A court in Paris has rescheduled a hearing date to examine CGG’s request for sanctioning of its draft safeguard plan and the claim filed against it to allow for the second meeting of the shareholders to take place.
The seismic player has been severely hit by the unprecedented crisis affecting the oil and oil-services industries since 2013. After realizing that its prior strategic methods failed to keep the debt in line with its financial capacities, CGG in 2017 started discussions with various stakeholders in order to establish a financial restructuring plan.
CGG’s draft safeguard plan entails full conversion of unsecured debt into equity and raising up to $500 million of new money through a $125 million rights issue and the issuance of $375 million of new secured second lien senior notes with a six-year maturity.
The safeguard plan was unanimously approved by lenders’ committee at the end of July. Furthermore, the various classes of creditors in the U.S. concerned by the Chapter 11 proceedings voted in favor of the plan in early October.
Following these steps, the implementation of the safeguard plan and the Chapter 11 plan remained subject to, among other things, approval by general meeting on October 31. The vote of the extraordinary general meeting on the resolutions required to implement the financial restructuring plan is a decisive step for the future of the company.
However, the combined general meeting (ordinary and extraordinary) held on October 31 could not resolve on the extraordinary part of the agenda to vote on the resolutions required to implement the financial restructuring plan due to a lack of a quorum. The required quorum for the extraordinary part of the general meeting on first notice was 25% of the share capital, and 20% on second notice. As a result, another extraordinary general meeting was scheduled for November 13.
Since the meeting on October 31 validly voted on all the resolutions of the ordinary part of the agenda, the general meeting convened under the second convening notice was invited to vote only on the extraordinary part of the agenda.
According to CGG, if the shareholders general meeting were to reject the resolutions relating to the implementation of the safeguard plan, the group could be placed under judicial reorganization proceedings in the short term, be dismantled in the medium term, as the case may be in the context of judicial liquidation proceedings in various jurisdictions.
Should such proceedings be carried out, they could place the shareholders and the holders of American Depositary Shares in a situation where they would lose their entire investment in the group, and the creditors, or some of them, in a situation of lower recovery of their claims.
In a hearing held on Monday, November 6, in order to take into account the second meeting of the shareholders, the Commercial Court of Paris decided to postpone the examination of the draft safeguard plan of CGG and the claim filed against it by certain holders of convertible bonds to November 20.
When it comes to those holders that filed the claim against the plan, they challenged the treatment of their claims under the safeguard plan, arguing that the differences in treatment between the holders of convertible bonds and the holders of senior notes was not justified by the differences in their situations and would be, in any event, disproportionate.
The company, on the other hand, considers that the holders of convertible bonds are not in the same situation as the senior notes holders, in particular regarding the guarantees given to the latter, and hence the differentiated treatment provided for under the safeguard plan complies with law.
Should this claim be declared well founded by the court, the court could not adopt the safeguard plan insofar as it does not have the power to modify its terms.
Offshore Energy Today Staff