ION Geophysical amends restructuring agreement for second-lien notes

By Sarah Lizee

Olympia, Wash., Feb. 11 – ION Geophysical Corp. announced an amendment to the restructuring support agreement for its 9 1/8% senior secured second-priority notes due December 2021 (Cusip: 462044AH1), reflecting increased bondholder support to 92% from 84% and finalized pricing terms.

Based on the 20-day volume-weighted average price since the initial announcement, the price to purchase new shares of stock through the rights offering was set at $2.57 and the conversion price of the new 8% senior secured second-priority notes due 2025 was set at the high end of the collar at $3.00.

The company also entered into a support agreement with the lender of its credit facility, PNC Bank, which will permit the company to consummate and implement the bond restructuring transactions.

“We are on track to complete the transactions by the end of March, which will improve the company’s platform to continue execution of our refreshed strategy,” Chris Usher, ION’s president and chief executive officer, said in the release.

As previously reported, the company entered into the restructuring support agreement in December.

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.

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.

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.

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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