Shares of Bristow Group Tank on Debt Issuance

What happened

Shares of helicopter services provider Bristow Group (NYSE: BRS) are down 16% as of 1:30 p.m. EST Wednesday. Today's decline comes after management announced a deal to offer new debt.

So what

Bristow Group announced today that it intends to issue $125 million in convertible senior notes that will be due in 2023. Since this is the initial notice of the issuance, there was no interest rate price announced with this news, but we can expect that announcement to come relatively soon. As part of the notice, management said that the interest rate, conversion rate, and other terms will be decided when the offering is priced.

The announcement also said that the company intends to use the proceeds of this issuance to pay off a portion of its current term loan as well as other general corporate purposes.

Now what

After a promising quarterly earnings report that signaled things were getting better for Bristow, this announcement is an odd one. After management noted a couple of months ago that it was freeing up some cash from operations by deferring some capital spending and selling its pilot training program, one would assume the company wouldn't need to use these kinds of securities to meet its funding needs.

Bristow has been a volatile stock that swings with the ebb and flow of the oil and gas sector. While there are some encouraging signs that things are getting better, this debt issuance is a head-scratching move that make an investor think twice about investing in this company.

10 stocks we like better than Bristow GroupWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Bristow Group wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of December 4, 2017

Tyler Crowe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.