Global Geophysical files reorganization backed by committee, lenders

By Kali Hays

New York, Sept. 24 – Global Geophysical Services, Inc. filed a joint Chapter 11 plan of reorganization and related disclosure statement on Sept. 24 with the U.S. Bankruptcy Court for the Southern District of Texas.

The company said the proposed plan is supported by its board of directors, holders of roughly 57% of its senior notes and substantially all of its $151.9 million debtor-in-possession loans and its official committee of unsecured creditors.

After “months of extensive negotiations,” Global Geophysical and the supporting parties agreed to the plan centered on a backstop conversion commitment agreement allowing the company to also market its assets.

“The restructuring will substantially reduce the company’s debt burden, enhance its liquidity, and solidify the company’s long-term growth and operating performance” and also “provide for a substantial recovery for unsecured creditors in a Chapter 11 case where the senior secured post-petition lenders have agreed to equitize approximately one-third to one-half of their debt,” the plan stated.

Backstop agreement

Predicated on a projected enterprise value of $190 million for the reorganized company, the backstop agreement “provides the opportunity to engage in a market test, which may result in a transaction that implies a higher enterprise value,” according to the disclosure statement.

Under the backstop agreement, the group of secured noteholders supporting the plan agreed to equitize $51.9 million to $68.1 million of its senior secured DIP financing claims “to set a substantial floor for the recovery available to unsecured creditors.”

The backstop agreement includes a payment of a backstop commitment premium to investors equal to 3.5% of the DIP facility claims that are equitized, payable in new common stock.

Global Geophysical said the backstop agreement will allow it to implement a sale or plan sponsor process under proposed bidding procedures.

“The backstop agreement includes covenants obligating the members of the group to support the plan, yet also provides for a vigorous go-shop period allowing the debtors to pursue higher and better alternative proposals.”

If the company pursues a more favorable transaction, the investors will receive a cash payment of $3.75 million and the payment of all fees and expenses related to a rights offering.

The proposed rights offering will allow those holders of financial claims that are accredited investors and not term B DIP lenders the option to subscribe to purchase an additional 28.5% to 37.4% of the 3,740,544 shares of new common stock of the reorganized company.

The shares will be offered at a price of $8.0887 per share.

Cash proceeds of the rights offering will be used toward payment of the term B loans.

A hearing to approve the backstop agreement and rights offering is set for Oct. 15.

Bid Procedures

Global Geophysical will take 60 days to market substantially all company assets or specific groups of assets.

Under the proposed bid procedures, the projected enterprise value of $190 million plus the $3.75 million termination payment and expense reimbursement of the noteholder group will serve as the base line bid.

Any initial overbid must be made in increments of $5 million.

All subsequent bids must be made in increments of $2.5 million.

A qualified bid must include a cash component sufficient to cover all DIP loan claims, the termination payment and expense reimbursement along with a cash deposit equal to 5% of the bid.

Any proposed transaction must be able to close no later than Feb. 27

The current bid deadline is set for Dec. 3.

If one or more qualified bids are received, an auction for the assets will be held Dec. 5.

The hearing to approve any successful sale is scheduled for Dec. 9.

If the sale process does not result in a sale of all or part of the company, Global Geophysical will continue to seek confirmation of the proposed plan with a projected effective date of Dec. 31.

Plan Terms

Under the plan, the company will enter in to an exit credit facility consisting of a term loan of up to $100 million and a revolving credit facility of up to $50 million, repay $60 million in term A loans and a portion of term B loans totaling $91.88 million.

Specific treatment of creditors under the plan are as follows:

• Holders of general administrative claims, priority tax claims, other priority claims, other secured claims professional claims, secured amegy claims and secured capital lease claims will be paid in full in cash;

• Holders of secured DIP term A loan claims will be paid in full and holders of term B loan claims will be paid a proportionate share of rights offering proceeds, if any, and the term B loan conversion shares;

• Holders of financial claims will receive a proportional share of 11.95% to 32.71% of the new common stock of the reorganized company and warrants;

• Holders of trade claims will receive a proportional share of $3 million of cash proceeds and a library fund capped at $250,000; and

• Holders of subordinated claims and equity interest claims will receive no recovery.

A hearing to approve the disclosure statement is set for Oct. 30.

Global Geophysical, a Missouri City, Texas-based provider of seismic data services to the oil and gas industry, filed for bankruptcy on March 25. The Chapter 11 case number is 14-20130.

© 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.