Moody's rates Generale de Geophysique loans Ba2

Moody's Investors Services said it assigned provisional Ba2 ratings with a stable outlook to Compagnie Generale de Geophysique's proposed $1.1 billion credit facilities, which include a $800 million term loan due 2014 and two revolving credit facilities of $100 million and $200 million, respectively, due 2012. The $200 million revolver will be issued by Generale de Geophysique. The term loan and the $100 million revolver are anticipated to be issued by Volnay Acquisition Co. I, a holding company, and guaranteed by Generale de Geophysique.

The company's Ba2 corporate family and Ba3 debt ratings remain under review for possible downgrade.

The term loan facility is expected to refinance part of the $1.6 billion bridge credit facility raised in November by Generale de Geophysique to finance the agreed merger with Veritas DGC Inc. in a part-cash, part-stock transaction valued at $3.2 billion, and the two revolvers will be used to finance the combined entity's working capital needs.

All the conditions required for the closing of the transaction have been satisfied, Moody's said. The only remaining condition is the approval by the shareholders of both companies of the merger agreement, which is expected to take place in early January.

The agency said it views the proposed transaction as mildly beneficial to the company's overall business risk profile owing to the greater overall scale, enhanced leadership in offshore seismic services and data processing and the more balanced customer mix that will result from the merger. In addition, the agency expects the combined entity's relatively high pro forma leverage to decline rapidly on the back of the current strong market, characterized by double-digit growth rates. Moody's therefore believes that Generale de Geophysique's ratings currently under review for downgrade are likely to be confirmed at their current level upon completion of the transaction.

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