ION gets bridge loan commitment for ARAM buy, plans to replace with bonds and short-term debt

By Sara Rosenberg

New York, July 9 - ION Geophysical Corp. has received a commitment for a bridge loan to help fund its acquisition of ARAM Systems Ltd., but the company hopes to replace that bridge with high-yield bonds and short-term debt, company officials said in a conference call Wednesday.

ARAM is being bought for C$350 million, of which $275 million will be paid in cash and the remainder will be paid in ION common stock.

"It is our intention to debt finance the $275 million cash portion of the deal most probably through the issuance of some short-term debt and a high-yield bond," officials said in the call.

"We have selected both commercial and investment banking partners to assist in the transaction, as well as secured committed bridge financing, prior to executing the share purchase agreement," officials continued.

The company officials went on to say in the call that it's the company's "intent to raise permanent financing prior to the close of the transaction and avoid funding with the bridge commitments."

Closing on the transaction is expected to close within 45 to 60 days, driven by timelines to finalize the financing commitments and receive regulatory approvals.

"Although we won't be able to speak to the specific terms of these instruments until after we complete the capital raise, we are excited about the opportunity to add some leverage to our balance sheet with such a strategically aligned company in a transaction we expect to be nicely accretive to earnings in 2009," officials remarked in the call.

"In general, we would expect the leverage ratio of the combined entities in 2008 to be less than 1.5 times total debt to EBITDA," officials added.

ION Geophysical is a Houston-based provider of acquisition equipment, software, and planning and seismic processing and interpretation services to the energy industry. ARAM is a Calgary, Alberta, provider of cable-based land seismic recording systems.

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