Geokinetics to implement restructuring agreement via Chapter 11 plan

By Caroline Salls

Pittsburgh, Jan. 15 - Geokinetics Inc. has entered into a restructuring support agreement with holders of more than 70% in total principal amount of its 9¾% senior secured notes due 2014 and the largest holder of its preferred stock, according to a news release.

Under the terms of the restructuring support agreement, the stakeholder parties have agreed to vote in favor of either a pre-negotiated or a pre-packaged Chapter 11 restructuring plan to be filed in the U.S. Bankruptcy Court for the District of Delaware.

"With new backing from our strong and experienced sponsors, we are confident in our ability to seamlessly deliver quality service in the near term," Geokinetics president and chief executive officer David J. Crowley said in the release.

"We are also very excited at the long term prospects for Geokinetics, with the restructured company having a substantially de-levered balance sheet, reduced interest expense and a number of compelling prospects for growth on the horizon in all three product lines: seismic acquisition, multi-client seismic services and seismic processing and interpretation."

Restructuring terms

Under the restructuring support agreement and Chapter 11 plan:

• The entire $300 million of the senior secured notes will be converted into 100% of the common equity of the reorganized company, subject to dilution for a management incentive plan and conversion of the company's debtor-in-possession financing.

The noteholders will become the majority equity owners of Geokinetics at the completion of the restructuring;

• Senior secured noteholders will provide up to $25 million of financing, which will be converted to equity upon completion of the restructuring;

• The company's existing revolving credit facility will be repaid in full;

• Unsecured creditors, including trade vendors, will be paid in full;

• A cash payment will be made to some of the company's preferred stockholders;

• Existing common stock and all classes of preferred stock will be cancelled; and

• Company operations are expected to remain unaffected.

According to the release, a special committee of the company's board of directors unanimously approved entering into the restructuring support agreement.

Financing plans

As part of the restructuring process, Geokinetics said it expects to enter into a new credit facility to provide liquidity for operations after the restructuring.

During the restructuring process, some holders of the senior secured notes have agreed to backstop up to $25 million in debtor-in-possession financing to allow the company to finance its operations.

The DIP financing will be converted into common stock of the reorganized company at a discount to Chapter 11 plan value.

The parties' commitment under the restructuring support agreement and the completion of the transactions are subject to a number of closing conditions, termination rights and approvals, including the majority of the noteholders reaching an agreement on various corporate governance arrangements, bankruptcy court approval and the finalization of definitive documentation.

The company said it plans to seek court approval to emerge from bankruptcy by the end of the first quarter.

Houston-based Geokinetics provides seismic data acquisition, processing and integrated reservoir geosciences services to the oil and natural gas industry.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.