Oil-services company CGG Group filed for bankruptcy protection Wednesday in the U.S. and France after reaching a restructuring deal with lenders and bondholders that will eliminate about $2 billion in debt from the company's books.
Under the deal, bondholders will swap nearly $2 billion in debt for most of the equity in a reorganized CGG, the company said. The restructuring plan calls for up to $500 million of new money to be raised from a $125 million rights offering and the issuance of $375 million in new debt.
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CGG's senior lenders, owed about $800 million, will extend the maturity on their loans in return for $150 million payment from the proceeds of the new money investment. Existing shareholders, who will be able to participate in the rights offering, will see their investments reduced to a 4.5% stake in the restructured CGG following completion of the debt swap, according to filings in U.S. Bankruptcy Court.
Beatrice Place-Faget, general counsel of parent company CGG SA, said in court papers the prolonged downturn in oil and natural gas prices left the company unable to pay its debts.
CGG's 2016 annual revenue was roughly one-third of what it was before the current downturn began, she said. In 2012, before oil prices dropped, the company had total operating revenues of more than $3.41 billion. By 2016, that number was $1.195 billion.
In addition, the company has been losing money for years, including losses of $1.14 billion in 2015 and another $404.7 million last year.
CGG was founded in 1931 as " Compagnie Générale de Géophysique" and focuses on seismic surveys and other techniques to help energy companies locate oil and natural-gas reserves. The company also makes geophysical equipment under the Sercel brand name.
CGG launched its court-supervised restructuring bid in Paris on Wednesday by opening a "sauvegarde" proceeding, the French equivalent of a chapter 11 bankruptcy filing. Fourteen CGG subsidiaries filed for chapter 11 in U.S. Bankruptcy Court in New York and the parent intends to seek U.S. court recognition of the Paris case under chapter 15, the section of U.S. bankruptcy law dealing with international insolvencies.
CGG's legal advisers are Linklaters LLP and Weil Gotshal & Manges LLP for the sauvegarde and chapter 15 case, and Paul, Weiss, Rifkind, Wharton & Garrison LLP for the chapter 11 cases. The company's financial advisers are Lazard and Morgan Stanley, and its restructuring adviser is Alix Partners LLP. Judge Martin Glenn has been assigned the case.
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(END) Dow Jones Newswires
June 14, 2017 19:10 ET (23:10 GMT)