ION Geophysical launches rights offering for second-lien convertibles

Chicago, March 5 – ION Geophysical Corp. will launch a rights offering for new second-lien convertible notes or its common stock as part of its restructuring transactions, according to a press release.

The launch will occur after the S-1 registration form filed with the Securities and Exchange Commission is declared effective by the SEC.

Each shareholder as of March 15 will receive one non-transferable subscription right for each share of common stock they own.

Each right will entitle the holder to purchase a principal amount of new notes equal to $50 million divided by the number of shares of common stock outstanding on the record date at a purchase price of par of $1,000, or a number of shares of common stock equal to $50 million divided by the purchase price of $2.57 per share divided by the number of shares of common stock outstanding on the record date at a purchase price of $2.57 per whole share of common stock.

Notes will be issued in minimum increments of $1,000 and common stock will only be issued in whole numbers of shares.

As of March 5, the company had 17,960,434 shares of common stock outstanding such that each right would entitle a holder to purchase $2.78 principal amount of new notes or 1.08 shares of common stock.

Each holder of a right will be entitled to an over-subscription privilege to purchase additional securities that may remain unsubscribed as a result of any unexercised rights.

Backstop agreements have been entered into with several parties. The backstop providers have agreed to purchase in excess of $20 million of new notes at par or shares of common stock at $2.57 per share.

The backstop agreements are subject to customary terms and conditions, including payment, in principal amount of new notes or shares of common stock at $2.57 per share, or a backstop fee in an amount up to 5% of the backstop commitment.

To complete the rights offering, the company must receive net proceeds or at least $20 million from the rights offering.

The backstop commitment allows ION to satisfy this condition.

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

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