French geophysical services player CGG has received an approval of its draft safeguard plan by creditors’ committees in France as the company is working to cut about $2 billion off of its debt.
The company’s restructuring 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.
At the end of the second quarter 2017, CGG’s gross debt was $2.812 billion. Available cash was $315 million and group net debt was $2.497 billion.
CGG CEO, Jean-Georges Malcor, last week said that the proposed restructuring plan would result in a $2 billion net debt reduction and would provide the necessary liquidity to support the company’s turnaround.
The French safeguard proceeding on CGG S.A. was launched on June 14 and creditors committee was held in France on Friday, July 28.
CGG and SELARL FHB, represented by Hélène Bourbouloux, in her capacity as judicial administrator appointed by a ruling of the commercial court of Paris on June 14, 2017, informed on Monday that in the framework of the meetings held on July 28 and convened by the latter, the lenders’ committee unanimously approved the draft safeguard plan, and the bondholder general meeting at a majority of 93.5% of the creditors who cast a vote.
According to its 2Q 2017 report last Friday, the geophysical company is facing material uncertainties that may cast substantial doubt upon its ability to continue as a going concern, which depends essentially on the effective and timely implementation of the proposed restructuring plan, especially the raising of up to $500 million of new money by early 2018.
Following the Friday approval of the creditors involved in the French safeguard, the next step is the approval of creditors in the U.S.
Prearranged U.S. Chapter 11 for CGG’s 14 significant subsidiaries was also launched on June 14. Creditors consultation in the U.S. is expected to be completed by mid-October. The next step after that will be the approval of the financial restructuring plan at the shareholders’ Extraordinary General Meeting at the end of October.
If the $500 million new money is raised in the first quarter of 2018, which CGG believes is a reasonable assumption, the group liquidity is expected to be sufficient to fund current operations until June 30, 2018, at least.
Offshore Energy Today Staff