CGG and senior noteholders committee enter private placement agreement

By Caroline Salls

Pittsburgh, June 27 – CGG SA, some of its subsidiaries and an informal committee of the holders of its senior notes entered into a private placement agreement on Monday following approval of a judge overseeing its safeguard proceeding in France on June 23, according to a 6-K filed Tuesday with the Securities and Exchange Commission.

As previously reported, CGG’s restructuring includes a plan to raise up to $500 million of new money investments, including a $375 million issue of new six-year second-lien senior notes with cash interest at a rate of Libor for a dollar tranche and Euribor for a euro tranche plus 400 basis points, subject to a floor of 1%, and payment-in-kind interest at a rate of 8˝%, as well as penny warrants giving the possibility to subscribe for new shares representing 16% of the share capital of the company at a price of € 0.01 per new share, to be subscribed by eligible senior noteholders under the terms of the private placement agreement.

Under the private placement agreement, the committee committed to subscribe for its portion and to backstop any of the securities whose subscription is not committed during the placement period.

According to the 6-K, the placement period opened on June 27 and will expire on July 7.

Eligible senior noteholders may commit to subscribe for their portion of the securities, calculated based on the lower of the total principal amount of senior notes held as of 5 p.m. ET on June 1 and the total principal amount of senior notes held when the holder commits to subscribe, in each case compared to the total principal amount of the senior notes outstanding on the record date.

The securities will be allocated to the senior noteholders after restructuring steps have been completed but before exercise of two sets of warrants, requiring the reduction of the face value of CGG shares to €0.01from €0.80, with the difference being booked as unavailable reserves.

The members of the committee will receive in consideration for their backstop a 3% cash fee and penny warrants giving the possibility to subscribe for new shares representing 1.5% of the share capital of the company.

CGG said the issuance of the securities is subject to approval of the restructuring plan by U.S. and French courts, the plan becoming effective in both jurisdictions and the implementation of the other aspects of the company’s financial restructuring, which requires approval by the CGG shareholders’ meeting and obtaining the required level of support from creditors in the proceedings launched in France and the United States.

If the conditions are satisfied or waived, the subscription, payment and delivery of the securities is expected to occur no later than Feb. 28, 2018.

Subject to payment, issuance and delivery of the securities, CGG said each eligible senior noteholder committing to subscribe and actually subscribing for the securities will receive a commitment fee equal to 7% of its commitment.

CGG is a Paris-based manufacturer of seismic equipment and a provider of geoscience services. The company filed bankruptcy on June 15 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 case number is 17-11637, and the Chapter 15 case number is 17-11636.

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