ION Geophysical enters restructuring agreement for second-lien notes

By Cady Vishniac

Detroit, Dec. 23 – ION Geophysical Corp. has entered into a restructuring support agreement with approximately 84% of the holders of its 9 1/8% senior secured second-priority notes due December 2021 (Cusip: 462044AH1), according to a company press release.

Under the agreement, all existing notes would be exchangeable for $150 cash, $850 of consideration for new 8% second-lien convertible notes due Dec. 15, 2025 and $35 of additional cash, the convertible notes or common stock at ION’s option, plus payment of all accrued and unpaid interest. The stock would be offered at a deal price based on the 20-day volume-weighted average price straddling ION’s Tuesday announcement.

Rights would also be granted to all holders of ION’s common stock to subscribe to a pro rata share (with oversubscription rights) of up to $50 million of either the new convertible notes or common stock issued at the deal price.

Backstop parties on the rights offering would be entitled to a fee of up to 5%. The company is in talks with several current and new investors about serving as backstop parties.

The new notes’ conversion price will be a 25% premium over the deal price, between $1.80 and $3 per share. ION will have the right to convert all outstanding new notes 18 months from the issue date, provided that its volume-weighted average price is at least 175% of the conversion price. Holders of the notes will have certain voting rights and may appoint two independent directors to ION’s board.

ION intends to hold a special shareholder meeting in February in order to get approval to issue more shares and take other necessary measures for the restructuring.

Winston & Strawn LLP and Oppenheimer & Co. Inc. represented ION in the restructuring support agreement. Ropes & Gray LLP and FocalPoint Partners LLC represented the noteholders.

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

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