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reported book value and secures PGS liquidity to repay the USD 135 million
revolving credit facility due September 2020
- TGS proposes a post-closing collaboration agreement for future PGS multi-
client projects and preferential rights for PGS to offer their 3D-fleet for
future TGS data acquisition
- A successful offer will broaden TGS´ multi-client geophysical data offering
in all major mature and frontier basins world-wide
- The offer will be financed by on-balance cash, a new term loan facility and
new equity
OSLO, NORWAY (6 August 2020) - TGS-NOPEC Geophysical Company ASA (“TGS” or the
“Company”, OSE: TGS) announced today that it has submitted a conditional offer
for the purchase of the multi-client data library of PGS ASA (“PGS”) (the
“Offer”). Under the Offer, PGS would, upon consummation of the sale, receive a
cash consideration of USD 600 million. In addition, TGS has proposed that the
parties enter into a post-closing collaboration agreement for future PGS multi-
client projects, which also would include certain preferential rights for PGS to
offer their 3D-fleet for future TGS data acquisition.
The proposed transaction presents an opportunity for PGS and its stakeholders to
monetize its multi-client data library in excess of its full reported value,
delivering substantial funds to PGS in what are challenging times for the entire
seismic industry. The Offer will secure the liquidity required to repay PGS’ USD
135 million revolving credit facility due September 2020 and will further
significantly deleverage the company to support its continued operations and
enhance the ability to service the remaining debt.
For TGS, the acquisition of PGS’ multi-client data library would broaden the
Company’s offering as a multi-client geophysical data provider in all major
mature and frontier basins world-wide.
Commenting on the Offer, Kristian Johansen, CEO of TGS said:
“We see a strong complement between our existing business and the PGS data
library and the opportunity to leverage our expertise and scale to improve
returns. Concurrently, a refocused and refinanced PGS will be a world-leading
and highly innovative provider of acquisition technology and marine acquisition
capacity, providing a strong platform for creating long-term value for the
company´s stakeholders. The proposed transaction is thus aimed at safeguarding
customers’ access to leading acquisition technology, high-quality data
acquisition capacity and top tier data processing capabilities, whether they
choose to purchase data through the contract model or the multi-client model. We
believe the consolidation and further partnership between our two companies
carries a strong industry logic and we look forward to initiate the dialogue
with the management and board of PGS.”
Background for the Offer
Over the past years the seismic industry has seen a sharp drop in aggregate
return on capital caused by a combination of a lower oil price, a more
consolidated customer base and over-capacity on the supply side. As a result,
industry players have changed their strategy towards specialization such that
most companies have become either pure vessel operators or pure multi-client
providers. TGS has since its inception focused on an asset light multi-client
operation and has grown to become a leading global multi-client seismic company.
PGS has built a significant multi-client library and is a key player in the
seismic industry. As opposed to TGS, PGS has been an integrated operator, and is
today the only remaining player in the industry pursuing both data acquisition
and multi-client seismic strategies.
Following recent market developments, TGS is of the view that a combination of
the TGS and PGS multi-client businesses will improve the ability of the industry
to deliver best in class services to its customers while creating value for its
owners and other stakeholders. TGS strongly believes that the combination
contemplated under the Offer will deliver more scale, better data and increased
efficiencies in the seismic industry. At the same time, the transaction would
position PGS credibly as one of the most solid in the seismic vessel and
acquisition industry, supported by a robust balance sheet and strong
technologies.
Key terms and financing of the Offer
- The Offer comprises the entirety of the multi-client data library of PGS,
including all existing data and work-in-process, as well as the contractual
arrangements associated with the foregoing (the “PGS MC Library”). The Offer
assumes an effective date of 1 July 2020.
- The Offer values the PGS MC Library at USD 600 million, with full
consideration in cash on completion, representing a meaningful premium to
the USD 565m book value (as reported by PGS in its financial report for the
2(nd) quarter of 2020).
- The transaction contemplates a post-closing collaboration between the
parties that comprises a framework arrangement for future acquisition
services by PGS to TGS as well as the opportunity for TGS to participate in
future multi-client opportunities pursued by PGS.
- The Offer is subject to a customary, limited scope, confirmatory due
diligence and entering into definitive agreements for the transaction, and
completion will be conditional upon any required approvals by an
extraordinary general meeting in TGS in respect of the equity financing of
the transaction, and other customary closing conditions, including relevant
regulatory approvals.
The Offer will be financed by on-balance cash, a new term loan facility of USD
200 million and new equity. TGS, with its very robust balance sheet, has seen
strong support for the debt financing of the Offer and is in the position to
execute on such in a timely basis to secure the completion of the Offer. As for
the equity financing, TGS will revert with further details of the structure of
such financing in due course. TGS remains committed to maintaining a strong
financial position and its existing dividend policy.
The Offer as presented to PGS is non-binding at this juncture and may be
withdrawn by TGS at its sole discretion at any time until definitive agreements
in respect of the Offer are entered into.
Timeline
The Offer presented to PGS is valid until 16 August 2020. The transaction
contemplated by the Offer is subject to transaction documentation being
finalized and executed, and TGS is prepared to swiftly enter into discussions
with PGS with the aim of securing a definitive agreement in an expeditious
manner. While the timeline is not under the full control of TGS, the Company
believes that, with a mutual commitment to a process, a definitive agreement
could be entered into by the end of August. Closing of a transaction is subject
to satisfaction of all relevant closing conditions, including the receipt of
necessary regulatory approvals or expiration of statutory waiting periods, and
would occur as soon as possible thereafter. Although a full analysis has not yet
been completed, TGS foresees no material issues in relation to the securing of
regulatory approvals, i.a. in view of the moderate size of acquired annual sales
relative to the USD 4+ billion total seismic market, and is confident that all
conditions for completion would be satisfied. TGS expects that completion of the
transaction could take place in 60-90 days after the signing, subject to timing
of regulatory approvals.
Advisors
ABG Sundal Collier ASA is engaged as financial advisor and Advokatfirmaet
Thommessen AS is acting as legal counsel to the Company in connection with the
Offer.
Kristian Johansen, CEO of TGS, will host a conference call to discuss the Offer
at 15:00 (CEST) on 7 August.
Dial-in details:
PIN Code for all countries: 938720
Norway: + 47-21-956342
Sweden: +46-8-1241-0952
Denmark: +45 7876 8490
UK: +44-203-7696819
USA: +1 646-787-0157
Please dial in 5-10 minutes prior to the call to ensure that you will be
connected in time.
For further information, please contact:
Sven Børre Larsen
Head of Business Development and M&A
Tel: +47 909 43 673
E-mail: sven.larsen@tgs.com
Fredrik Amundsen
CFO
Tel: +47 995 89 882
E-mail: fredrik.amundsen@tgs.com
About TGS
TGS-NOPEC Geophysical Company ASA (TGS) provides multi-client geoscience data to
oil and gas Exploration and Production companies worldwide. In addition to
extensive global geophysical and geological data libraries that include multi-
client seismic data, magnetic and gravity data, digital well logs, production
data and directional surveys, TGS also offers advanced processing and imaging
services, interpretation products, and data integration solutions.
For more information visit TGS online at www.tgs.com
Important Notice
This announcement is not and does not form a part of any offer to sell, or a
solicitation of an offer to purchase, any securities of the Company.
Neither this announcement nor any copy of it may be made or transmitted into the
United States, or distributed, directly or indirectly, in the United States.
Neither this announcement nor any copy of it may be taken or transmitted
directly or indirectly into Australia, Canada, Japan, Hong Kong, New Zealand or
South Africa or to any persons in any of those jurisdictions, except in
compliance with applicable securities laws. Any failure to comply with this
restriction may constitute a violation of national securities laws. The
distribution of this announcement in other jurisdictions may be restricted by
law and persons into whose possession this announcement comes should inform
themselves about, and observe, any such restrictions. This announcement does not
constitute, or form part of, an offer to sell, or a solicitation of an offer to
purchase, any securities in Australia, Canada, Japan, South Africa, Hong Kong,
New Zealand or the United States or in any jurisdiction to whom or in which such
offer or solicitation is unlawful.
The securities referred to in this announcement have not been and will not be
registered under the U.S. Securities Act of 1933, as amended (the “Securities
Act”), or any securities laws of any state or other jurisdiction of the United
States and may not be offered or sold within the United States except pursuant
to an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act and in compliance with applicable state law.
There will be no public offer of the securities in the United States.
This announcement is an advertisement and does not constitute a prospectus for
the purposes of the Prospectus Regulation (EU) 2017/1129 (as amended, together
with any applicable implementing measures in any Member State, the “Prospectus
Regulation”). In any EEA Member State that has implemented the Prospectus
Regulation, this communication is only addressed to and is only directed at
qualified investors in that Member State within the meaning of the Prospectus
Regulation. In addition, in the United Kingdom, this announcement is not being
distributed, nor has it been approved for the purposes of Section 21 of the
Financial Services and Markets Act 2000 (“FSMA”), by a person authorized under
FSMA and is directed only at persons who (i) are outside the United Kingdom,
(ii) are investment professionals falling within Article 19(5) of the U.K.
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as
amended) (the “Order”) or (iii) high net worth companies, and other persons to
whom it may lawfully be engaged with, falling within Article 49(2)(a) to (d) of
the Order (all such persons in (i), (ii) and (iii) above together being referred
to as “relevant persons”). Under no circumstances should persons who are not
relevant persons rely or act upon the contents of this announcement. Any
investment or investment activity to which this announcement relates in the
United Kingdom is available only to, and will be engaged only with, relevant
persons.
Matters discussed in this announcement may constitute forward- looking
statements. Forward-looking statements are statements that are not historical
facts and may be identified by words such as “believe”, “expect”, “anticipate”,
“strategy”, “intends”, “estimate”, “will”, “may”, “continue”, “should” and
similar expressions. The forward-looking statements in this release are based
upon various assumptions, many of which are based, in turn, upon further
assumptions. Although the Company believes that these assumptions were
reasonable when made, these assumptions are inherently subject to significant
known and unknown risks, uncertainties, contingencies and other important
factors which are difficult or impossible to predict and are beyond its control.
Such risks, uncertainties, contingencies and other important factors could cause
actual events to differ materially from the expectations expressed or implied in
this release by such forward-looking statements.
The information, opinions and forward-looking statements contained in this
announcement speak only as at its date, and are subject to change without
notice. The Company does not undertake any obligation to review, update,
confirm, or to release publicly any revisions to any forward-looking statements
to reflect events that occur or circumstances that arise in relation to the
content of this announcement.
The distribution of this announcement and other information may be restricted by
law in certain jurisdictions. Persons into whose possession this announcement or
such other information should come are required to inform themselves about and
to observe any such restrictions.
This information is subject to the disclosure requirements pursuant to Section
5-12 the Norwegian Securities Trading Act
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