French geophysical services company CGG has reached an agreement in principle with its main creditors on a financial restructuring plan.
CGG entered into a financial restructuring process with the aim of significantly reducing debt levels at the beginning of March and has since then been negotiating the terms. By mid-May, the positions of the various stakeholders did not converge towards a proposal agreed by all parties. The principal area of negotiation centered around the sharing of value between stakeholders.
The company said on Friday, June 2 that the restructuring plan meets its objectives of full equitization of the existing unsecured debt, extension of the maturity of the secured debt and financial flexibility to confront various business scenarios through, inter alia, additional new money.
The company has also garnered the support of the majority of its secured lenders, the majority of the holders of its senior notes and DNCA, in its capacity as a longstanding institutional shareholder, bondholder and convertible bondholder of the company.
Following the May announcement, the company has re-engaged in discussions with certain of its main creditors and DNCA and their respective advisers, under non-disclosure agreements.
These discussions led to the agreement in principle, which was supported by the company; the Secured Lenders Coordinating Committee (representing approximately 52.7 % of the aggregate principal amount of the secured debt); DNCA (representing c. 7.9% of the share capital and 7.7% of the voting rights as well as 5.5% of the aggregate principal amount of the Senior Notes and 18.7% of the aggregate principal amount of the convertible bonds); as well as the members of the ad hoc Committee of the Senior Notes (representing c. 52.4% of the aggregate principal amount of the Senior Notes).
The representative of the masses of holders of convertible bonds has not supported the agreement in principle. The two other shareholders holding more than 5% of the company’s share capital, Bpifrance Participations and AMS Energie, have not participated in the negotiations of the agreement in principle.
According to CGG, the agreement in principle provides a framework for long-term sustainability and offers its current shareholders an opportunity to participate in the company’s recovery.
The agreement has been approved in principle by the company’s board of directors but it is still subject to the finalization of the negotiations of its final terms, and the necessary documentation to launch the private placement.
The plan needs to be finalized no later than June 12, 2017, and the implementation of the agreement in principle is expected to occur no later than February 28, 2018.
Following the restructuring, the company’s debt is expected to be reduced from $2.75 billion to $1.15 billion and maturities are expected to be extended to 2022 and 2023.
Offshore Energy Today Staff