Note
will be in a principal amount of $2,000 or an integral multiple
of $1,000. The Company will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
If the Change of Control Payment Date is on or after an interest
payment record date and on or before the related interest
payment date, any accrued and unpaid interest and Additional
Interest, if any, will be paid to the Person in whose name a
Note is registered at the close of business on such record date,
and no other interest will be payable to holders who tender
pursuant to the Change of Control Offer.
Except as described above with respect to a Change of Control
Trigger Event, the Indenture does not contain provisions that
permit the holders of the Notes to require that the Company
repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction. In addition, the
Company could enter into certain transactions, including
acquisitions, refinancings or other recapitalizations, that
could affect the Companys capital structure or the value
of the Notes, but that would not constitute a Change of Control.
The occurrence of a Change of Control may result in a default
under the Credit Facilities or future Indebtedness of the
Company and its Subsidiaries and give the lenders thereunder the
right to require the Company to repay all outstanding
obligations thereunder. The Companys ability to repurchase
Notes following a Change of Control Trigger Event may also be
limited by the Companys then existing financial resources.
The Company will not be required to make a Change of Control
Offer following a Change of Control Trigger Event if a third
party makes the Change of Control Offer in the manner, at the
times and otherwise in compliance with the requirements set
forth in the Indenture applicable to a Change of Control Offer
made by the Company and purchases all Notes validly tendered and
not withdrawn under such Change of Control Offer.
The Change of Control provisions described above may deter
certain mergers, tender offers and other takeover attempts
involving the Company by increasing the capital required to
effectuate such transactions. The definition of Change of
Control includes a disposition of all or substantially all
of the properties or
53
assets of the Company and its Restricted Subsidiaries
(determined on a consolidated basis). Although there is a
limited body of case law interpreting the phrase
substantially all, there is no precise established
definition of the phrase under applicable law. Accordingly, in
certain circumstances there may be a degree of uncertainty as to
whether a particular transaction would involve a disposition of
all or substantially all of the properties or assets
of a Person. As a result, it may be unclear as to whether a
Change of Control has occurred and whether a holder of Notes may
require the Company to make an offer to repurchase the Notes as
described above.
A Change of Control Trigger Event means the
occurrence of both a Change of Control and, during the period
beginning on the earlier of (i) the date of the first
public notice or announcement with respect to a Change of
Control and (ii) the occurrence of a Change of Control,
and, in either case, ending 90 days after the occurrence of
such Change of Control, a Ratings Event.
A Change of Control means any of the
following:
(1) the sale, lease, transfer, conveyance or other
disposition (other than by merger or consolidation), in one or a
series of related transactions, of all or substantially all of
the properties or assets of the Company and its Restricted
Subsidiaries (determined on a consolidated basis);
(2) the adoption of a plan relating to the liquidation or
dissolution of the Company;
(3) any person (as such term is used in
Section 13(d)(3) of the Exchange Act) becomes the
beneficial owner (as such term is defined in
Rule 13d-3
and
Rule 13d-5
under the Exchange Act), directly or indirectly through one or
more intermediaries, of more than 50% of the voting power of the
outstanding Voting Stock of the Company; or
(4) the first day on which more than a majority of the
members of the Board of Directors are not Continuing Directors;
provided, however, that, with respect to clause (3) above,
a transaction in which the Company becomes a Subsidiary of
another Person (other than a Person that is an individual) shall
not constitute a Change of Control if
(a) the stockholders of the Company immediately prior to
such transaction beneficially own (as such term is
defined in
Rule 13d-3
and
Rule 13d-5
under the Exchange Act), directly or indirectly through one or
more intermediaries, at least a majority of the voting power of
the outstanding Voting Stock of the Company immediately
following the consummation of such transaction; and
(b) immediately following the consummation of such
transaction, no person (as such term is defined
above), other than such other Person (but including the holders
of the Equity Interests of such other Person),
beneficially owns (as such term is defined above),
directly or indirectly through one or more intermediaries, more
than 50% of the voting power of the outstanding Voting Stock of
the Company.
Continuing Directors means, as of any date of
determination, any member of the Board of Directors who
(a) was a member of the Board of Directors on the Initial
Issuance Date or (b) was nominated for election to the
Board of Directors with the approval of, or whose election to
the Board of Directors was ratified by, at least a majority of
the Continuing Directors who were members of the Board of
Directors at the time of such nomination or election.
Ratings Event means a reduction in the rating
assigned to the Notes by either Moodys or S&P to a
rating below the rating assigned by such agency to the Notes as
of the Initial Issuance Date.
54
Certain
Covenants
Limitation
on Restricted Payments
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly:
(1) declare or pay any dividend or make any other payment
or distribution on account of the Companys or any of its
Restricted Subsidiaries Equity Interests (including,
without limitation, any such payment in connection with any
merger or consolidation involving the Company or any of its
Restricted Subsidiaries) or make any similar payment to the
direct or indirect holders of the Companys Equity
Interests in their capacity as such (other than dividends or
distributions payable in Equity Interests (other than
Disqualified Stock) of the Company);
(2) purchase, redeem or otherwise acquire or retire for
value (including without limitation, in connection with any
merger or consolidation involving the Company) any Equity
Interests of the Company (other than any such Equity Interests
owned by the Company or any Restricted Subsidiary of the
Company);
(3) make any payment on or with respect to, or purchase,
redeem, defease or otherwise acquire or retire for value, any
Indebtedness that is subordinated to the Notes or any Subsidiary
Guarantee, except a payment of interest or principal at Stated
Maturity; or
(4) make any Restricted Investment (all such payments and
other actions set forth in clauses (1) through
(4) above being collectively referred to as
Restricted Payments), unless, at the time of and
after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and
be continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted
Payment and after giving pro forma effect thereto as if such
Restricted Payment had been made at the beginning of the
applicable
four-quarter
period, have been permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated Interest
Coverage Ratio test set forth in the first paragraph of the
covenant described under Certain
Covenants Limitation on Incurrence of Indebtedness
and Issuance of Preferred Stock, and
(c) such Restricted Payment, together with the aggregate
amount of all other Restricted Payments made by the Company and
its Restricted Subsidiaries after the Initial Issuance Date
(excluding Restricted Payments permitted by clauses (2), (3),
(4), (6), and (7), but including, without duplication,
Restricted Payments permitted by clauses (1), (5) and
(8) of the next succeeding paragraph and clause (6)(b) of
the definition of Permitted Investment), is less
than the sum of:
(A) 50% of the Consolidated Net Income of the Company for
the period (taken as one accounting period) from April 1,
2007 to the end of the Companys most recently ended fiscal
quarter for which internal financial statements are available at
the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such
deficit); plus
(B) the sum of (x) 100% of the aggregate net cash
proceeds received by the Company from the issue or sale since
the Initial Issuance Date of Equity Interests of the Company
(other than Disqualified Stock) or of Disqualified Stock or debt
securities of the Company that have been converted into such
Equity Interests (other than (1) any such Equity Interests,
Disqualified Stock or convertible debt securities sold to a
Subsidiary of the Company or an employee stock ownership plan,
option plan or similar trust to the extent such sale to an
employee stock ownership plan or similar trust is financed by
loans from or guaranteed by the Company or any Restricted
Subsidiary unless such loans have been repaid with cash on or
prior to the date of determination and (2) Disqualified
Stock or convertible debt securities that have been converted
into Disqualified Stock), (y) 100% of the Fair Market Value
of property constituting Additional
55
Assets received by the Company or a Restricted Subsidiary
subsequent to the Initial Issuance Date in exchange for Capital
Stock (other than Disqualified Stock and other than Capital
Stock issued to a Subsidiary of the Company) and (z) 100%
of any cash capital contribution received by the Company from
its shareholders subsequent to the Initial Issuance Date; plus
(C) to the extent that any Restricted Investment that was
made after June 20, 2003 is sold for cash or otherwise
liquidated or repaid for cash after the Initial Issuance Date,
the lesser of (1) the cash return of capital with respect
to such Restricted Investment (less the cost of disposition, if
any) and (2) the initial amount of such Restricted
Investment; plus
(D) in the event that any Unrestricted Subsidiary is
redesignated as a Restricted Subsidiary, the lesser of
(1) an amount equal to the Fair Market Value of the
Companys Investments in such Restricted Subsidiary and
(2) the amount of Restricted Investments previously made by
the Company and its Restricted Subsidiaries in such Unrestricted
Subsidiary; plus
(E) 100% of the aggregate net cash proceeds received by the
Company from the issue or sale of debt securities of the Company
that are outstanding on the Initial Issuance Date and that have
been converted into Equity Interests of the Company on or after
the Initial Issuance Date; plus
(F) the amount available for the payment of Restricted
Payments, as of the Initial Issuance Date, under Section
4.07(4)(c) of the Indenture governing the Companys
61/8% Senior
Notes due 2013 (the foregoing totaling approximately
$348.0 million as of the date of this prospectus).
The preceding provisions of this covenant will not prohibit any
of the following:
(1) the payment of any dividend within 60 days after
the date of declaration thereof if at the date of declaration
such payment would have complied with the provisions of the
Indenture;
(2) the redemption, repurchase, retirement, defeasance or
other acquisition of any Indebtedness subordinated to the Notes
or the Subsidiary Guarantees or Equity Interests of the Company
in exchange for, or out of the net cash proceeds of the
substantially concurrent sale (other than to a Subsidiary of the
Company) of, other Equity Interests of the Company (other than
any Disqualified Stock and other than Equity Interests issued or
sold to a Subsidiary of the Company or an employee stock
ownership plan or similar trust to the extent such sale to an
employee stock ownership plan or similar trust is financed by
loans from or guaranteed by the Company or any Restricted
Subsidiary unless such loans have been repaid with cash on or
prior to the date of determination), provided that the amount of
any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from clause (4)(c)(B) of the
preceding paragraph;
(3) the defeasance, redemption, repurchase, retirement or
other acquisition of Indebtedness subordinated to the Notes or
the Subsidiary Guarantees with the net cash proceeds from an
incurrence of, or in exchange for, Permitted Refinancing
Indebtedness;
(4) the payment of any dividend or distribution by a
Restricted Subsidiary of the Company to the Company or any of
its Restricted Subsidiaries (and if such Restricted Subsidiary
is not a Wholly Owned Restricted Subsidiary, to the other
holders of its Capital Stock on a pro rata basis);
(5) so long as no Default or Event of Default shall have
occurred and be continuing, the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of
the Company held by any current or former employee or director
of the Companys or any of its Restricted Subsidiaries,
provided that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed
$500,000 in any calendar year;
(6) the acquisition of Equity Interests by the Company in
connection with the exercise of stock options or stock
appreciation rights by way of cashless exercise;
56
(7) so long as no Default or Event of Default has occurred
and is continuing, any purchase or redemption of Indebtedness
subordinated to the Notes or the Subsidiary Guarantees from Net
Proceeds from an Asset Sale to the extent permitted by the
covenant described under Limitation on Asset
Sales after the Company (or a Restricted Subsidiary, as
the case may be) has made an offer to the holders of the Notes
to purchase the Notes pursuant to such covenant; and
(8) other Restricted Payments in an amount not to exceed
$50.0 million.
The Board of Directors may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if such designation would not
cause a Default. For purposes of making such determination, all
outstanding Investments by the Company and its Restricted
Subsidiaries (except to the extent repaid in cash) in the
Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation. All such outstanding
Investments will be deemed to constitute Investments in an
amount equal to the Fair Market Value of such Investments at the
time of such designation. Such designation will only be
permitted if such Restricted Payment would be permitted at such
time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be
the Fair Market Value on the date of the Restricted Payment of
the asset(s) or securities proposed to be transferred or issued
by the Company or such Restricted Subsidiary, as the case may
be, pursuant to the Restricted Payment. The Fair Market Value of
any non-cash Restricted Payment shall be evidenced by an
Officers Certificate delivered to the Trustee. Not later
than five business days following the date of making any
Restricted Payment (excluding Restricted Payments permitted by
clauses (2), (3), (4), (6), and (7) of the second preceding
paragraph), the Company shall deliver to the Trustee an
Officers Certificate stating that such Restricted Payment
is permitted and setting forth the basis upon which the
calculations required by the covenant
Certain Covenants Limitation
on Restricted Payments were computed.
Limitation
on Incurrence of Indebtedness and Issuance of Preferred
Stock
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to
(collectively, incur or an incurrence)
any Indebtedness, the Company will not, and will not permit any
Guarantor to, issue any Disqualified Stock and the Company will
not permit any of its Restricted Subsidiaries that are not
Guarantors to issue any shares of Preferred Stock; provided,
however, that the Company and its Restricted Subsidiaries may
incur Indebtedness, and the Company and any Guarantor may issue
Disqualified Stock, if the Consolidated Interest Coverage Ratio
for the Companys most recently ended four full fiscal
quarters for which internal financial statements are available
immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued
would have been at least 2.0 to 1.0, determined on a pro forma
basis (including a pro forma application of the net proceeds
therefrom), as if the additional Indebtedness or Disqualified
Stock had been issued or incurred at the beginning of such
four-quarter period.
The foregoing provisions will not apply to:
(1) the incurrence by the Company and its Restricted
Subsidiaries of Indebtedness under the Credit Facilities in an
aggregate principal amount at any one time outstanding not to
exceed the greater of (i) $150.0 million (or the
equivalent thereof in any other currency or currency unit), or
(ii) 30% of Consolidated Net Tangible Assets, plus any
fees, premiums, expenses (including costs of collection),
indemnities and similar amounts payable in connection with such
Indebtedness;
(2) the incurrence by the Company and its Restricted
Subsidiaries of Existing Indebtedness;
(3) the incurrence by the Company and its Restricted
Subsidiaries of Hedging Obligations in the ordinary course of
business and not for speculation;
(4) the incurrence by the Company and its Restricted
Subsidiaries of Indebtedness represented by the Notes (other
than Additional Notes), the Subsidiary Guarantees thereof and
the Indenture;
57
(5) guarantees by the Guarantors of Indebtedness incurred
in accordance with the provisions of the Indenture;
(6) the incurrence of intercompany Indebtedness between or
among the Company and any of its Restricted Subsidiaries,
provided that any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a
Person other than the Company or a Restricted Subsidiary of the
Company, or any sale or other transfer of any such Indebtedness
to a Person that is neither the Company nor a Restricted
Subsidiary of the Company, shall be deemed to constitute an
incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be provided, however:
(a) if the Company is the obligor on such Indebtedness and
a Guarantor is not the obligee, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all
obligations with respect to the Notes;
(b) if a Guarantor is the obligor on such Indebtedness and
the Company or a Guarantor is not the obligee, such Indebtedness
is expressly subordinated in right of payment to the Subsidiary
Guarantees of such Guarantor;
(7) Indebtedness in respect of bid, performance or surety
bonds issued for the account of the Company or any Restricted
Subsidiary thereof in the ordinary course of business, including
guarantees or obligations of the Company or any Restricted
Subsidiary thereof with respect to letters of credit supporting
such bid, performance or surety obligations (in each case other
than for an obligation for money borrowed);
(8) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange
for, or the net proceeds of which are used to extend, refinance,
renew, replace, defease or refund, Indebtedness that was
permitted by the Indenture to be incurred (other than pursuant
to clause (1), (6), (11) and (13) of this covenant);
(9) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease
Obligations, mortgage financings or purchase money obligations
with respect to assets other than Capital Stock or other
Investments, in each case incurred for the purpose of financing
all or any part of the purchase price or cost of construction or
improvements of property used in the business of the Company or
such Restricted Subsidiary, in an aggregate principal amount not
to exceed the greater of (i) $50.0 million, or
(ii) 5% of Consolidated Net Tangible Assets at any time
outstanding;
(10) Indebtedness of a Restricted Subsidiary incurred and
outstanding on the date on which such Restricted Subsidiary was
acquired by the Company, or Indebtedness incurred by the Company
or a Restricted Subsidiary to provide all or any portion of the
funds utilized to consummate the transaction or series of
related transactions pursuant to which such Restricted
Subsidiary becomes a Restricted Subsidiary or is otherwise
acquired by the Company, provided, however, that at the time
such Restricted Subsidiary is acquired by the Company, the
Consolidated Interest Coverage Ratio for the Companys most
recent four quarters for which internal financial statements are
available, after giving pro forma effect to the acquisition and
the incurrence of any related Indebtedness, would be (a) at
least 2.0 to 1.0 or (b) greater than the Consolidated
Interest Coverage Ratio determined for such four quarter period
without giving effect to such acquisition and incurrence of
Indebtedness;
(11) Indebtedness arising from agreements of the Company or
a Restricted Subsidiary providing for indemnification,
adjustment of purchase price or similar obligations, in each
case, incurred or assumed in connection with the disposition of
any business, assets or Capital Stock of a Restricted
Subsidiary, provided that the maximum aggregate liability in
respect of all such Indebtedness shall at no time exceed the
gross proceeds actually received by the Company and its
Restricted Subsidiaries in connection with such disposition;
(12) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar
instrument (except in the case of daylight overdrafts) drawn
against insufficient funds in the
58
ordinary course of business, provided, however, that such
Indebtedness is extinguished within five business days of
incurrence; and
(13) in addition to the items referred to in
clauses (1) through (12) above, Indebtedness of the
Company and the Guarantors in an aggregate outstanding principal
amount which, when taken together with the principal amount of
all other Indebtedness incurred pursuant to this
clause (13) and then outstanding, will not exceed the
greater of (i) $50.0 million, or (ii) 5% of
Consolidated Net Tangible Assets at any one time outstanding.
The Company will not, and will not permit any Guarantor to,
directly or indirectly, incur any Indebtedness which by its
terms (or by the terms of any agreement governing such
Indebtedness) is subordinated to any other Indebtedness of the
Company or of such Guarantor, as the case may be, unless such
Indebtedness is also by its terms (or by the terms of any
agreement governing such Indebtedness) made expressly
subordinate to the Notes or the Subsidiary Guarantee of such
Guarantor, as the case may be, to the same extent and in the
same manner as such Indebtedness is subordinated pursuant to
subordination provisions that are most favorable to the holders
of any other Indebtedness of the Company or of such Guarantor,
as the case may be.
For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness incurred
pursuant to and in compliance with, this covenant:
(1) in the event that Indebtedness meets the criteria of
more than one of the types of Indebtedness described in the
first and second paragraphs of this covenant, the Company, in
its sole discretion, will classify such item of Indebtedness on
the date of incurrence (or later classify or reclassify such
Indebtedness, in its sole discretion) and only be required to
include the amount and type of such Indebtedness in one of such
clauses (any Indebtedness under Credit Facilities on the Initial
Issue Date shall be considered incurred under the first
paragraph of this covenant);
(2) guarantees of, or obligations in respect of letters of
credit relating to, Indebtedness which is otherwise included in
the determination of a particular amount of Indebtedness shall
not be included;
(3) the principal amount of any Disqualified Stock of the
Company or a Guarantor will be equal to the greater of the
maximum mandatory redemption or repurchase price (not including,
in either case, any redemption or repurchase premium) or the
liquidation preference thereof;
(4) Indebtedness permitted by this covenant need not be
permitted solely by reference to one provision permitting such
Indebtedness but may be permitted in part by one such provision
and in part by one or more other provisions of this covenant
permitting such Indebtedness; and
(5) the amount of Indebtedness issued at a price that is
less than the principal amount thereof will be equal to the
amount of the liability in respect thereof determined in
accordance with GAAP.
Accrual of interest, accrual of dividends, the accretion of
accreted value, the payment of interest in the form of
additional Indebtedness and the payment of dividends in the form
of additional shares of Preferred Stock or Disqualified Stock
will not be deemed to be an incurrence of Indebtedness for
purposes of this covenant. The amount of any Indebtedness
outstanding as of any date shall be (a) the accreted value
thereof in the case of any Indebtedness issued with original
issue discount and (b) the principal amount or liquidation
preference thereof, together with any interest thereon that is
more than 30 days past due, in the case of any other
Indebtedness.
In addition, the Company will not permit any of its Unrestricted
Subsidiaries to incur any Indebtedness or issue any shares of
Disqualified Stock, other than Non-Recourse Debt. If at any time
an Unrestricted Subsidiary becomes a Restricted Subsidiary, any
Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of the Company as of such date (and,
if such Indebtedness is not permitted to be incurred as of such
date under this covenant, the Company shall be in Default of
this covenant).
For purposes of determining compliance with any
U.S. dollar-denominated restriction on the incurrence of
Indebtedness, the U.S. dollar-equivalent principal amount
of Indebtedness denominated in a foreign
59
currency shall be calculated based on the relevant currency
exchange rate in effect on the date such Indebtedness was
incurred, in the case of term Indebtedness, or first committed,
in the case of revolving credit Indebtedness; provided that if
such Indebtedness is incurred to refinance other Indebtedness
denominated in a foreign currency, and such refinancing would
cause the applicable U.S. dollar-dominated restriction to
be exceeded if calculated at the relevant currency exchange rate
in effect on the date of such refinancing, such
U.S. dollar-dominated restriction shall be deemed not to
have been exceeded so long as the principal amount of such
refinancing Indebtedness does not exceed the principal amount of
such Indebtedness being refinanced. Notwithstanding any other
provision of this covenant, the maximum amount of Indebtedness
that the Company may incur pursuant to this covenant shall not
be deemed to be exceeded solely as a result of fluctuations in
the exchange rate of currencies.
Limitation
on Liens
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien on any property or asset now owned
or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom, except
Permitted Liens, to secure (a) any Indebtedness of the
Company or such Restricted Subsidiary (if it is not also a
Guarantor), unless prior to, or contemporaneously therewith, the
Notes are equally and ratably secured, or (b) any
Indebtedness of any Guarantor, unless prior to, or
contemporaneously therewith, the Subsidiary Guarantees are
equally and ratably secured; provided, however, that if such
Indebtedness is expressly subordinated to the Notes or the
Subsidiary Guarantees, the Lien securing such Indebtedness will
be subordinated and junior to the Lien securing the Notes or the
Subsidiary Guarantees, as the case may be, with the same
relative priority as such Indebtedness has with respect to the
Notes or the Subsidiary Guarantees.
Limitation
on Dividends and Other Payment Restrictions Affecting
Subsidiaries
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) (a) pay dividends or make any other distributions
to the Company or any of its Restricted Subsidiaries on its
Capital Stock or (b) pay any Indebtedness or other
obligations owed to the Company or any of its Restricted
Subsidiaries;
(2) make loans or advances to the Company or any of its
Restricted Subsidiaries; or
(3) transfer any of its properties or assets to the Company
or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of:
(a) the Credit Facilities or any instrument governing
Existing Indebtedness, each as in effect on the Initial Issuance
Date;
(b) the Indenture and the Exchange Notes;
(c) applicable law;
(d) any instrument governing Indebtedness or Capital Stock
of a Person acquired by the Company or any of its Restricted
Subsidiaries as in effect at the time of such acquisition
(except to the extent such Indebtedness was incurred in
connection with or in contemplation of such acquisition), which
encumbrance or restriction is not applicable to any Person or
the properties or assets of any Person, other than the Person,
or the property or assets of the Person, so acquired, provided
that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of the Indenture to be incurred;
(e) by reason of customary non-assignment provisions in
leases entered into in the ordinary course of business and
consistent with past practices;
60
(f) any mortgages, pledges or other security agreements
permitted under the Indenture securing Indebtedness of the
Company or a Restricted Subsidiary to the extent the
encumbrances or restrictions they contain restrict the transfer
of the properties or assets subject to such mortgages, pledges
or other security agreements;
(g) purchase money obligations for properties or assets
acquired in the ordinary course of business and Capital Lease
Obligations permitted under the Indenture, in each case, that
impose encumbrances or restrictions of the nature described in
clause (3) of the first paragraph of this covenant on the
properties or assets so acquired;
(h) any encumbrance or restriction with respect to a
Restricted Subsidiary (or any of its properties or assets)
imposed pursuant to an agreement entered into for the direct or
indirect sale or disposition of all or substantially all the
Capital Stock or properties or assets of such Restricted
Subsidiary (or the properties or assets that are subject to such
restriction) pending the closing of such sale or disposition;
(i) customary provisions in bona fide contracts for the
sale of properties or assets;
(j) customary provisions in joint venture agreements and
similar agreements that restrict the transfer of interests in
the joint venture; or
(k) Permitted Refinancing Indebtedness with respect to any
Indebtedness referred to in clauses (a) and (b) above,
provided that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are not
materially more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being
refinanced.
Limitation
on Asset Sales
The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(1) the Company or such Restricted Subsidiary, as the case
may be, receives consideration at the time of such Asset Sale at
least equal to the Fair Market Value (provided such Fair Market
Value shall be determined on the date of contractually agreeing
to such Asset Sale) of the assets or Equity Interests issued or
sold or otherwise disposed of; and
(2) at least 75% of the consideration therefor received by
the Company or such Restricted Subsidiary is in the form of
cash, Cash Equivalents or Marketable Securities; provided,
however, that the amount of (a) any liabilities (as shown
on the Companys or such Restricted Subsidiarys most
recent balance sheet) of the Company or such Restricted
Subsidiary (other than contingent liabilities and liabilities
that are by their terms subordinated to the Notes or any
Subsidiary Guarantee) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that
releases the Company or such Restricted Subsidiary from further
liability shall be deemed to be cash for purposes of this
provision and (b) any securities, notes or other
obligations (other than Marketable Securities) received by the
Company or such Restricted Subsidiary from such transferee that
are converted within 180 days by the Company or such
Restricted Subsidiary into cash (to the extent of the cash
received in that conversion) shall be deemed to be cash for
purposes of this provision.
Within 365 days after the receipt of any Net Proceeds from
an Asset Sale, the Company or any such Restricted Subsidiary may
apply such Net Proceeds to:
(1) permanently repay the principal of any Indebtedness of
the Company or any Guarantor ranking in right of payment at
least equal with the Notes or the Subsidiary Guarantees, as the
case may be; or
(2) to acquire (including by way of a purchase of assets or
stock, merger, consolidation or otherwise) Productive Assets;
provided that the requirements of this clause (2) will be
deemed to be satisfied if an agreement committing to make the
acquisitions referred to above is entered into by the Company or
any of its Restricted Subsidiaries within 365 days after
the receipt of such Net Proceeds with the good faith
61
expectation that such Net Proceeds will be applied to satisfy
such commitment in accordance with such agreement within
180 days after such
365-day
period and if such Net Proceeds are not so applied within such
180-day
period, then such Net Proceeds will constitute Excess Proceeds
(as defined below).
Pending the final application of any such Net Proceeds, the
Company or any such Restricted Subsidiary may temporarily reduce
outstanding revolving credit borrowings, including borrowings
under the Credit Facilities, or otherwise invest such Net
Proceeds in any manner that is not prohibited by the Indenture.
Any Net Proceeds from Asset Sales that are not applied or
invested as provided in the first sentence of this paragraph
will be deemed to constitute Excess Proceeds.
On the 366th day after the Asset Sale (or, at the
Companys option, such earlier date), if the aggregate
amount of Excess Proceeds exceeds $30.0 million, the
Company will be required to make an offer (an Asset Sale
Offer) to all holders of Notes and to the extent required
by the terms of other Pari Passu Indebtedness, to all holders of
other Pari Passu Indebtedness outstanding with similar
provisions requiring the Company to make an offer to purchase
such Pari Passu Indebtedness with the proceeds from any Asset
Sale (Pari Passu Notes), to purchase the maximum
principal amount of Notes and any such Pari Passu Notes to which
the Asset Sale Offer applies that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal to
100% of the principal amount of the Notes and Pari Passu Notes
plus accrued and unpaid interest and Additional Interest, if
any, to the date of purchase, in accordance with the procedures
set forth in the Indenture or the agreements governing the Pari
Passu Notes, as applicable, in each case in integral multiples
of $1,000. To the extent that the aggregate principal amount of
Notes tendered pursuant to an Asset Sale Offer is less than the
amount that the Company is required to repurchase, the Company
may use any remaining Excess Proceeds for any purpose not
prohibited by the Indenture. If the aggregate principal amount
of Notes surrendered by holders thereof and other Pari Passu
Notes surrendered by holders or lenders, collectively, exceeds
the amount that the Company is required to repurchase, the
Trustee shall select the Notes and Pari Passu Notes to be
purchased on a pro rata basis on the basis of the aggregate
principal amount of tendered Notes and Pari Passu Notes. Upon
completion of such offer to purchase, the amount of Excess
Proceeds shall be reset at zero.
If the Asset Sale purchase date is on or after an interest
payment record date and on or before the related interest
payment date, any accrued and unpaid interest and Additional
Interest, if any, will be paid to the Person in whose name a
Note is registered at the close of business on such record date,
and no other interest will be payable to holders who tender
Notes pursuant to the Asset Sale Offer.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any
other securities laws or regulations in connection with the
repurchase of Notes pursuant to the Indenture. To the extent
that the provisions of any securities laws or regulations
conflict with provisions of this covenant, the Company will
comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under the
Indenture by virtue of any conflict.
Merger,
Consolidation, or Sale of Assets
The Company may not consolidate or merge with or into (whether
or not the Company is the surviving corporation), or sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets in one or more
related transactions, to another Person, unless:
(1) the Company is the surviving corporation or the Person
formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been
made is a corporation, partnership or limited liability company
organized or existing under the laws of the United States, any
state or the District of Columbia;
(2) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, lease,
conveyance or other disposition shall have been made assumes all
the obligations of the Company under the Notes and the Indenture
pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee;
(3) immediately after such transaction no Default or Event
of Default exists;
62
(4) except in the case of a merger of the Company with or
into a Restricted Subsidiary of the Company, either (i) the
Company or the Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which
such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made will, at the time of such
transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable
four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Consolidated Interest
Coverage Ratio test set forth in the first paragraph of the
covenant described above under Limitation on
Incurrence of Indebtedness and Issuance of Preferred Stock
or (ii) the Consolidated Interest Coverage Ratio of the
Company or the Person surviving or formed by such transaction,
calculated for the most recent four quarter period for which
internal financial statements of the Company are available,
after giving pro forma effect to such transaction and any
related incurrence of Indebtedness, is (a) at least 2.0 to
1.0 or (b) greater than the Consolidated Interest Coverage
Ratio of the Company determined for such period without giving
effect to such transaction and incurrence of
Indebtedness; and
(5) the Company shall have delivered to the Trustee an
Officers Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with the Indenture;
provided, however, that clause (4) shall no longer be
applicable from and after the occurrence of any Investment Grade
Ratings Event.
For purposes of this covenant, the sale, assignment, transfer,
lease, conveyance, or other disposition of all or substantially
all of the properties or assets of one or more Subsidiaries of
the Company, which properties or assets, if held by the Company
instead of such Subsidiaries, would constitute all or
substantially all of the properties or assets of the Company on
a consolidated basis, shall be deemed to be the transfer of all
or substantially all of the properties or assets of the Company.
Although there is a limited body of case law interpreting the
phrase substantially all, there is no precise
established definition of the phrase under applicable law.
Accordingly, in certain circumstances there may be a degree of
uncertainty as to whether a particular transaction would involve
all or substantially all of the properties or assets
of a Person.
Limitation
on Transactions with Affiliates
The Company will not, and will not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer
or otherwise dispose of any of its properties or assets to, or
purchase any properties or assets from, or enter into or make or
amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate
(each of the foregoing, an Affiliate Transaction),
unless:
(1) such Affiliate Transaction is on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary
than those that would have been obtained in a comparable
transaction by the Company or such Restricted Subsidiary in
arms-length dealings with an unrelated Person or, if there
is no such comparable transaction, on terms that are fair and
reasonable to the Company or such Restricted Subsidiary; and
(2) the Company delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration
in excess of $20.0 million, an Officers Certificate
certifying that such Affiliate Transaction complies with
clause (1) above; and
(b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration
in excess of $40.0 million, in addition to the
Officers Certificate referred to above, a resolution of
the Board of Directors of the Company approved by a majority of
the disinterested members thereof,
in each case described in clause (2) above other than any
such transactions in the ordinary course of business with an
Affiliate engaged in the business of providing helicopter
transportation services to
63
the oil and gas industry (or a business that is reasonably
complementary or related thereto as determined in good faith by
the Board of Directors); provided, however, that the following
shall be deemed not to be Affiliate Transactions:
(A) any employment agreement or other employee compensation
plan or arrangement entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business of
the Company or such Restricted Subsidiary;
(B) transactions between or among the Company and its
Restricted Subsidiaries;
(C) Permitted Investments and Restricted Payments that are
permitted by the provisions of the Indenture;
(D) loans or advances to officers, directors and employees
of the Company or any Restricted Subsidiary made in the ordinary
course of business and consistent with past practices of the
Company and its Restricted Subsidiaries in an aggregate amount
not to exceed $500,000 outstanding at any one time;
(E) indemnities of officers, directors and employees of the
Company or any Restricted Subsidiary permitted by bylaw or
statutory provisions; and
(F) the payment of reasonable and customary regular fees to
directors of the Company or any of its Restricted Subsidiaries
who are not employees of the Company or any Subsidiary.
Additional
Subsidiary Guarantees
The Indenture provides that
(1) if the Company or any of its Restricted Subsidiaries
(except, so long as Bristow Aviation is not a Guarantor, either
Bristow Aviation or any of its Subsidiaries) shall, after the
Initial Issuance Date, acquire or create another Significant
U.S. Subsidiary, or
(2) if, after such date, any Restricted Subsidiary that is
not a Guarantor shall incur any Indebtedness (including any
guarantee of Indebtedness of the Company) except Permitted
Non-Guarantor Indebtedness,
then such newly acquired or created Significant
U.S. Subsidiary, in the case of clause (1) above, or
such Restricted Subsidiary described in clause (2) above,
shall execute a supplement to the Indenture providing for a
Subsidiary Guarantee and deliver an Opinion of Counsel in
accordance with the terms of the Indenture.
Reports
Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company will file with the
U.S. Securities and Exchange Commission (the
Commission) (unless the Commission will not accept
such a filing) within the time periods specified in the Exchange
Act and, within 15 days of filing, or attempting to file,
the same with the Commission, furnish to the Trustee and the
holders of the Outstanding Notes:
(1) all quarterly and annual financial and other
information with respect to the Company and its Subsidiaries
that would be required to be contained in a filing with the
Commission on
Forms 10-Q
and 10-K if
the Company were required to file such forms, including a
Managements Discussion and Analysis of Financial
Condition and Results of Operations and, with respect to
the annual information only, a report thereon by the
Companys certified independent accountants; and
(2) all current reports that would be required to be filed
with the Commission on
Form 8-K
if the Company were required to file such reports.
So long as the Company is required to file periodic reports
under Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934, as amended, the Companys obligation
to deliver the information referred to above shall be deemed
satisfied upon the filing of such information in the EDGAR
system and the giving of notice to the Trustee as to the public
availability of such information from such source.
64
In addition, the Company and the Guarantors will furnish to the
holders of the Notes, prospective purchasers of the Notes and
securities analysts, upon their request, the information, if
any, required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
If the Company has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual
financial information required by the preceding paragraph shall
include a reasonably detailed presentation, either on the face
of the financial statements or in the footnotes to the financial
statements and in Managements Discussion and Analysis of
Results of Operations and Financial Condition, of the financial
condition and results of operations of the Company and its
Restricted Subsidiaries separate from the financial condition
and results of operations of the Unrestricted Subsidiaries.
Certain
Investment Grade Covenants
If an Investment Grade Rating Event occurs and no Default or
Event of Default has occurred and is continuing under the
Indenture, then upon delivery to the trustee of an
Officers Certificate to the foregoing effect, each of the
covenants (except for Merger, Consolidation,
or Sale of Assets (but clause (4) of that covenant
will no longer apply) and Reports)
described above under Certain Covenants
will cease to apply to us and our Restricted Subsidiaries. As a
result, the Notes will be entitled to substantially less
covenant protection from and after the occurrence of an
Investment Grade Rating Event. In addition, the Indenture
contains the following covenants, which will apply to us only
upon and after the occurrence of an Investment Grade Rating
Event.
Restrictions
on Secured Indebtedness
If the Company or any Restricted Subsidiary incurs any
Indebtedness secured by a Lien (other than a Permitted Lien) on
any asset or property or on any Capital Stock or Indebtedness of
a Restricted Subsidiary, the Company or such Restricted
Subsidiary will secure the Notes equally and ratably with (or at
the Companys option, prior to) such secured Indebtedness
so long as such Indebtedness is so secured, unless the aggregate
amount of all Indebtedness secured by Liens (other than
Permitted Liens), together with all Attributable Indebtedness of
the Company and the Restricted Subsidiaries with respect to any
Sale/Leaseback Transactions (with the exception of such
transactions which are excluded as described in clauses (1)
through (4) under Certain Investment
Grade Covenants Restrictions on Sale/Leaseback
Transactions below), would not exceed 10% of Consolidated
Net Tangible Assets.
Restrictions
on Sale/Leaseback Transactions
The Company will not, and will not permit any Restricted
Subsidiary to, enter into any Sale/Leaseback Transaction, unless
the aggregate amount of all Attributable Indebtedness with
respect to such transaction plus all secured Indebtedness of the
Company and the Restricted Securities (with the exception of
Indebtedness secured by Permitted Liens) would not exceed 10% of
Consolidated Net Tangible Assets outstanding at any time. This
restriction shall not apply to, and there shall be excluded from
Attributable Debt in any computation under such restriction, any
Sale/Leaseback Transaction if:
(1) the lease is for a period, including renewal rights,
not in excess of three years;
(2) the sale of the asset or property subject to the
Sale/Leaseback Transaction is made within 270 days after
its acquisition, construction or improvements;
(3) the transaction is between the Company and a Restricted
Subsidiary; or
(4) the Company, within 270 days after the sale is
completed, applies to the retirement of its Indebtedness or that
of a Restricted Subsidiary, or to the purchase of other assets
or properties which will constitute Productive Assets, an amount
not less than the greater of:
(a) the net proceeds of the sale of the asset or property
leased; or
(b) the fair market value (as determined by the Company in
good faith) of the asset or property leased.
65
The amount to be applied to the retirement of Indebtedness shall
be reduced by:
(A) the principal amount of any of the Companys
debentures or notes (including the Notes) or those of a
Restricted Subsidiary surrendered within 270 days after
such sale to the applicable trustee for retirement and
cancellation;
(B) the principal amount of Indebtedness, other than the
items referred to in the preceding clause (A), voluntarily
retired by the Company or a Restricted Subsidiary within
270 days after such sale; and
(C) associated transaction expenses.
Events of
Default and Remedies
The Indenture provides that each of the following constitutes an
Event of Default:
(1) default for 30 days in the payment when due of
interest or Additional Interest on the Notes;
(2) default in payment of the principal of or premium, if
any, on the Notes when due at its Stated Maturity, upon optional
redemption, upon required repurchase, upon declaration or
otherwise;
(3) failure by the Company for 30 days after notice to
comply with any of its obligations in the covenants described
under Repurchase at the Option of
Holders or Certain Covenants
Limitation on Asset Sales (other than a failure to
repurchase Notes when due), or failure by the Company to comply
with its obligations described under Certain
Covenants Merger, Consolidation, or Sale of
Assets;
(4) failure by the Company for 60 days after notice to
comply with any of its other agreements in the Indenture or the
Notes (provided that, with respect to the covenant described
above under Certain Covenants
Reports, the Company shall have not less than
120 days from the failure to comply with such covenant to
cure such failure);
(5) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by the Company
or any of its Restricted Subsidiaries (or the payment of which
is guaranteed by the Company or any of its Restricted
Subsidiaries), whether such Indebtedness or guarantee now exists
or is created after the Initial Issuance Date, which default:
(a) is caused by a failure to pay principal of or premium
or interest on such Indebtedness prior to the expiration of any
grace period provided in such Indebtedness, including any
extension thereof (a Payment Default); or
(b) results in the acceleration of such Indebtedness prior
to its Stated Maturity and, in each case, the principal amount
of any such Indebtedness, together with the principal amount of
any other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated,
aggregates in excess of $25.0 million and provided,
further, that if any such default is cured or waived or any such
acceleration rescinded, or such Indebtedness is repaid, within a
period of 10 days from the continuation of such default
beyond the applicable grace period or the occurrence of such
acceleration, as the case may be, such Event of Default and any
consequential acceleration of the Notes shall be automatically
rescinded, so long as such rescission does not conflict with any
judgment or decree;
(6) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess of
$25.0 million (net of any amounts that a reputable and
creditworthy insurance company has acknowledged liability for in
writing), which judgments are not paid, discharged or stayed for
a period of 60 days;
(7) failure by any Guarantor to perform any covenant set
forth in its Subsidiary Guarantee, or the repudiation by any
Guarantor of its obligations under its Subsidiary Guarantee or
the unenforceability of any Subsidiary Guarantee against a
Guarantor for any reason; and
66
(8) certain events of bankruptcy, insolvency or
reorganization with respect to the Company, any Guarantor or any
Significant Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or
the holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and
payable immediately. Notwithstanding the preceding, in the case
of an Event of Default arising from certain events of
bankruptcy, insolvency or reorganization with respect to the
Company or any Significant Subsidiary, all outstanding Notes
will become due and payable without further action or notice.
The holders of a majority in principal amount of the then
outstanding Notes by written notice to the Trustee may on behalf
of all of the holders rescind an acceleration and its
consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except
with respect to nonpayment of principal, interest, premium or
Additional Interest that have become due solely because of the
acceleration) have been cured or waived. Holders of the Notes
may not enforce the Indenture or the Notes except as provided in
the Indenture. Subject to certain limitations, holders of a
majority in principal amount of the then outstanding Notes may
direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from holders of the Notes notice of any
continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal, interest,
premium or Additional Interest) if it determines that
withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any
willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding payment of
the premium that the Company would have had to pay if the
Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent
premium shall also become and be immediately due and payable to
the extent permitted by law upon the acceleration of the Notes.
The holders of a majority in principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the
holders of all of the Notes waive any existing Default or Event
of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of the
principal of or interest, premium or Additional Interest on the
Notes.
The Company will be required to deliver to the Trustee annually
a statement regarding compliance with the Indenture, and the
Company will be required, upon becoming aware of any Default or
Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
No
Personal Liability of Directors, Officers, Employees and
Stockholders
No director, officer, employee, incorporator, member, partner or
stockholder or other owner of Capital Stock of the Company or
any Guarantor, as such, shall have any liability for any
obligations of the Company or any Guarantor under the Notes, the
Subsidiary Guarantees or the Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their
creation. Each holder of Notes by accepting a Note waives and
releases all such liability. The waiver and release are part of
the consideration for issuance of the Notes. Such waiver may not
be effective to waive liabilities under the federal securities
laws, and it is the view of the Commission that such a waiver is
against public policy.
Legal
Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have
all of the obligations of itself and the Guarantors discharged
with respect to the outstanding Notes (Legal
Defeasance) except for:
(1) the rights of holders of outstanding Notes to receive
payments in respect of the principal of and premium, interest
and Additional Interest, if any, on such Notes when such
payments are due from the trust referred to below;
(2) the Companys obligations with respect to the
Notes concerning issuing temporary Notes, registration of Notes,
mutilated, destroyed, lost or stolen Notes and the maintenance
of an office or agency for payment and money for security
payments held in trust;
67
(3) the rights, powers, trusts, duties and immunities of
the Trustee, and the Companys obligations in connection
therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company released with
respect to certain covenants that are described in the Indenture
(Covenant Defeasance), and thereafter any omission
to comply with such obligations shall not constitute a Default
or Event of Default with respect to the Notes. In the event
Covenant Defeasance occurs, certain other events (not including
non-payment,
bankruptcy, insolvency and reorganization events) described
under Events of Default and Remedies will no longer
constitute an Event of Default with respect to the Notes. If the
Company exercises either its Legal Defeasance or Covenant
Defeasance option, each Guarantor will be released and relieved
of any obligations under its Subsidiary Guarantee and any
security for the Notes (other than the trust) will be released.
In order to exercise either Legal Defeasance or Covenant
Defeasance,
(1) the Company must irrevocably deposit with the Trustee,
in trust, for the benefit of the holders of the Notes, cash in
U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent
public accountants, to pay the principal of and premium,
interest and Additional Interest, if any, on the outstanding
Notes on the Stated Maturity or on the applicable redemption
date, as the case may be, and the Company must specify whether
the Notes are being defeased to Stated Maturity or to a
particular redemption date;
(2) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that:
(a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling; or
(b) since the Initial Issuance Date, there has been a
change in the applicable federal income tax law, in either case
to the effect that, and based thereon such opinion of counsel
shall confirm that, the holders of the outstanding Notes will
not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Company shall
have delivered to the Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee confirming
that the holders of the outstanding Notes will not recognize
income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Covenant
Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit (other than a Default
or Event of Default resulting from the borrowing of funds to be
applied to such deposit);
(5) such Legal Defeasance or Covenant Defeasance will not
result in a breach or violation of, or constitute a default
under any material agreement or instrument (other than the
Indenture) to which the Company or any of its Restricted
Subsidiaries is a party or by which the Company or any of its
Restricted Subsidiaries is bound;
(6) the Company must have delivered to the Trustee an
opinion of counsel to the effect that the trust funds will not
be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting
creditors rights generally;
(7) the Company must deliver to the Trustee an
Officers Certificate stating that the deposit was not made
by the Company with the intent of preferring the holders of
Notes over the other creditors of the
68
Company with the intent of defeating, hindering, delaying or
defrauding creditors of the Company or others; and
(8) the Company must deliver to the Trustee an
Officers Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for relating to
the Legal Defeasance or the Covenant Defeasance have been
complied with.
Amendment
and Waiver
Except as provided below, the Indenture or the Notes may be
amended with the consent of the holders of at least a majority
in principal amount of the Notes then outstanding (including
consents obtained in connection with a purchase of, or tender
offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture or the Notes may
be waived with the consent of the holders of a majority in
principal amount of the then outstanding Notes (including
consents obtained in connection with a purchase of, tender offer
or exchange offer for, Notes). Without the consent of each
holder affected, an amendment or waiver may not (with respect to
any Notes held by a non-consenting holder):
(1) reduce the principal amount of Notes whose holders must
consent to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of
any Note or alter the provisions with respect to the redemption
or repurchase of the Notes (other than provisions relating to
the covenants described above under Repurchase
at the Option of Holders or Certain
Covenants Limitation on Asset Sales);
(3) reduce the rate of or change the time for payment of
interest on any Note;
(4) waive a Default or Event of Default in the payment of
principal of or premium, interest or Additional Interest, if
any, on the Notes (except a rescission of acceleration of the
Notes by the holders of at least a majority in principal amount
of the Notes and a waiver of the payment default that resulted
from such acceleration);
(5) make any Note payable in money other than that stated
in the Notes;
(6) make any change in the provisions of the Indenture
relating to waivers of past defaults or the rights of holders of
Notes to receive payments of principal of or premium, interest
or Additional Interest, if any, on the Notes (except as
permitted in clause (7) hereof);
(7) waive a redemption or repurchase payment with respect
to any Note (other than a payment required by one of the
covenants described above under Repurchase at
the Option of Holders or Certain
Covenants Limitation on Asset Sales);
(8) make any change in the ranking of the Notes or the
Subsidiary Guarantees relative to other Indebtedness of the
Company or the Guarantors, respectively, in either case in a
manner adverse to the holders;
(9) modify the Subsidiary Guarantees in any manner adverse
to the holders of the Notes; or
(10) make any change in the preceding amendment and waiver
provisions.
Notwithstanding the preceding, without the consent of any holder
of Notes, the Company, the Guarantors and the Trustee may amend
the Indenture or the Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition
to or in place of certificated Notes, to provide for the
assumption of the Companys obligations to holders of Notes
in the case of a merger or consolidation or sale of all or
substantially all of the Companys properties or assets, to
make any change that would provide any additional rights or
benefits to the holders of Notes or that does not adversely
affect the legal rights under the Indenture of any such holder,
to secure the Notes pursuant to the requirements of the
Liens covenant, to add any additional Guarantor or
to release any Guarantor from its Subsidiary Guarantee, in each
case as provided in
69
the Indenture, or to comply with requirements of the Commission
in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act.
Neither the Company nor any of its Subsidiaries shall, directly
or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any holder of
any Notes for or as an inducement to any consent, waiver or
amendment of any terms or provisions of the Indenture or the
Notes, unless such consideration is offered to be paid or agreed
to be paid to all holders of the Notes which so consent, waive
or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
The consent of the holders is not necessary under the Indenture
to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the
proposed amendment. A consent to any amendment or waiver under
the Indenture by any holder of Notes given in connection with a
purchase, tender or exchange of such holders Notes will
not be rendered invalid by such purchase, tender or exchange.
Concerning
the Trustee
U.S. Bank National Association serves as Trustee under the
Indenture.
The Indenture contains certain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain
payment of claims in certain cases, or to realize on certain
property received in respect of any such claim as security or
otherwise. The Trustee is permitted to engage in other
transactions; however, if it acquires any conflicting interest
(as defined in the Trust Indenture Act) after a Default has
occurred and is continuing, it must eliminate such conflict
within 90 days or apply to the Commission for permission to
continue or resign.
The holders of a majority in principal amount of the then
outstanding Notes will have the right to direct the time, method
and place of conducting any proceeding for exercising any remedy
available to the Trustee, subject to certain exceptions. If an
Event of Default occurs (which is not cured), the Trustee is
required, in the exercise of its power, to use the degree of
care of a prudent man in the conduct of his own affairs. Subject
to such provisions, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the
request of any holder of Notes, unless such holder has offered
to the Trustee security and indemnity satisfactory to it against
any loss, liability or expense.
Governing
Law
The Indenture, the Notes and the Subsidiary Guarantees will be
governed by, and construed in accordance with, the laws of the
State of New York.
Additional
Information
Anyone who receives this prospectus may obtain a copy of the
Indenture and Registration Rights Agreement without charge by
writing to Bristow Group Inc., 2000 W. Sam Houston
Pkwy S., Suite 1700, Houston, Texas 77042, Attention:
Corporate Secretary.
Registration
Rights; Additional Interest
We have agreed pursuant to the Registration Rights Agreement
that, unless, prior to the 360th day after the Initial
Issuance Date, the Notes are freely transferable by
non-affiliates without restriction pursuant to Rule 144
under the Securities Act, we will, subject to certain exceptions,
(1) file a registration statement (the Exchange Offer
Registration Statement) with the SEC with respect to a
registered offer (the Registered Exchange Offer) to
exchange the Outstanding Notes for Exchange Notes of the Company
having terms substantially identical in all material respects to
the Outstanding Notes (except that such new notes will not
contain terms with respect to transfer restrictions);
70
(2) use our reasonable best efforts to cause the Exchange
Offer Registration Statement to become effective under the
Securities Act within 360 days after the Initial Issuance
Date;
(3) promptly after the effectiveness of the Exchange Offer
Registration Statement (the Effectiveness Date),
offer the Exchange Notes in exchange for surrender of the
Outstanding Notes; and
(4) keep the Registered Exchange Offer open for not less
than 20 business days (or longer if required by applicable law)
after the date notice of the Registered Exchange Offer is mailed
to the holders of the Outstanding Notes.
For each Outstanding Note tendered to us pursuant to the
Registered Exchange Offer, we will issue to the holder of such
Outstanding Note an Exchange Note having a principal amount
equal to that of the surrendered Outstanding Note. Interest on
each Exchange Note will accrue from the last interest payment
date on which interest was paid on the Outstanding Note
surrendered in exchange therefor, or, if no interest has been
paid on such Outstanding Note, from the date of its original
issue.
Under existing SEC interpretations, the Exchange Notes will be
freely transferable by holders without further registration
under the Securities Act assuming such holder of the Exchange
Notes is not an affiliate of the Company, acquires the Exchange
Notes in the ordinary course of its business, and it has no
arrangements with any person to participate in the distribution
of the Exchange Notes and is not prohibited by any law or policy
of the SEC from participating in the Registered Exchange Offer;
provided, however, that broker-dealers (Participating
Broker-Dealers) receiving Exchange Notes in the Registered
Exchange Offer will have a prospectus delivery requirement with
respect to resales of such Exchange Notes. The SEC has taken the
position that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to Exchange Notes
(other than a resale of an unsold allotment from the original
sale of the Outstanding Notes) with the prospectus contained in
the Exchange Offer Registration Statement.
Under the Registration Rights Agreement, the Company is required
to allow Participating Broker Dealers and other persons, if any,
with similar prospectus delivery requirements to use the
prospectus contained in the Exchange Offer Registration
Statement in connection with the resale of such Exchange Notes
for not less than 90 days following the consummation of the
Registered Exchange Offer.
A holder of Outstanding Notes (other than certain specified
holders) who wishes to exchange such Outstanding Notes for
Exchange Notes in the Registered Exchange Offer will be required
to represent at the time of the consummation of the Registered
Exchange Offer that (a) any Exchange Notes received by it
will be acquired in the ordinary course of its business,
(b) it will have no arrangements or understanding with any
person to participate in the distribution (within the meaning of
the Securities Act) of the Exchange Notes, (c) that it is
not an affiliate of the Company, as defined in
Rule 405 of the Securities Act, or if it is an affiliate,
that it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent
applicable, (d) if such holder is not a broker-dealer, that
it is not engaged in, and does not intend to engage in, the
distribution of the Exchange Notes and (e) if such holder
is a broker-dealer, that it will receive Exchange Notes for its
own account in exchange for Outstanding Notes that were acquired
as a result of market-making activities or other trading
activities and that it will be required to acknowledge that it
will deliver a prospectus in connection with any resale of such
Exchange Notes.
In the event that:
(1) any change in law or in applicable interpretations of
the law by the staff of the SEC do not permit us to effect such
a Registered Exchange Offer; or
(2) for any other reason we do not consummate the
Registered Exchange Offer within 390 days of the Initial
Issuance Date; or
(3) within twenty business days following consummation of
the Registered Exchange Offer, an initial purchaser requests
with respect to the Outstanding Notes not eligible to be
exchanged for Exchange Notes in the Registered Exchange Offer
and held by it following the consummation of the Registered
Exchange Offer; or
71
(4) any holder (other than a Participating Broker-Dealer)
is not eligible to participate in the Registered Exchange Offer
or, in the case of any holder (other than a Participating Broker
Dealer) that participates in the Registered Exchange Offer, such
holder does not receive freely tradeable Exchange Notes on the
date of the exchange
then, unless the Outstanding Notes are then freely transferable
by non-affiliates without restriction pursuant to Rule 144
under the Securities Act and subject to certain exceptions, we
will:
(1) promptly file a shelf registration statement (the
Shelf Registration Statement) with the SEC covering
resales of the Outstanding Notes or the Exchange Notes, as the
case may be;
(2) use our reasonable best efforts to cause the Shelf
Registration Statement to be declared effective under the
Securities Act; and
(3) use our reasonable best efforts to keep the Shelf
Registration Statement continuously effective for a period of
two years from the Initial Issuance Date or such shorter period
that will terminate when all the Outstanding Notes covered by
the Shelf Registration Statement (A) have been sold
pursuant to the Shelf Registration Statement, (B) are no
longer restricted securities (as defined in Rule 144 under
the Securities Act, or any successor rule thereof) or
(c) are freely transferable by non-affiliates without
restriction pursuant to Rule 144 under the Securities Act.
We will, in the event a Shelf Registration Statement is filed,
among other things, provide to each holder for whom such Shelf
Registration Statement was filed copies of the prospectus which
is a part of the Shelf Registration Statement, notify each such
holder when the Shelf Registration Statement has become
effective and take certain other actions as are required to
permit unrestricted resales of the Outstanding Notes or the
Exchange Notes, as the case may be. A holder selling such
Outstanding Notes or Exchange Notes pursuant to the Shelf
Registration Statement generally would be required to be named
as a selling security holder in the related prospectus and to
deliver a prospectus to purchasers, will be subject to certain
of the civil liability provisions under the Securities Act in
connection with such sales and will be bound by the provisions
of the Registration Rights Agreement that are applicable to such
holder (including certain indemnification obligations).
We will pay additional cash interest (Additional
Interest) on the applicable Outstanding Notes, subject to
certain exceptions,
(1) if a Registration Statement required by the
Registration Rights Agreement is not filed and declared
effective by the SEC on or prior to the 360th day after the
Initial Issuance Date,
(2) if the required Registered Exchange Offer is not
consummated on or prior to the 360th day after the Initial
Issuance Date,
(3) if any of the Registration Statements required by the
Registration Rights Agreement has been declared effective by the
SEC but (A) such Registration Statement thereafter ceases
to be effective during the periods specified in the Registration
Rights Agreement during which it is required to be effective or
(B) such Registration Statement or the related prospectus
ceases to be usable (subject to certain exceptions) in
connection with resales of the Exchange Notes during the periods
specified therein because either (1) any event occurs as a
result of which the related prospectus forming part of such
Registration Statement would include any untrue statement of a
material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, or (2) it shall
be necessary to amend such Registration Statement or supplement
the related prospectus, to comply with the Securities Act or the
Exchange Act or the respective rules thereunder (each such event
referred to in the preceding clauses (1) through (3) a
Registration Default), from and including the date
on which any such Registration Default shall occur to but
excluding the date on which all Registration Defaults have been
cured.
The rate of the Additional Interest will be 0.25% per annum for
the first
90-day
period immediately following the occurrence of a Registration
Default, and such rate will increase by an additional 0.25% per
annum with respect to each subsequent
90-day
period until all Registration Defaults have been cured, up to a
72
maximum Additional Interest rate of 1.0% per annum. We will pay
such Additional Interest on regular interest payment dates. Such
Additional Interest will be in addition to any other interest
payable from time to time with respect to the Outstanding Notes.
All references in the Indenture, in any context, to any interest
or other amount payable on or with respect to the Outstanding
Notes shall be deemed to include any Additional Interest
pursuant to the Registration Rights Agreement. If we effect the
Registered Exchange Offer, we will be entitled to close the
Registered Exchange Offer 20 business days after the
commencement thereof provided that we have accepted all
Outstanding Notes theretofore validly tendered in accordance
with the terms of the Registered Exchange Offer.
Certain
Definitions
Set forth below are certain defined terms used in the Indenture.
Reference is made to the Indenture for a full disclosure of all
such terms, as well as any other capitalized terms used in this
description for which no definition is provided.
Additional Assets means:
(1) any Productive Assets;
(2) the Capital Stock of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock
by the Company or another Restricted Subsidiary; or
(3) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary;
provided, however, that any such Restricted Subsidiary described
in clause (2) or (3) above is primarily engaged in the
business of providing helicopter transportation services to the
oil and gas industry (or any business that is reasonably
complementary or related thereto as determined in good faith by
the Board of Directors of the Company).
Additional Notesmeans Notes issued under the
Indenture after the Initial Issuance Date and having identical
terms (except as to the initial interest payment date) to the
initial Outstanding Notes or the Exchange Notes issued in
exchange for the initial Outstanding Notes.
Affiliate of any specified Person means any
other Person, directly or indirectly, controlling or controlled
by or under direct or indirect common control with such
specified Person. For the purposes of this definition,
control when used with respect to any Person means
the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms
controlling and controlled have meanings
correlative to the foregoing.
Asset Sale means
(1) the sale, lease, conveyance or other disposition (a
disposition) of any properties or assets (including,
without limitation, by way of a Sale/Leaseback), excluding
dispositions in the ordinary course of business (provided that
the disposition of all or substantially all of the properties or
assets of the Company and its Subsidiaries (on a consolidated
basis) will be governed by the provisions of the Indenture
described above under Certain
Covenants Merger, Consolidation, or Sale of
Assets and not by the provisions described under
Certain Covenants Limitation on
Asset Sales,
(2) the issue or sale by the Company or any of its
Restricted Subsidiaries of Equity Interests of any of the
Companys Subsidiaries,
whether, in the case of clause (1) or (2), in a single
transaction or a series of related transactions, provided that
such transaction or series of transactions involves properties
or assets having a Fair Market Value in excess of
$15.0 million. Notwithstanding the preceding, the following
transactions will be deemed not to be Asset Sales:
(a) a disposition of obsolete or excess equipment or other
properties or assets;
73
(b) a disposition of properties or assets by the Company to
a Restricted Subsidiary or by a Restricted Subsidiary to the
Company or to another Restricted Subsidiary;
(c) a disposition of Equity Interests by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary;
(d) a disposition of cash or Cash Equivalents or a
disposition of properties or assets that constitutes a
Restricted Payment that is permitted by the Indenture or a
Permitted Investment;
(e) a disposition of properties or assets in the ordinary
course of business by the Company or any of its Restricted
Subsidiaries to a Person that is an Affiliate of the Company or
such Restricted Subsidiary and is engaged in the business of
providing helicopter transportation services to the oil and gas
industry (or a business that is reasonably complementary or
related thereto as determined in good faith by the Board of
Directors), which Person is an Affiliate solely because the
Company or such Restricted Subsidiary has an Investment in such
Person, provided that such transaction complies with the
covenant described under Certain
Covenants Limitation on Transactions with
Affiliates;
(f) any charter or lease of any equipment or other
properties or assets entered into in the ordinary course of
business and with respect to which the Company or any Restricted
Subsidiary thereof is the lessor, except any such charter or
lease that provides for the acquisition of such properties or
assets by the lessee during or at the end of the term thereof
for an amount that is less than their fair market value at the
time the right to acquire such properties or assets occurs;
(g) any trade or exchange by the Company or any Restricted
Subsidiary of equipment or other properties or assets for
equipment or other properties or assets owned or held by another
Person, provided that the Fair Market Value of the properties or
assets traded or exchanged by the Company or such Restricted
Subsidiary (together with any cash or Cash Equivalents) is
reasonably equivalent to the Fair Market Value of the properties
or assets (together with any cash or Cash Equivalents) to be
received by the Company or such Restricted Subsidiary; provided
further that any cash or Cash Equivalents received must be
applied in accordance with the provisions described under
Certain Covenants Limitation on
Asset Sales;
(h) a disposition in the ordinary course of business of
inventory, receivables or other current assets; and
(i) the creation or perfection of a Lien (but not the sale
or other disposition of the properties or assets subject to such
Lien).
The Fair Market Value of any non-cash proceeds of a disposition
of properties or assets and of any properties or assets referred
to in the foregoing clause (g) of this definition shall be
set forth in an Officers Certificate delivered to the
Trustee.
Attributable Indebtedness in respect of a
Sale/Leaseback Transaction means, at the time of determination,
the present value (discounted at the rate of interest implicit
in such transaction, determined in accordance with GAAP) of the
obligation of the lessee for net rental payments during the
remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been
extended or may, at the option of the lessor, be extended). As
used in the preceding sentence, the net rental
payments under any lease for any such period shall mean
the sum of rental and other payments required to be paid with
respect to such period by the lessee thereunder, excluding any
amounts required to be paid by such lessee on account of
maintenance and repairs, insurance, taxes, assessments, water
rates or similar charges. In the case of any lease that is
terminable by the lessee upon payment of penalty, such net
rental payment shall also include the amount of such penalty,
but no rent shall be considered as required to be paid under
such lease subsequent to the first date upon which it may be so
terminated.
Board of Directors means, as to any Person,
the board of directors of such Person or any duly authorized
committee thereof.
74
Capital Lease Obligation means, at the time
any determination thereof is to be made, the amount of the
liability in respect of a capital lease that would at such time
be required to be capitalized on a balance sheet in accordance
with GAAP.
Capital Stock means
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any
and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock;
(3) in the case of a partnership or limited liability
company, partnership or membership interests (whether general or
limited); and
(4) any other interest or participation that confers on a
Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person but, in
each case, excluding any debt securities convertible into such
equity.
Cash Equivalents means
(1) securities issued or directly and fully guaranteed or
insured by the government of the United States or any other
country whose sovereign debt has a rating of at least A3 from
Moodys and at least A- from S&P or any agency or
instrumentality thereof having maturities of not more than
twelve months from the date of acquisition;
(2) certificates of deposit and Eurodollar time deposits
with maturities of six months or less from the date of
acquisition, bankers acceptances with maturities not
exceeding six months and overnight bank deposits, in each case
with any commercial bank organized under the laws of any country
that is a member of the Organization for Economic Cooperation
and Development having capital and surplus in excess of
$500 million (or the equivalent thereof in any other
currency or currency unit);
(3) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in
clauses (1) and (2) above entered into with any
financial institution meeting the qualifications specified in
clause (2) above;
(4) commercial paper having the highest rating obtainable
from Moodys or S&P, or carrying an equivalent rating
by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of investments,
and in each case maturing within 270 days after the date of
acquisition;
(5) deposits available for withdrawal on demand with any
commercial bank not meeting the qualifications specified in
clause (2) above, provided all such deposits do not exceed
$3.0 million (or the equivalent thereof in any other
currency or currency unit) in the aggregate at any one
time; and
(6) money market mutual funds substantially all of the
assets of which are of the type described in the foregoing
clauses (1) through (4).
Common Stock means the Common Stock of the
Company, par value $.01 per share.
Consolidated Cash Flow means, with respect to
any Person for any period, the Consolidated Net Income of such
Person for such period plus, to the extent deducted or excluded
in calculating Consolidated Net Income for such period,
(1) an amount equal to any extraordinary loss plus any net
loss realized by such Person or any of its Restricted
Subsidiaries in connection with an Asset Sale and gains from
Asset Sales of aircraft in the ordinary course of business;
(2) Consolidated Income Taxes of such Person and its
Restricted Subsidiaries;
(3) Consolidated Interest Expense of such Person and its
Restricted Subsidiaries;
75
(4) depreciation and amortization (including amortization
of goodwill and other intangibles but excluding amortization of
prepaid cash expenses that were paid in a prior period) of such
Person and its Restricted Subsidiaries; and
(5) all other non-cash charges and non-cash write offs,
including non-cash compensation expense and minority interest,
of such Person and its Restricted Subsidiaries reducing
Consolidated Net Income (excluding any such non-cash charge or
write off to the extent that it represents an accrual of or
reserve for cash expenditures in any future period or
amortization of a prepaid cash expense that was paid in a prior
period not included in the calculation),
in each case, on a consolidated basis and determined in
accordance with GAAP. Notwithstanding the preceding sentence,
clauses (1), (2), (3), (4) and (5) relating to amounts
of a Restricted Subsidiary of a Person will be added to
Consolidated Net Income to compute Consolidated Cash Flow of
such Person only to the extent (and in the same proportion) that
the net income (loss) of such Restricted Subsidiary was included
in calculating the Consolidated Net Income of such Person.
Consolidated Income Taxes means, with respect
to any Person for any period, taxes imposed upon such Person or
other payments required to be made by such Person by any
governmental authority which taxes or other payments are
calculated by reference to the income or profits of such Person
or such Person and its Restricted Subsidiaries (to the extent
such income or profits were included in computing Consolidated
Net Income for such period), regardless of whether such taxes or
payments are required to be remitted to any governmental
authority.
Consolidated Interest Coverage Ratio means
with respect to any Person for any period, the ratio of the
Consolidated Cash Flow of such Person for such period to the
Consolidated Interest Expense of such Person for such period;
provided, however, that the Consolidated Interest Coverage Ratio
shall be calculated giving pro forma effect to each of the
following transactions as if each such transaction had occurred
at the beginning of the applicable four quarter reference period:
(1) any incurrence, assumption, guarantee, repayment,
repurchase, defeasance or redemption by such Person or any of
its Restricted Subsidiaries of any Indebtedness (other than
revolving credit borrowings) subsequent to the commencement of
the period for which the Consolidated Interest Coverage Ratio is
being calculated but prior to the date on which the event for
which the calculation of the Consolidated Interest Coverage
Ratio is made (the Calculation Date);
(2) any acquisition that has been made by such Person or
any of its Restricted Subsidiaries, including, through a merger
or consolidation, and including any related financing
transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the
Calculation Date; and
(3) any other transaction that may be given pro forma
effect in accordance with Article 11 of
Regulation S-X
as in effect from time to time;
provided further, however, that (A) the Consolidated Cash
Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded and
(B) the Consolidated Interest Expense attributable to
discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Consolidated Interest
Expense will not be obligations of the referent Person or any of
its Restricted Subsidiaries following the Calculation Date. For
purposes of this definition, whenever pro forma effect is to be
given to any calculation under this definition, the pro forma
calculations will be determined in good faith by a responsible
financial or accounting officer of the Company (including pro
forma expense and cost reductions calculated on a basis
consistent with
Regulation S-X
under the Securities Act). If any Indebtedness bears a floating
rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness will be calculated as if
the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any
interest rate agreement applicable to such Indebtedness if such
interest rate agreement has a remaining term in excess of
12 months).
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Consolidated Interest Expense means, with
respect to any Person for any period, the sum, without
duplication, of
(1) the consolidated interest expense of such Person and
its Restricted Subsidiaries for such period, whether paid or
accrued (including amortization of original issue discount,
non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, commissions,
discounts and other fees and charges incurred in respect of
letter of credit or bankers acceptance financings, and net
payments (if any) pursuant to Hedging Obligations but excluding
amortization of debt issuance costs); and
(2) the consolidated interest expense of such Person and
its Restricted Subsidiaries that was capitalized during such
period.
Consolidated Net Income means, with respect
to any Person for any period, the aggregate of the Net Income of
such Person and its Restricted Subsidiaries for such period, on
a consolidated basis, determined in accordance with GAAP,
provided that
(1) the Net Income (but not loss) of any Person that is not
a Restricted Subsidiary or that is accounted for by the equity
method of accounting shall be included only to the extent of the
amount of dividends or distributions paid in cash to the
referent Person or its Restricted Subsidiaries;
(2) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary
of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been
obtained) or, directly or indirectly, by operation of the terms
of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to
that Subsidiary or its stockholders;
(3) the cumulative effect of a change in accounting
principles shall be excluded; and
(4) solely for purposes of the covenant set forth under
Certain Covenants Limitation on
Restricted Payments, all premiums paid in connection with
any early extinguishment of Indebtedness will be excluded.
Consolidated Net Tangible Assets as of any
date of determination, means the consolidated total assets of
the Company and its Restricted Subsidiaries determined in
accordance with GAAP, less the sum of:
(1) all current liabilities (excluding the amount of those
which are by their terms extendable or renewable at the option
of the obligor to a date more than 12 months after the date
as of which the amount is being determined); and
(2) all goodwill, trade names, trademarks, patents,
organization expense, unamortized debt discount and expense and
other similar intangibles properly classified as intangibles in
accordance with GAAP.
Credit Facilities means one or more debt
facilities or commercial paper facilities, in each case with
banks or other institutional lenders or institutional investors
providing for revolving credit loans, term loans, receivables
financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from (or
sell receivables to) such lenders against such receivables), or
letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part
from time to time.
Default means any event that is or with the
passage of time or the giving of notice or both would be an
Event of Default.
Disqualified Stock means any Capital Stock
that, by its terms (or by the terms of any security into which
it is convertible or for which it is exchangeable), or upon the
happening of any event:
(1) matures (excluding any maturity as a result of an
optional redemption by the issuer thereof) or is mandatorily
redeemable pursuant to a sinking fund obligation or otherwise;
77
(2) is convertible or exchangeable for Indebtedness or
other Disqualified Stock (excluding Capital Stock which is
convertible or exchangeable solely at the option of the issuer
thereof); or
(3) is redeemable at the option of the holder thereof, in
whole or in part, in each case, on or prior to the date that is
91 days after the date on which the Notes mature or are
redeemed or retired in full;
provided, however, that any Capital Stock that would constitute
Disqualified Stock solely because the holders thereof (or of any
security into which it is convertible or for which it is
exchangeable) have the right to require the issuer to repurchase
such Capital Stock (or such security into which it is
convertible or for which it is exchangeable) upon the occurrence
of any of the events constituting an Asset Sale or a Change of
Control shall not constitute Disqualified Stock if such Capital
Stock (and all such securities into which it is convertible or
for which it is exchangeable) provides that the issuer thereof
will not repurchase or redeem any such Capital Stock (or any
such security into which it is convertible or for which it is
exchangeable) pursuant to such provisions prior to compliance by
the Company with the provisions of the Indenture described under
Repurchase at the Option of Holders or
Certain Covenants Limitation on
Asset Sales, as the case may be.
Equity Interests means Capital Stock and all
warrants, options or other rights to acquire Capital Stock (but
excluding any debt security that is convertible into, or
exchangeable for, Capital Stock).
Exchange Notes means any substantially
identical issue of notes issued in an exchange offer for the
initial Outstanding Notes (other than with respect to transfer
restrictions) or any Additional Notes.
Existing Indebtedness means Indebtedness of
the Company and its Restricted Subsidiaries (other than
Indebtedness under the Credit Facilities) in existence on the
Initial Issuance Date, until such amounts are repaid.
Fair Market Value means, with respect to any
Asset Sale or Restricted Payment, the price that would be
negotiated in an arms-length transaction for cash between
a willing seller and a willing and able buyer, neither of which
is under any compulsion to complete the transaction, as such
price is determined in good faith by an officer of the Company
(and evidenced by an Officers Certificate delivered to the
Trustee) if such value is less than $15.0 million; provided
if the value of such Asset Sale or Restricted Payment is
$15.0 million or greater, such determination shall be made
in good faith by the Board of Directors of the Company and
evidenced by a board resolution delivered to the Trustee in the
form of an Officers Certificate, provided further if the
value of such Asset Sale or Restricted Payment is
$25.0 million or greater, such determination shall be made
by a reputable accounting, appraisal or investment banking firm
that is, in the judgment of such Board of Directors of the
Company, qualified to perform the task for which such firm has
been engaged and independent with respect to the Company.
GAAP means generally accepted accounting
principles in the United States as in effect from time to time.
Hedging Obligations means, with respect to
any Person, the obligations of such Person under:
(1) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements;
(2) other agreements or arrangements designed to protect
such Person against fluctuations in interest rates; and
(3) any foreign currency futures contract, option or
similar agreement or arrangement designed to protect such Person
against fluctuations in foreign currency rates, in each case to
the extent such obligations are incurred in the ordinary course
of business of such Person.
Indebtedness means, with respect to any
Person on any date of determination (without duplication):
(1) the principal of and premium (if any) in respect of
indebtedness of such Person for borrowed money;
(2) the principal of and premium (if any) in respect of
obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments;
78
(3) the principal component of all obligations of such
Person in respect of letters of credit, bankers
acceptances or other similar instruments (including
reimbursement obligations with respect thereto except to the
extent such reimbursement obligation relates to a trade payable
and such obligation is satisfied within 30 days of
incurrence);
(4) the principal component of all obligations of such
Person to pay the deferred and unpaid purchase price of property
(except trade payables), which purchase price is due more than
six months after the date of placing such property in service or
taking delivery and title thereto, the amount of such price
being that which would be negotiated in an arms length
transaction for cash between a willing seller and a willing and
able buyer, neither of which is under any compulsion to complete
the transaction;
(5) Capital Lease Obligations and all Attributable
Indebtedness of such Person;
(6) the principal component or liquidation preference of
all obligations of such Person with respect to the redemption,
repayment or other repurchase of any Disqualified Stock (but
excluding, in each case, any accrued dividends);
(7) the principal component of all Indebtedness of other
Persons secured by a Lien on any asset of such Person, whether
or not such Indebtedness is assumed by such Person; provided,
however, that the amount of such Indebtedness will be the lesser
of
(a) the fair market value of such asset at such date of
determination; and
(b) the amount of such Indebtedness of such other Persons;
(8) the principal component of Indebtedness of other
Persons to the extent guaranteed by such Person; and
(9) to the extent not otherwise included in this
definition, Hedging Obligations of such Person (the amount of
any such obligations to be equal at any time to the termination
value of the agreement or arrangement giving rise to such
obligation that would be payable by such Person at such time).
In addition, Indebtedness of any Person shall
include Indebtedness described in the preceding paragraph that
would not appear as a liability on the balance sheet of such
Person if:
(1) such Indebtedness is the obligation of a partnership or
joint venture that is not a Restricted Subsidiary (a Joint
Venture);
(2) such Person or a Restricted Subsidiary of such Person
is a general partner of the Joint Venture (a General
Partner); and
(3) there is recourse, by contract or operation of law,
with respect to the payment of such Indebtedness to properties
or assets of such Person or a Restricted Subsidiary of such
Person; and then such Indebtedness shall be included in an
amount not to exceed:
(a) the lesser of (x) the net assets of the General
Partner and (y) the amount of such obligations to the
extent that there is recourse, by contract or operation of law,
to the properties or assets of such Person or a Restricted
Subsidiary of such Person; or
(b) if less than the amount determined pursuant to
clause (a) immediately above, the actual amount of such
Indebtedness that is recourse to such Person or a Restricted
Subsidiary of such Person, if the Indebtedness is evidenced by a
writing and is for a determinable amount and the related
interest expense shall be included in Consolidated Interest
Expense to the extent actually paid by the Company or its
Restricted Subsidiaries.
Initial Issuance Date means June 13,
2007.
Initial Notes means
(1) $300 million aggregate principal amount of Notes
issued on the Initial Issuance Date and (2) Additional
Notes, if any, issued in a transaction exempt from the
registration requirements of the Securities Act.
79
Investment Grade Rating means:
(1) a Moodys rating of Baa3 or higher and an S&P
rating of at least BB+ or
(2) a Moodys rating of Ba1 or higher and an S&P
rating of at least BBB-;
provided, however, that if (a) either Moodys or
S&P changes its rating system, such ratings will be the
equivalent ratings after such changes or (b) if S&P or
Moodys or both shall not make a rating of the Notes
publicly available, the references above to S&P or
Moodys or both, as the case may be, shall be to a
nationally recognized U.S. rating agency or agencies, as
the case may be, selected by the Company and the references to
the ratings categories above shall be to the corresponding
rating categories of such rating agency or rating agencies, as
the case may be.
Investment Grade Rating Event means the first
day on which the Notes are assigned an Investment Grade Rating.
Investments means, with respect to any
Person, all investments by such Person in other Persons
(including Affiliates) in the forms of direct or indirect loans
(including guarantees by the referent Person of, and Liens on
any assets of the referent Person securing, Indebtedness or
other obligations of other Persons), advances or capital
contributions (excluding commission, travel and similar advances
to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on
a balance sheet prepared in accordance with GAAP; provided,
however, that the following shall not constitute Investments:
(1) extensions of trade credit or other advances to
customers on commercially reasonable terms in accordance with
normal trade practices or otherwise in the ordinary course of
business;
(2) Hedging Obligations; and
(3) endorsements of negotiable instruments and documents in
the ordinary course of business.
If the Company or any Restricted Subsidiary of the Company sells
or otherwise disposes of any Equity Interests of any direct or
indirect Restricted Subsidiary of the Company such that, after
giving effect to any such sale or disposition, such Person is no
longer a Restricted Subsidiary of the Company, the Company shall
be deemed to have made an Investment on the date of any such
sale or disposition equal to the Fair Market Value of the Equity
Interests of such Restricted Subsidiary not sold or disposed of
in an amount determined as provided in the final paragraph of
the covenant described above under Certain
Covenants Limitation on Restricted Payments.
Lien means, with respect to any asset,
mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset, whether or not filed,
recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform
Commercial Code (or equivalent statutes) of any jurisdiction
other than a precautionary financing statement respecting a
lease not intended as a security agreement).
Marketable Securities means, with respect to
any Asset Sale, any readily marketable equity securities that
are:
(1) traded on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market; and
(2) issued by a corporation or limited partnership having a
total equity market capitalization of not less than
$250.0 million; provided that the excess of (a) the
aggregate amount of securities of any one such corporation or
limited partnership held by the Company and any Restricted
Subsidiary over (b) ten times the average daily trading
volume of such securities during the 20 immediately preceding
trading days shall be deemed not to be Marketable Securities, as
determined on the date of the contract relating to such Asset
Sale.
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Moodys means Moodys Investors
Service, Inc. and its successors.
Net Income means, with respect to any Person,
the net income (loss) of such Person, determined in accordance
with GAAP and before any reduction in respect of Preferred Stock
dividends, excluding, however:
(1) any gain (but not loss), together with any related
provision for taxes on such gain (but not loss), realized in
connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to Sale/leaseback
Transactions), or (b) the disposition of any securities by
such Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its
Restricted Subsidiaries; and
(2) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such
extraordinary or nonrecurring gain (but not loss).
Net Proceeds means the aggregate cash
proceeds received by the Company or any of its Restricted
Subsidiaries in respect of any Asset Sale (including, without
limitation, any cash received upon the sale or other disposition
of any non-cash consideration received in any Asset Sale), net
of (without duplication):
(1) the direct costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment
banking fees, sales commissions, recording fees, title transfer
fees, title insurance premiums, appraiser fees and costs
incurred in connection with preparing such asset for sale) and
any relocation expenses incurred as a result of such Asset Sale;
(2) taxes paid or estimated to be payable as a result of
the Asset Sale (after taking into account any available tax
credits or deductions and any tax sharing arrangements);
(3) amounts required to be applied to the repayment of
Indebtedness (other than under the Credit Facilities) secured by
a Lien on the properties or assets that were the subject of such
Asset Sale; and
(4) any reserve established in accordance with GAAP or any
amount placed in escrow, in either case for adjustment in
respect of the sale price of such properties or assets, until
such time as such reserve is reversed or such escrow arrangement
is terminated, in which case Net Proceeds shall include only the
amount of the reserve so reversed or the amount returned to the
Company or its Restricted Subsidiaries from such escrow
arrangement, as the case may be.
Non-Recourse Debt means Indebtedness:
(1) as to which neither the Company nor any of its
Restricted Subsidiaries (a) provides credit support of any
kind that would constitute Indebtedness or is otherwise directly
or indirectly liable (as a guarantor or otherwise) or
(b) constitutes the lender;
(2) no default with respect to which (including any rights
the holders thereof may have to take enforcement action against
an Unrestricted Subsidiary) would permit (upon notice, lapse of
time or both) the holders of Indebtedness of the Company or any
of its Restricted Subsidiaries to declare a default on such
Indebtedness or cause the payment thereof to be accelerated or
payable prior to its stated maturity; and
(3) the explicit terms of which provide that there is no
recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries.
Pari Passu Indebtedness means, with respect
to any Net Proceeds from Asset Sales, Indebtedness of the
Company and its Restricted Subsidiaries that ranks equal in
right of payment with the Notes or the Subsidiary Guarantees, as
the case may be, and the terms of which require the Company or
such Restricted Subsidiary to apply such Net Proceeds to offer
to repurchase such Indebtedness.
Permitted Investments means:
(1) any Investment in the Company or in a Restricted
Subsidiary of the Company;
(2) any Investment in Cash Equivalents;
81
(3) any Investment by the Company or any Restricted
Subsidiary of the Company in a Person if as a result of such
Investment (a) such Person becomes a Restricted Subsidiary
of the Company or (b) such Person is merged, consolidated
or amalgamated with or into, or transfers or conveys all or
substantially all of its assets to, or is liquidated into, the
Company or a Restricted Subsidiary of the Company;
(4) any Investment made as a result of the receipt of
non-cash consideration from (a) an Asset Sale that was made
pursuant to and in compliance with the covenant described above
under Certain Covenants Limitation
on Asset Sales or (b) a disposition of properties or
assets that does not constitute an Asset Sale;
(5) receivables owing to the Company or any Restricted
Subsidiary created or acquired in the ordinary course of
business and payable or dischargeable in accordance with
customary trade terms;
(6) Investments in any Person (a) in exchange for an
issue or sale by the Company of its Common Stock or (b) out
of the net cash proceeds of an issue or sale by the Company of
its Common Stock so long as such Investment pursuant to this
clause (b) occurs within 90 days of the closing of
such issuance or sale of Common Stock;
(7) loans or advances to employees (other than executive
officers) made in the ordinary course of business consistent
with past practices of the Company or such Restricted
Subsidiary; and
(8) Investments in a Person engaged principally in the
business of providing helicopter transportation services to the
oil and gas industry or businesses reasonably complementary or
related thereto, provided that the aggregate amount of such
Investments pursuant to this clause (8) in Persons shall
not exceed the greater of (i) $50.0 million, or
(ii) 10% of Consolidated Net Tangible Assets at any one
time.
Permitted Liens means:
(1) Liens securing Indebtedness incurred pursuant to
clause (1) of the second paragraph of the covenant entitled
Certain Covenants Limitation on
Incurrence of Indebtedness and Issuance of Preferred Stock;
(2) Liens in favor of the Company and its Restricted
Subsidiaries;
(3) Liens on any property, asset or Capital Stock of a
Person existing at the time such Person becomes a Restricted
Subsidiary of the Company, provided that such Liens were not
created or incurred in connection with, or in contemplation of,
such other Person becoming a Restricted Subsidiary and do not
extend to any other property or asset owned by the Company or
any of its Restricted Subsidiaries;
(4) Liens on any property or asset existing at the time of
its acquisition by the Company or any Restricted Subsidiary of
the Company, provided that such Liens were not created or
incurred in connection with, or in contemplation of, such
acquisition and do not extend to any other property or asset;
(5) Liens to secure the performance of statutory
obligations, surety or appeal bonds, bid or performance bonds,
insurance obligations or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens securing Hedging Obligations;
(7) Liens existing on the Initial Issuance Date;
(8) Liens securing Non-Recourse Debt;
(9) any interest or title of a lessor under a Capital Lease
Obligation or an operating lease;
(10) Liens arising by reason of deposits necessary to
obtain standby letters of credit in the ordinary course of
business;
(11) Liens on real or personal property or assets of the
Company or a Restricted Subsidiary thereof to secure
Indebtedness incurred for the purpose of (a) financing all
or any part of the purchase price of
82
such property or assets incurred prior to, at the time of, or
within 120 days after, the acquisition of such property or
assets or (b) financing all or any part of the cost of
construction of any such property or assets, provided that the
amount of any such financing shall not exceed the amount
expended in the acquisition of, or the construction of, such
property or assets and such Liens shall not extend to any other
property or assets of the Company or a Restricted Subsidiary
(other than any associated accounts, contracts and insurance
proceeds);
(12) Liens securing Permitted Refinancing Indebtedness with
respect to any Indebtedness referred to in clauses (3), (4),
(7) and (11) above; provided that any such Lien is
limited to all or part of the same property or assets (plus
improvements, accessions, proceeds or dividends or distributions
in respect thereof) that secured (or, under the written
arrangements under which the original Lien arose, could secure)
the Indebtedness being refinanced or is in respect of property
or assets that are the security for a Permitted Lien
hereunder; and
(13) Liens not otherwise permitted by clauses (1)
through (12) above securing Indebtedness not in excess of
an aggregate of the greater of (a) $50.0 million or
(b) 5% of Consolidated Net Tangible Assets at any one time
outstanding.
Permitted Non-Guarantor Indebtedness means
(1) any Indebtedness incurred pursuant to clauses (1)
through (12) of the second paragraph of the covenant
entitled Certain Covenants
Limitation on Incurrence of Indebtedness and Issuance of
Preferred Stock; and
(2) any additional Indebtedness in an aggregate principal
amount not in excess of $10.0 million at any time
outstanding.
Permitted Refinancing Indebtedness means any
Indebtedness of the Company or any of its Restricted
Subsidiaries issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its
Restricted Subsidiaries; provided, however, that:
(1) the principal amount (or accreted value, if applicable)
of such Permitted Refinancing Indebtedness does not exceed the
principal amount of (or accreted value, if applicable), plus
premium, if any, and accrued interest on, the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses incurred in connection
therewith);
(2) (a) if the Stated Maturity of the Indebtedness
being refinanced is earlier than the Stated Maturity of the
Notes, the Permitted Refinancing Indebtedness has a Stated
Maturity no earlier than the Stated Maturity of the Indebtedness
being refinanced or (b) if the Stated Maturity of the
Indebtedness being refinanced is later than the Stated Maturity
of the Notes, the Permitted Refinancing Indebtedness has a
Stated Maturity at least 91 days later than the Stated
Maturity of the Notes;
(3) the Permitted Refinancing Indebtedness has a Weighted
Average Life to Maturity at the time such Permitted Refinancing
Indebtedness is incurred that is equal to or greater than the
Weighted Average Life to Maturity of the Indebtedness being
extended, refinanced, renewed, replaced, deferred or refunded;
(4) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right
of payment to the Notes or the Subsidiary Guarantees, such
Permitted Refinancing Indebtedness is subordinated in right of
payment to the Notes or the Subsidiary Guarantees on terms at
least as favorable, taken as a whole, to the holders of Notes as
those contained in the documentation governing the Indebtedness
being extended, refinanced, renewed, replaced, defeased or
refunded; and
(5) such Indebtedness is not incurred by a Restricted
Subsidiary if the Company is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or
refunded; provided, however, that a Restricted Subsidiary that
is also a Guarantor may guarantee Permitted Refinancing
Indebtedness incurred by the Company, whether or not such
Restricted Subsidiary was an obligor or guarantor of the
Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; provided further,
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however, that if such Permitted Refinancing Indebtedness is
subordinated to the Notes, such guarantee shall be subordinated
to such Restricted Subsidiarys Subsidiary Guarantee to at
least the same extent.
Person means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, limited liability company,
government or any agency or political subdivision hereof or any
other entity.
Preferred Stock, as applied to the Capital
Stock of any Person, means Capital Stock of any class or classes
(however designated) which is preferred as to the payment of
dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of
such Person.
Productive Assets means aircraft or other
assets (other than assets that would be classified as current
assets in accordance with GAAP) of the kind used or usable by
the Company or its Restricted Subsidiaries in the business of
providing helicopter transportation services to the oil and gas
industry (or any business that is reasonably complementary or
related thereto as determined in good faith by the Board of
Directors).
Qualified Equity Offering means:
(1) any sale of Equity Interests (other than Disqualified
Stock) of the Company pursuant to an underwritten offering
registered under the Securities Act; or
(2) any sale of Equity Interests (other than Disqualified
Stock) of the Company so long as, at the time of consummation of
such sale, the Company has a class of common equity securities
registered pursuant to Section 12(b) or Section 12(g)
under the Exchange Act,
in each case, other than public offerings with respect to the
Companys Common Stock, or options, warrants or rights,
registered on
Form S-4
or S-8.
Restricted Investment means an Investment
other than a Permitted Investment.
Restricted Subsidiary of a Person means any
Subsidiary of such Person that is not an Unrestricted Subsidiary.
Sale/Leaseback Transaction means an
arrangement relating to property owned by the Company or a
Restricted Subsidiary on the Initial Issuance Date or thereafter
acquired by the Company or a Restricted Subsidiary whereby the
Company or a Restricted Subsidiary transfers such property to a
Person and the Company or a Restricted Subsidiary leases it from
such Person.
S&P means Standard &
Poors Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors.
Significant Subsidiary means any Restricted
Subsidiary of the Company that would be a significant
subsidiary as defined in Article 1,
Rule 1-02
of
Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation
is in effect on the Initial Issuance Date.
Significant U.S. Subsidiary means any
Significant Subsidiary organized under the laws of the United
States, any state thereof or the District of Columbia.
Stated Maturity means, with respect to any
installment of interest or principal on any series of
Indebtedness, the date on which such payment of interest or
principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any
contingent obligations to repay, redeem or repurchase any such
interest or principal prior to the date originally scheduled for
the payment thereof.
Subsidiary means, with respect to any Person:
(1) any corporation, association or other business entity
of which more than 50% of the total voting power of shares of
its Voting Stock is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other
Subsidiaries of that Person (or a combination thereof);
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(2) any partnership, joint venture limited liability
company or similar entity of which more than 50% of the capital
accounts, distribution rights, total equity and voting interests
or general or limited partnership interests, as applicable, is
at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person
(or a combination thereof); and
(3) any other Person whose results for financial reporting
purposes are consolidated with those of such Person in
accordance with GAAP.
Unrestricted Subsidiary means any Subsidiary
that is designated by the Board of Directors as an Unrestricted
Subsidiary pursuant to a Board Resolution and any Subsidiary of
an Unrestricted Subsidiary, but only to the extent that each of
such Subsidiary and its Subsidiaries at the time of such
designation:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of
the Company unless such agreement, contract, arrangement or
understanding does not violate the terms of the Indenture
described under Certain Covenants
Limitation on Transactions with Affiliates;
(3) is a Person with respect to which neither the Company
nor any of its Restricted Subsidiaries has any direct or
indirect obligation (a) to subscribe for additional Equity
Interests or (b) to maintain or preserve such Persons
financial condition or to cause such Person to achieve any
specified levels of operating results, in each case, except to
the extent otherwise permitted by the Indenture; and
(4) such Subsidiary, either alone or in the aggregate with
all other Unrestricted Subsidiaries, does not operate, directly
or indirectly, all or substantially all of the business of the
Company and its Subsidiaries.
Any such designation by the Board of Directors shall be
evidenced to the Trustee by filing with the Trustee a certified
copy of the Board Resolution giving effect to such designation
and an Officers Certificate certifying that such
designation complied with the foregoing conditions and was
permitted by the covenant described above under
Certain Covenants Limitation on
Restricted Payments. If, at any time, any Unrestricted
Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of the Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of the Company as of such date (and,
if such Indebtedness is not permitted to be incurred as of such
date under the covenant described under Certain
Covenants Limitation on Incurrence of Indebtedness
and Issuance of Preferred Stock, the Company shall be in
default of such covenant). The Board of Directors of the Company
may at any time designate any Unrestricted Subsidiary to be a
Restricted Subsidiary, provided that such designation shall be
deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of
such Unrestricted Subsidiary and such designation shall only be
permitted if:
(a) such Indebtedness is permitted under the covenant
described under Certain Covenants
Limitation on Incurrence of Indebtedness and Issuance of
Preferred Stock, calculated on a pro forma basis as if
such designation had occurred at the beginning of the
four-quarter reference period; and
(b) no Default or Event of Default would be in existence
following such designation.
U.S. Dollar Equivalent means with
respect to any monetary amount in a currency other than
U.S. dollars, at any time for determination thereof, the
amount of U.S. dollars obtained by converting such foreign
currency involved in such computation into U.S. dollars at
the spot rate for the purchase of U.S. dollars with the
applicable foreign currency as published in The Wall Street
Journal in the Exchange Rates column under the
heading Currency Trading on the date two Business
Days prior to such determination.
Except as described under Certain
Covenants Limitation on Incurrence of Indebtedness
and Issuance of Preferred Stock, whenever it is necessary
to determine whether the Company has complied with
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any covenant in the Indenture or a Default has occurred and an
amount is expressed in a currency other than U.S. dollars,
such amount will be treated as the U.S. Dollar Equivalent
determined as of the date such amount is initially determined in
such currency.
Voting Stock of a Person means all classes of
Capital Stock of such Person then outstanding and normally
entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees of
such Person.
Weighted Average Life to Maturity means, when
applied to any Indebtedness at any date, the number of years
obtained by dividing
(1) the sum of the products obtained by multiplying
(a) the amount of each then remaining installment, sinking
fund, serial maturity or other required payments of principal,
including payment at final maturity, in respect thereof, by
(b) the number of years (calculated to the nearest one
twelfth) that will elapse between such date and the making of
such payment, by
(2) the then outstanding principal amount of such
Indebtedness.
Wholly Owned Restricted Subsidiary of any
Person means a Restricted Subsidiary of such Person, all of the
Capital Stock of which (other than directors qualifying
shares) is owned by the Company or another Wholly Owned
Restricted Subsidiary.
BOOK-ENTRY,
DELIVERY AND FORM
The
Global Notes
The Exchange Notes will be issued in the form of several
registered notes in global form, without interest coupons (the
Global Notes), in definitive, registered, book entry
form. Upon issuance, each of the Global Notes will be deposited
with the Trustee as custodian for DTC and registered in the name
of Cede & Co., as nominee of DTC.
Ownership of beneficial interests in each Global Note will be
limited to persons who have accounts with DTC (DTC
participants) or persons who hold interests through DTC
participants. We expect that under procedures established by DTC:
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upon deposit of each Global Note with DTCs custodian, DTC
will credit portions of the principal amount of the Global Note
to the accounts of the DTC participants; and
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ownership of beneficial interests in each Global Note will be
shown on, and transfer of ownership of those interests will be
effected only through, records maintained by DTC (with respect
to interests of DTC participants) and the records of DTC
participants (with respect to other owners of beneficial
interests in the Global Note).
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Investors may hold their interests in a Global Note directly
through the Euroclear System (Euroclear) or
Clearstream Banking, societe anonyme (Clearstream),
if they are participants in those systems, or indirectly through
organizations that are participants in those systems. Each of
Euroclear and Clearstream will appoint a DTC participant to act
as its depositary for the interests in each Global Note that are
held within DTC for the account of each settlement system on
behalf of its participants.
Beneficial interests in the Global Notes may not be exchanged
for notes in physical, certificated form except in the limited
circumstances described below under
Certificated Notes.
Book-Entry
Procedures for the Global Notes
All interests in the Global Notes will be subject to the
operations and procedures of DTC, Euroclear and Clearstream. We
provide the following summaries of those operations and
procedures solely for the
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convenience of investors. The operations and procedures of each
settlement system are controlled by that settlement system and
may be changed at any time. We are not responsible for those
operations or procedures.
DTC has advised us that it is:
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a limited purpose trust company organized under the laws of the
State of New York;
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a banking organization within the meaning of the New
York State Banking Law;
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a member of the Federal Reserve System;
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a clearing corporation within the meaning of the
Uniform Commercial Code; and
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a clearing agency registered under Section 17A
of the Exchange Act.
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DTC was created to hold securities for its participants and to
facilitate the clearance and settlement of securities
transactions between its participants through electronic
book-entry changes to the accounts of its participants.
DTCs participants include securities brokers and dealers,
banks and trust companies, clearing corporations and other
organizations. Indirect access to DTCs system is also
available to others such as banks, brokers, dealers and trust
companies; these indirect participants clear through or maintain
a custodial relationship with a DTC participant, either directly
or indirectly. Investors who are not DTC participants may
beneficially own securities held by or on behalf of DTC only
through DTC participants or indirect participants in DTC.
So long as DTCs nominee is the registered owner of a
Global Note, that nominee will be considered the sole owner or
holder of the Notes represented by that Global Note for all
purposes under the Indenture. Except as provided below, owners
of beneficial interests in a Global Note:
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will not be entitled to have Notes represented by the Global
Note registered in their names;
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will not receive or be entitled to receive physical,
certificated Notes; and
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will not be considered the owners or holders of the Notes under
the Indenture for any purpose, including with respect to the
giving of any direction, instruction or approval to the Trustee
under the Indenture.
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As a result, each investor who owns a beneficial interest in a
Global Note must rely on the procedures of DTC to exercise any
rights of a holder of Notes under the Indenture (and, if the
investor is not a participant or an indirect participant in DTC,
on the procedures of the DTC participant through which the
investor owns its interest). Interests held through Euroclear or
Clearstream may also be subject to the procedures and
requirements of those systems. The laws of some states require
that certain persons take physical delivery in definitive form
of securities they own. Consequently, the ability to transfer
beneficial interests in a Global Note to those persons will be
limited to that extent. Because DTC can act only on behalf of
participations, which in turn act on behalf of indirect
participants, the ability of a beneficial owner of interests in
a Global Note to pledge those interests to a person that does
not participate in the DTC system or otherwise take actions in
respect of those interests may be affected by the lack of a
physical certificate evidencing the interests.
Payments of principal, premium (if any) and interest with
respect to the Notes represented by a Global Note will be made
by the Trustee to DTCs nominee as the registered holder of
the Global Note. Neither we, the Trustee nor any of our or its
agents will have any responsibility or liability for the payment
of amounts to owners of beneficial interests in a Global Note,
for any aspect of the records relating to or payments made on
account of those interests by DTC, or for maintaining,
supervising or reviewing any records of DTC relating to those
interests.
Payments by participants and indirect participants in DTC to the
owners of beneficial interests in a Global Note will be governed
by standing instructions and customary industry practice and
will be the responsibility of those participants or indirect
participants and DTC.
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Transfers between participants in DTC will be effected under
DTCs procedures and will be settled in
same-day
funds. Transfers between participants in Euroclear or
Clearstream will be effected in the ordinary way under the rules
and operating procedures of those systems.
Subject to compliance with applicable transfer restrictions,
cross-market transfers between DTC participants, on the one
hand, and Euroclear or Clearstream participants, on the other
hand, will be effected within DTC through the DTC participants
that are acting as depositaries for Euroclear and Clearstream.
To deliver or receive an interest in a Global Note held in a
Euroclear or Clearstream account, an investor must send transfer
instructions to Euroclear or Clearstream, as the case may be,
under the rules and procedures of that system and within the
established deadlines of that system. If the transaction meets
its settlement requirements, Euroclear or Clearstream, as the
case may be, will send instructions to its DTC depositary to
take action to effect final settlement by delivering or
receiving interests in the relevant Global Notes in DTC, and
making or receiving payment under normal procedures for
same-day
funds settlement applicable to DTC. Euroclear and Clearstream
participants may not deliver instructions directly to the DTC
depositaries that are acting for Euroclear or Clearstream.
Because of time zone differences, the securities account of a
Euroclear or Clearstream participant that purchases an interest
in a Global Note from a DTC participant will be credited on the
business day for Euroclear or Clearstream immediately following
the DTC settlement date. Cash received in Euroclear or
Clearstream from the sale of an interest in a Global Note to a
DTC participant will be received with value on the DTC
settlement date but will be available in the relevant Euroclear
or Clearstream cash account as of the business day for Euroclear
or Clearstream following the DTC settlement date.
DTC, Euroclear and Clearstream have agreed to the above
procedures to facilitate transfers of interests in the Global
Notes among participants in those settlement systems. However,
the settlement systems are not obligated to perform these
procedures and may discontinue or change these procedures at any
time. Neither we nor the Trustee will have any responsibility
for the performance by DTC, Euroclear or Clearstream or their
participants or indirect participants of their obligations under
the rules and procedures governing their operations.
Certificated
Notes
Notes in physical, certificated form will be issued and
delivered to each person that DTC identifies as a beneficial
owner of the related notes only if:
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DTC notifies us at any time that it is unwilling or unable to
continue as depositary for the Global Notes and a successor
depositary is not appointed within 90 days;
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DTC ceases to be registered as a clearing agency under the
Securities Exchange Act of 1934 and a successor depositary is
not appointed within 90 days; or
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an Event of Default has occurred and is continuing and DTC
notifies the trustee of its decision to exchange each Global
Note for certificated Notes.
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In all cases, certificated Notes delivered in exchange for any
Global Note or beneficial interests in Global Notes will be
registered in the names, and issued in any approved
denominations, requested by or on behalf of the depositary (in
accordance with its customary procedures).
CERTAIN
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal
income and estate tax considerations relating to the exchange of
Outstanding Notes for Exchange Notes and to the purchase,
ownership and disposition of the Exchange Notes, but does not
purport to be a complete analysis of all the potential tax
considerations relating thereto. This summary is based on the
Internal Revenue Code of 1986, as amended (the
Code), Treasury regulations, rulings and
pronouncements of the Internal Revenue Service (the
IRS), and judicial decisions as of the date of this
prospectus. These authorities may be changed, perhaps
retroactively, so as to result in United States federal income
tax consequences different from those described herein. Except
for the
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discussion below entitled Exchange of Notes, this
summary is addressed only to persons who hold the Exchange Notes
as capital assets and who acquire the Exchange Notes in a cash
purchase from one or more of the initial purchasers of the
Outstanding Notes (or from a qualified institutional buyer who
purchased Outstanding Notes from such initial purchaser) in the
first sale of such Exchange Notes by such initial purchaser (or
such qualified institutional buyer) after the Exchange Notes are
first registered with the SEC. This summary does not address tax
considerations arising under the laws of any foreign, state or
local jurisdiction or the effect of any tax treaty. In addition,
this discussion does not address tax considerations that are the
result of a holders particular circumstances or of special
rules, such as those that apply to holders subject to the
alternative minimum tax, financial institutions, tax exempt
organizations, insurance companies, dealers or traders in
securities or commodities, regulated investment companies, real
estate investment trusts, United States Holders (as defined
below) whose functional currency is not the
U.S. dollar, certain former citizens or former long-term
residents of the United States, or persons who will hold the
Exchange Notes as a position in a hedging transaction,
straddle or conversion transaction. If a
partnership holds Exchange Notes, then the United States federal
income tax treatment of a partner will generally depend on the
status of the partner and the activities of the partnership.
Such a partner should consult its tax advisor as to its
consequences. We have not sought any ruling from the IRS with
respect to the statements made and conclusions reached in this
summary, and there can be no assurance that the IRS will agree
with these statements and conclusions.
INVESTORS CONSIDERING THE PURCHASE OF EXCHANGE
NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THE APPLICATION OF THE UNITED STATES FEDERAL TAX LAWS TO THEIR
PARTICULAR SITUATIONS AS WELL AS TO ANY TAX CONSEQUENCES ARISING
UNDER THE LAWS OF ANY STATE, LOCAL OR OTHER TAXING JURISDICTION
OR UNDER ANY APPLICABLE TAX TREATY.
Exchange
of Notes
We believe that the receipt of Exchange Notes in exchange for
Outstanding Notes in the exchange offer should not be treated as
a taxable exchange for United States federal income tax purposes
because the Exchange Notes and the Outstanding Notes are not
materially different in kind or in extent, and as a result on
the receipt of Exchange Notes in exchange for Outstanding Notes
in the exchange offer you should not recognize gain or loss,
your initial tax basis in the Exchange Notes should be the same
as your adjusted tax basis in the Outstanding Notes immediately
before such exchange, and your holding period for the Exchange
Notes should include your holding period for the Outstanding
Notes.
United
States Holders
As used in this discussion, United States Holder
means a beneficial owner of Exchange Notes that for United
States federal income tax purposes is:
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an individual who is a citizen or resident of the United States;
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a corporation, or other entity taxable as a corporation, created
or organized in or under the laws of the United States, any
state thereof or the District of Columbia;
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an estate whose income is subject to United States federal
income taxation regardless of its source; or
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a trust (i) if it is subject to the supervision of a court
within the United States and one or more United States persons
have the authority to control all substantial decisions of the
trust or (ii) that has a valid election in effect under
applicable Treasury regulations to be treated as a United States
person.
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Payment
of Interest
Interest on Exchange Notes generally will be taxable to you as
ordinary income at the time it is received or accrued in
accordance with your ordinary method of accounting for United
States federal income tax purposes. In certain circumstances
(see, for example, Description of the Exchange
Notes Registration Rights; Additional
Interest), we may pay amounts on the Outstanding Notes
that are in excess of the stated
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interest or principal of the Outstanding Notes. We believe that
the possibility that any such payment will be made is remote so
that such possibility will not affect the timing or amount of
interest income that you recognize. Our determination that these
contingencies are remote is binding on you unless you disclose
your contrary position to the IRS in the manner that is required
by applicable Treasury regulations. Our determination is not,
however, binding on the IRS. It is possible that the IRS might
take a different position from that described above, in which
case the timing, character and amount of taxable income in
respect of the Exchange Notes may be different from that
described herein.
Market
Discount
Under the market discount rules of the Code, a United States
Holder who purchases Exchange Notes at a market discount will
generally be required to treat any gain realized on the sale,
exchange, retirement or other disposition of the Exchange Notes
as ordinary income to the extent of the accrued market discount
that has not been previously included in income. A disposition
of Exchange Notes by gift, and certain other dispositions that
would normally qualify for nonrecognition treatment, will also
require a holder to include accrued market discount in income to
the same extent as if the holder had sold the Exchange Notes at
their fair market value in a taxable transaction. Market
discount is generally defined as the amount by which the United
States Holders purchase price for Exchange Notes is less
than the Exchange Notes stated redemption price at
maturity (generally, the Exchange Notes principal amount)
on the date of purchase, subject to a statutory de minimis
exception. In general, market discount accrues on a ratable
basis over the remaining term of the Exchange Notes unless the
United States Holder makes an irrevocable election to accrue
market discount on a constant yield to maturity basis. A United
States Holder who acquires Exchange Notes at a market discount
may be required to defer a portion of any interest expense that
otherwise may be deductible on any indebtedness incurred or
continued to purchase or carry such Exchange Notes until the
United States Holder disposes of the Exchange Notes. A United
States Holder who has elected to include market discount in
income annually as such discount accrues will not be required to
treat any gain realized on disposition as ordinary income or to
defer any deductions for interest expense under these rules.
This election to include market discount in income currently,
once made, applies to all market discount obligations acquired
on or after the first day of the taxable year to which the
election applies and may not be revoked without the consent of
the IRS.
United States Holders should consult their tax advisors as to
the portion of any gain that would be taxable as ordinary income
under the market discount rules, applicable elections, and any
other consequences of the market discount rules that may apply
to them in particular.
Amortizable
Bond Premium
A United States Holder who purchases Exchange Notes for an
amount in excess of their principal amount will be considered to
have purchased the Exchange Notes at a premium. A United States
Holder may elect to amortize the premium over the remaining term
of the Exchange Notes on a constant yield to maturity basis,
except that, in some cases, amortizable bond premium may be
determined by reference to an early call date. The amount
amortized in any year will be treated as a reduction of the
United States Holders interest income from the Exchange
Notes. A United States Holder who elects to amortize any premium
on Exchange Notes must reduce its tax basis in the Exchange
Notes by the amount of the premium amortized in any year. An
election to amortize premium applies to all taxable debt
obligations held by the United States Holder at the beginning of
the first taxable year to which the election applies and to all
such obligations thereafter acquired by the United States Holder
and may be revoked only with the consent of the IRS. Premium on
Exchange Notes held by a United States Holder who does not make
such an election will decrease the gain or increase the loss
otherwise recognized on the disposition of the Exchange Notes.
Election
to Use Constant Yield Method
Under applicable Treasury regulations, a United States Holder
may elect to include stated interest on the Exchange Notes in
income on a constant yield basis. Such an election could, in
some instances, affect the timing of the inclusion of interest
income and the treatment of market discount or amortizable bond
premium.
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United States Holders should consult their own tax advisors as
to the desirability and effects of such an election.
Disposition
of the Exchange Notes
Except as described above with respect to market discount and
amortizable bond premium, upon the sale, exchange, redemption,
retirement or other taxable disposition of Exchange Notes, you
generally will recognize capital gain or loss equal to the
difference between:
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the amount of cash proceeds and the fair market value of any
property received on such disposition (less any amount
attributable to accrued and unpaid interest on the Exchange
Notes, which will generally be taxable as ordinary income if you
have not previously included such interest in income); and
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your adjusted tax basis in the Exchange Notes.
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Any gain or loss that is recognized on the disposition of the
Exchange Notes generally will be capital gain or loss and will
be long-term capital gain or loss if you have held the Exchange
Notes for more than one year. Long-term capital gains of
individuals, estates and trusts are generally taxed at a maximum
rate of 15%; however, under current law the rate is scheduled to
revert to 20% for taxable years beginning after
December 31, 2010. Your ability to deduct capital losses is
subject to certain limitations.
Information
Reporting and Backup Withholding
In general, information reporting is required as to certain
payments of principal and interest on the Exchange Notes and on
the disposition of Exchange Notes unless you are a corporation
or other exempt person. In addition, you will be subject to
backup withholding if you are not exempt and you fail to
properly furnish a taxpayer identification number and certain
other information or if the IRS has notified you that you are
subject to backup withholding.
Any amount withheld from a payment under the backup withholding
rules may be allowed as a credit against your United States
federal income tax liability and may entitle you to a refund,
provided that the required information is furnished to the IRS.
Non-United
States Holders
As used in this tax discussion,
non-United
States Holder means any beneficial owner (other than a
partnership) of Exchange Notes that is not a United States
Holder. The rules governing the United States federal income
taxation of a
non-United
States Holder are complex, and no attempt will be made herein to
provide more than a summary of certain of those rules.
NON-UNITED
STATES HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS TO
DETERMINE THE EFFECT OF UNITED STATES FEDERAL, STATE AND OTHER
TAX LAWS, AS WELL AS FOREIGN TAX LAWS, INCLUDING ANY REPORTING
REQUIREMENTS.
Payment
of Interest
Interest on Exchange Notes that you receive will not be subject
to United States federal income tax or withholding tax under the
portfolio interest exception if the interest is not effectively
connected with your conduct of a trade or business in the United
States and if you:
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do not own, actually or constructively, 10% or more of the
combined voting power of all classes of our stock entitled to
vote;
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are not a controlled foreign corporation related to us through
stock ownership;
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are not a bank whose receipt of interest on the Exchange Notes
is interest received pursuant to a loan agreement entered into
in the ordinary course of your trade or business; and
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appropriately certify as to your foreign status.
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You generally can meet the certification requirement listed
above by providing to us or our agent a properly completed IRS
Form W-8BEN.
If the portfolio interest exemption is not available to you,
then payments of interest on the Exchange Notes may be subject
to United States federal income tax (which may be collected by
withholding) at a rate of 30 percent, unless you provide us
or our paying agent with a properly executed IRS
Form W-8BEN
claiming an exemption from (or reduction of) withholding under
an applicable tax treaty, or the payments of interest are
effectively connected with your conduct of a trade or business
in the United States and you meet the certification requirements
described below.
Interest that is effectively connected with your conduct of a
trade or business in the United States (and, if a tax treaty
applies, is attributable to a permanent establishment maintained
by you in the United States) is not subject to withholding if
you provide a properly completed IRS
Form W-8ECI.
However, you will generally be subject to United States federal
income tax on such interest on a net income basis at rates
applicable to United States persons generally. In addition, if
you are a foreign corporation you may incur a branch profits tax
on such interest equal to 30% of your effectively connected
earnings and profits for the taxable year, as adjusted for
certain items, unless a lower rate applies to you under a United
States income tax treaty with your country of residence. For
this purpose, you must include interest, gain and income on your
Exchange Notes in the earnings and profits subject to United
States branch profits tax if these amounts are effectively
connected with your trade or business in the United States.
Disposition
of the Exchange Notes
You will generally not be subject to United States federal
income tax on any gain realized on the sale, exchange,
redemption, retirement or other taxable disposition of Exchange
Notes (other than with respect to payments attributable to
accrued interest, which will be taxed as described under
Payment of Interest above) unless the
gain is effectively connected with your conduct of a trade or
business in the United States (and, if a tax treaty applies, is
attributable to a permanent establishment maintained by you in
the United States), or you are an individual present in the
United States for 183 days or more in the taxable year in
which such disposition occurs and certain other conditions are
met.
Certain
United States Federal Estate Tax Considerations for
Non-United
States Holders
Exchange Notes beneficially owned by an individual who is not a
citizen or resident of the United States (as defined for United
States federal estate tax purposes) at the time of death will
generally not be includable in the decedents gross estate
for United States federal estate tax purposes, provided that the
beneficial owner did not at the time of death actually or
constructively own 10% or more of the combined voting power of
all classes of our stock entitled to vote, and provided that, at
the time of the holders death, payments with respect to
such Exchange Notes would not have been effectively connected
with the holders conduct of a trade or business within the
United States.
Information
Reporting and Backup Withholding
Payments to a
non-United
States Holder of interest on Exchange Notes, and amounts
withheld from such payments, if any, generally will be required
to be reported to the IRS and to the
non-United
States Holder.
United States backup withholding tax generally will not apply to
payments of interest and principal on Exchange Notes to a
non-United
States Holder if either of the certification statements
described in Payment of Interest is
duly provided by the holder or the holder otherwise establishes
an exemption, provided that we do not have actual knowledge or
reason to know that the holder is a United States person.
Payment of the proceeds of a sale of Exchange Notes effected by
the U.S. office of a U.S. or foreign broker will be
subject to information reporting requirements and backup
withholding unless you properly certify under penalties of
perjury as to your foreign status and certain other conditions
are met or you otherwise establish an exemption. Information
reporting requirements and backup withholding generally will not
apply to any payment of the proceeds of the sale of Exchange
Notes effected outside the United States by a foreign office of
a broker. However, unless such a broker has documentary evidence
in its records that you are a
non-United
States Holder and certain other conditions are met, or you
otherwise establish an exemption,
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information reporting will apply to a payment of the proceeds of
the sale of Exchange Notes effected outside the United States by
such a broker if it:
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is a United States person;
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is a foreign person which derives 50% or more of its gross
income for certain periods from the conduct of a trade or
business in the United States;
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is a controlled foreign corporation for U.S. federal income
tax purposes; or
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is a foreign partnership that, at any time during its taxable
year, has more than 50% of its income or capital interests owned
by United States persons or is engaged in the conduct of a
U.S. trade or business.
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Any amount withheld from a payment under the backup withholding
rules may be allowed as a credit against your United States
federal income tax liability and may entitle you to a refund,
provided that the required information is furnished to the IRS.
PLAN OF
DISTRIBUTION
Based on interpretations by the staff of the SEC in no-action
letters issued to third parties, we believe that you may
transfer Exchange Notes issued in the exchange offer in exchange
for the Outstanding Notes if:
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you acquire the Exchange Notes in the ordinary course of your
business; and
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you are not engaged in, and do not intend to engage in, and have
no arrangement or understanding with any person to participate
in, a distribution of Exchange Notes.
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We believe that you may not transfer Exchange Notes issued in
the exchange offer in exchange for the Outstanding Notes if you
are:
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our affiliate, within the meaning of Rule 405
under the Securities Act;
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a broker-dealer that acquired Outstanding Notes directly from
us; or
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a broker-dealer that acquired Outstanding Notes as a result of
market-making activities or other trading activities, unless you
comply with the registration and prospectus delivery provisions
of the Securities Act.
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If you wish to exchange your Outstanding Notes for Exchange
Notes in the exchange offer, you will be required to make
representations to us as described above under The
Exchange Offer Procedures for Tendering
Your Representations to Us of this prospectus and in the
letter of transmittal. In addition, if you are a broker-dealer
that receives Exchange Notes in the exchange offer in exchange
for Outstanding Notes that were acquired by you for your own
account as a result of market-making or other trading
activities, you must acknowledge that you will deliver a
prospectus in connection with any resale of those Exchange Notes.
This prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with
resales of Exchange Notes received in exchange for Outstanding
Notes where such Outstanding Notes were acquired as a result of
market-making activities or other trading activities. We have
agreed that, for a period of up to 180 days after the
expiration date of the exchange offer, we will make this
prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In
addition, until such date, all dealers effecting transactions in
the Exchange Notes may be required to deliver a prospectus.
Broker-dealers who use this prospectus in connection with
resales of Exchange Notes may be required to suspend use of this
prospectus under various circumstances, including:
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the issuance by the SEC of a stop order suspending the
effectiveness of the registration statement to which this
prospectus relates; or
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during the period that we agreed to make this prospectus
available to broker-dealers in connection with resales of
Exchange Notes, this prospectus or the registration statement to
which it relates does not conform in all material respects to
the Securities Act and the Trust Indenture Act or contains
an untrue statement of a material fact or omits to state any
material fact required to be stated herein or therein or
necessary to make the statements herein or therein not
misleading in light of the circumstances then existing.
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We will not receive any proceeds from any sale of Exchange Notes
by broker-dealers. Exchange Notes received by broker-dealers for
their own account in the exchange offer may be sold from time to
time in one or more transactions:
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in the over-the-counter market;
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in negotiated transactions;
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through the writing of options on the Exchange Notes; or
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a combination of those methods of resale.
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The prices at which these sales occur may be at:
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market prices prevailing at the time of resale;
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prices related to prevailing market prices; or
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negotiated prices.
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Any resales may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of
commissions or concessions from the selling broker-dealer
and/or the
purchasers of the Exchange Notes. Any broker-dealer that resells
Exchange Notes that were received by it for its own account in
the exchange offer and any broker or dealer that participates in
a distribution of the Exchange Notes may be deemed to be an
underwriter within the meaning of the Securities
Act. Any profit on any resale of Exchange Notes and any
commissions or concessions received by these persons may be
deemed to be underwriting compensation under the Securities Act.
The letter of transmittal states that, by acknowledging that it
will deliver and by delivering a prospectus, a broker-dealer
will not be deemed to admit that it is an
underwriter within the meaning of the Securities Act.
For a period of 180 days after the expiration date of the
exchange offer (or such earlier date as eligible broker-dealers
no longer own Exchange Notes), we will promptly send additional
copies of this prospectus and any amendment or supplement to
this prospectus to any eligible broker-dealer that requests such
documents in the letter of transmittal. We have agreed to pay
all expenses incidental to the exchange offer, other than
commissions and concessions of any brokers or dealers. We also
have agreed that we will indemnify specified holders of the
Exchange Notes, including broker-dealers, against certain
liabilities, including liabilities under the Securities Act.
TRANSFER
RESTRICTIONS ON OUTSTANDING NOTES
The Outstanding Notes were not registered under the Securities
Act. Accordingly, we offered and sold the Outstanding Notes only
in private sales exempt from or not subject to the registration
requirements of the Securities Act:
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to qualified institutional buyers under
Rule 144A under the Securities Act; and
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outside the United States in compliance with Regulation S
under the Securities Act.
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You may not offer or sell those Outstanding Notes in the United
States or to, or for the account or benefit of,
U.S. persons except in transactions exempt from or not
subject to the Securities Act registration requirements.
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LEGAL
MATTERS
Certain legal matters in connection with the issuance of the
Exchange Notes will be passed upon for us by Baker Botts L.L.P.,
Houston, Texas.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The consolidated financial statements of Bristow Group Inc. as
of March 31, 2007 and 2006, and for each of the years in
the three-year period ended March 31, 2007, and
managements assessment of the effectiveness of internal
control over financial reporting as of March 31, 2007, have
been incorporated by reference herein, in reliance upon the
reports of KPMG LLP, independent registered public accounting
firm, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing.
The audit report covering the March 31, 2007, consolidated
financial statements refers to a change in the method of
accounting for defined benefit plans as of March 31, 2007,
and the method of accounting for
stock-based
compensation plans as of April 1, 2006.
With respect to the unaudited interim financial information for
the periods ended September 30, 2007 and 2006, incorporated
by reference, the independent registered public accounting firm
has reported that they applied limited procedures in accordance
with professional standards for a review of such information.
However, their separate report included in the Companys
quarterly report on
Form 10-Q
for the quarter ended September 30, 2007, incorporated by
reference herein, states that they did not audit and they do not
express an opinion on that interim financial information.
Accordingly, the degree of reliance on their report on such
information should be restricted in light of the limited nature
of the review procedures applied. The accountants are not
subject to the liability provisions of Section 11 of the
Securities Act of 1933 (the 1933 Act) for their
report on the unaudited interim financial information because
that report is not a report or a part of
the registration statement prepared or certified by the
accountants within the meaning of Sections 7 and 11 of the
1933 Act.
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Bristow Group Inc.
$350,000,000
Offer to Exchange
registered
71/2% Senior
Notes due 2017
for all outstanding
71/2% Senior
Notes due 2017
PROSPECTUS