Petroleum Geo-Services tenders for $745.9 million 10% notes due 2010

By Jennifer Chiou

New York, Nov. 15 - Petroleum Geo-Services ASA announced the launch of a tender offer for all $745.9 million of its 10% senior notes due 2010 as part of a refinancing effort.

The company is also soliciting consents to amend the notes' indenture, eliminating all of the affirmative and restrictive covenants and events of default.

The consent deadline is 5 p.m. ET on Nov. 29. The offer ends at 8 a.m. ET on Dec. 14, unless extended.

For each $1,000 principal amount of notes, Petroleum Geo-Services said it will base its payment on the present value of the notes on their earliest redemption date, discounted using the yield to maturity of the 3% Treasury due Nov. 15, 2007 and 50 basis points. The payout includes a $20.00 consent payment for those who tender their holdings before the consent deadline.

The company will also pay accrued interest up to but excluding the payment date.

Pricing will be determined at 2 p.m. ET on Nov. 29.

UBS Investment Bank (888 722-9555 or call collect 203 719-4210) is dealer manager and solicitation agent. Global Bondholder Services Corp. (866 470-3900 or call collect 212 430-3774) is the information agent.

The company's board also decided to obtain a new $1 billion facility, comprised of an $850 million term loan and $150 million revolving credit facility. It plans to complete the refinancing in the fourth quarter.

Petroleum Geo-Services also said it will explore possibilities for separating into two independently listed companies, Geophysical and Production.

"Refinancing in the current, favorable debt market will provide PGS with more attractive financing and increased flexibility," president and chief executive officer Svein Rennemo said in a news release.

"We believe that direct access to the capital markets for both Geophysical and Production would allow us to capture more opportunities for value creation, benefiting shareholders, customers and employees. This is why we want to explore this direction and why we target a refinancing in 2005 and a separation in 2006."

Earlier in November, Petroleum Geo-Services redeemed its 8% senior notes due 2006.

Based in Lysaker, Norway, Petroleum Geo-Services is an oilfield service company that provides seismic and reservoir services.

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