ION Geophysical proposes exchange offer, consent bid for 8 1/8% notes

By Angela McDaniels

Tacoma, Wash., Feb. 29 – ION Geophysical Corp. said the holders of more than two-thirds of its outstanding 8 1/8% senior secured second-priority notes due 2018 have agreed to tender their notes in a proposed private exchange offer and give their consents in a proposed consent solicitation.

According to a company news release, the company plans to offer $1,000 principal amount of new 9 1/8% senior secured second-priority notes due 2021 and 10 shares of the common stock in exchange for each $1,000 principal amount of 8 1/8% notes.

The company also plans to solicit consents to amendments to the indenture governing the 8 1/8% notes that would, among other things, release all of the collateral securing the notes and related guarantees and eliminate most of the negative covenants and events of default.

In addition, the company plans to provide eligible participants who tender all of their notes in the exchange offer the option to tender their notes for cash (the "cash tender option"), subject to, among other things, a maximum aggregate amount of cash payable of $15 million plus accrued interest through and excluding the closing date of the exchange offer.

The pricing for the cash tender option will be determined through a Dutch auction in which each eligible noteholder electing to participate will specify a price not greater than $600 nor less than $430 per $1,000 principal amount of notes.

The company will accept for purchase notes tendered under the cash tender option beginning with those for which the lowest price has been specified until it has accepted for purchase an aggregate amount of notes equal to the cash tender cap, subject to applicable proration procedures among the last class of bids that still fits under the cash tender cap.

The company gave no assurance that it will reach a final agreement on the terms of an exchange offer.

“Upon the consummation of the exchange offer and, if the cash tender option is fully subscribed by our noteholders, we expect to have successfully extended the maturity of a substantial portion of our outstanding debt for over three years and will have delevered our balance sheet by $25 million to $30 million,” ION president and chief executive officer Brian Hanson said in the news release.

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

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