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Agreement") with lenders representing, in aggregate, 79.6% of its ~$350 million
revolving credit facility (“RCF”) and ~$522 million term loan B facility
(“TLB”). PGS has also entered into a consent and amendment agreement (the
“Consent and Amendment Agreement”) with the representative of 100% of the
finance parties under its ~$300 million export credit facilities (“ECF”).
Overview of the Transactions
As previously announced, the agreed terms of these transactions (the
“Transactions”) will, once consummated, enable PGS to extend its current near-
term maturity and amortization profile under its RCF/TLB and ECF facilities by
approximately two years. Together with the cost saving initiatives previously
announced, the Transactions will strengthen PGS’s liquidity profile in the
currently challenging operating environment.
The main terms agreed pursuant to the Lock-Up Agreement and the Consent and
Amendment Agreement are as follows:
-
The $135 million RCF due 2020, the $215 million RCF due 2023 and the ~$2
million TLB due 2021 will each be converted into a new TLB on the same terms
as the ~$520 million 2024 TLB
-
Quarterly amortization payments of up to 5% per annum of the original
principal amount of the ~$520 million 2024 TLB will be replaced by the new
amortization payments described below
-
The post transaction total debt under these credit facilities of ~$872
million (subject to any increases in principal due to payment-in-kind fees
and any reduction in principal due to lenders electing to exchange part of
their existing debt into new convertible bonds; see further below) maturing
in March 2024 will have following amortization profile (payable pro-rata to
all TLB lenders):
- ~$135 million amortization payment due in September 2022
- $200 million amortization payment due in September 2023
- ~$9 million quarterly amortization starting March 2023
-
Quarterly amortization payments totalling ~$106 million due over the next
two years under the ECF will be deferred and repaid over four quarters
starting December 2022
-
The current excess cash flow sweep for the RCF/TLB facilities will be
replaced by an excess liquidity sweep for any liquidity reserve in excess of
$200 million at each quarter end, with such amounts to be applied against
(i) the deferred amortization amounts under the ECF and (ii) the ~$135
million TLB amortization, until they have both been paid in full;
thereafter, any liquidity reserve in excess of $175 million at each quarter
end will be applied against the remaining TLB amortizations
-
The financial maintenance covenants will be amended, with the net leverage
ratio to be 4.5x through June 30, 2021, 4.25x through December
31, 2021, 3.25x through December 31, 2022 and 2.75x thereafter
-
The lenders’ security package will be strengthened
-
Total fees across the lender groups of up to ~$7.6 million will be payable
in cash and up to ~$9.9 million will be payable in kind
-
An up to ~NOK 116.2 million 3-year 5% unsecured convertible bond (the “CB”)
which can be converted into new PGS shares at NOK 3 per share (up to a
maximum of 38,720,699 shares, equalling 10% of the currently outstanding PGS
shares) will be issued by PGS. Lenders under the RCF and TLB facilities will
have a pro rata preferential right to subscribe for the CB against
conversion of a corresponding amount of their existing secured loans. To the
extent the CB is not fully subscribed, certain lenders under the TLB will
(i) subscribe for 80% of the unallocated amount for cash and (ii) have the
right to subscribe for the remaining 20% of the unallocated amount for cash.
PGS will be able to require that bondholders convert the CB into shares if
the PGS share price exceeds NOK 6 for 30 consecutive trading days
Support for the Transactions/Implementation
The representative of all of the ECF financing parties has entered into the
Consent and Amendment Agreement which (i) provides for the proposed amendments
to the ECF and (ii) maintains the forbearance arrangements (including
restrictions on acceleration and enforcement action) (the “Forbearance”) as put
in place with the ECF following the previous market announcement on September
25, 2020. The non-amendment terms of the Consent and Amendment Agreement are
effective immediately and are subject to customary termination events. The
amendment terms will become effective upon the consummation of the Transactions.
The Lock-Up Agreement has been entered into by RCF and TLB lenders representing
in aggregate 79.6% by amount and 65.3% by number, including:
- An informal Ad-Hoc Committee of TLB lenders and certain other TLB lenders
representing 78.9% of the ~$522 million TLB facilities
- 100% of the $215 million 2023 RCF
- 50.4% of the $135 million 2020 RCF
The Lock-Up Agreement outlines the terms of the proposed amendments to the
RCF/TLB Credit Agreement. Under the terms of the Lock-Up Agreement, the lenders
have agreed, among other things, to take such steps as are required to support
the implementation and the consummation of the Transactions. The Lock-Up
Agreement also maintains the terms of the Forbearance arrangement as put in
place with the majority of the RCF and TLB lenders prior to the previous market
announcement on September 25, 2020. The terms of the Lock-Up Agreement are
effective immediately and subject to customary undertakings and termination
events.
Following this announcement, the Company will launch a request for support from
TLB lenders who have not yet seen the details of the Transactions and from RCF
lenders who have not yet signed the Lock-Up Agreement.
Unless 100% of the RCF and TLB lenders consent to the Transactions, the
amendments to the RCF and TLB will be implemented pursuant to an English law
scheme of arrangement upon approval of the English Court, after obtaining the
necessary majority creditor consent (being 75% by value and a majority in number
of the total RCF and TLB voting in the Scheme) (the “Scheme”). The Scheme will
enable the Transaction in respect of the RCF and TLB to be implemented and bind
all RCF and TLB lenders (including those who vote against or do not vote). To
date, lenders holding a sufficient amount of RCF and TLB debt to meet the
relevant Scheme approval levels have already signed the Lock-up Agreement. The
governing law of the RCF and TLB has been changed to English law in furtherance
of the Scheme.
The agreed amendments to the RCF, TLB and ECF facilities are inter-conditional
and subject to customary conditions precedent and subsequent. They remain
subject to the implementation processes described above.
If implemented consensually (assuming 100% consent from the RCF and TLB
lenders), the Transactions are expected to close during Q4 2020. If implemented
through the Scheme, it is anticipated that the Transactions will close during
the course of Q1 2021. Further details on implementation will be announced in
due course.
Further information on the Transactions, as well as the summary financial
information shared with Ad-Hoc Committee of TLB lenders and certain other TLB
lenders, can be found in the presentation titled Cleansing Presentation on the
Company’s website www.pgs.com (http://www.pgs.com) - Investors - Presentations.
The Company will continue to operate its business as usual by performing other
obligations, including making payments of interest, as they fall due.
The Company will provide updates in due course as appropriate.
FOR DETAILS, CONTACT:
BÅRD STENBERG, VP IR & CORPORATE COMMUNICATION
MOBILE: +47 99 24 52 35
***
PGS is an integrated marine geophysical company, providing advanced subsurface
images, plus 2D and 3D data, that energy companies use to find and produce oil
and gas. PGS MultiClient data library is among the largest in the seismic
industry, with modern 3D coverage in all significant offshore hydrocarbon
provinces worldwide. The Company operates on a worldwide basis with headquarters
in Oslo, Norway and the PGS share is listed on the Oslo stock exchange (OSE:
PGS). For more information on PGS visit www.pgs.com (http://www.pgs.com/).
***
The information included herein contains certain forward-looking statements that
address activities, events or developments that the Company expects, projects,
believes or anticipates will or may occur in the future. These statements are
based on various assumptions made by the Company, which are beyond its control
and are subject to certain additional risks and uncertainties. The Company is
subject to a large number of risk factors including but not limited to the
demand for seismic services, the demand for data from our multi-client data
library, the attractiveness of our technology, unpredictable changes in
governmental regulations affecting our markets and extreme weather conditions.
For a further description of other relevant risk factors we refer to our Annual
Report for 2019. As a result of these and other risk factors, actual events and
our actual results may differ materially from those indicated in or implied by
such forward-looking statements. The reservation is also made that inaccuracies
or mistakes may occur in the information given above about current status of the
Company or its business. Any reliance on the information above is at the risk of
the reader, and PGS disclaims any and all liability in this respect.
--END--
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