ION Geophysical eyes $175 million five-year revolver, term facility

By Susanna Moon

Chicago, Aug. 25 – ION Geophysical Corp. obtained a $125 million revolving credit facility and an uncommitted term facility for up to $50 million, according to an 8-K filing with the Securities and Exchange Commission.

For the revolver, lenders committed $80 million at closing last Friday and up to $45 million will be subject to the implementation of accordion provisions.

The revolving loans will be due the earlier of Aug. 22, 2019 and the date that is 90 days prior to the maturity date of ION’s 8 1/8% senior secured second-priority notes due 2018.

The company and its subsidiaries, ION Exploration Production (U.S.A.), Inc., I/O Marine Systems, Inc. and GX Technology Corp. entered into the new credit facility last Friday with PNC Bank, NA as agent.

The new facility modified and replaced the company’s previous syndicated credit facility under a credit agreement dated March 25, 2010 with China Merchants Bank Co., Ltd., New York Branch as administrative agent and lender.

The facility includes a $15 million sublimit for the issuance of documentary and standby letters of credit.

At closing, there was no debt were outstanding under the new facility.

Proceeds of the revolver will be used for general corporate needs, including working capital requirements, capital expenditures, surety deposits and acquisition financing.

The loans are secured by a first-priority security interest in 100% of the stock of the subsidiary borrowers and 65% of the equity interests in ION International Holdings LP and by substantially all other assets of the borrowers.

The revolving credit and security agreement contains covenants that restrict the company from incurring additional debt and paying cash dividends under some circumstances.

The financial covenants require ION to maintain a minimum fixed charge coverage ratio of 1.1 times at the end of each fiscal quarter during a covenant testing trigger event and not exceeding a maximum senior secured leverage ratio of 3 times at the end of each fiscal quarter.

ION Geophysical is a Houston-based provider of geophysical technology, services and solutions for the oil and gas industry.

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