Key Aspects of the Joint Venture
-- ION will contribute its Land Imaging Systems assets and intellectual
property to the joint venture, including its ARAM, Aries(R),
Scorpion(R), and FireFly(R) product lines as well as its VectorSeis(R)
land sensor and vibroseis businesses, but excluding ION's Sensor
geophone business. All other ION businesses -- including ION's Marine
Imaging Systems, Concept Systems, Data Management Solutions, GXT
Imaging Solutions, Integrated Seismic Solutions (ISS), and
BasinSPAN(TM) seismic data libraries -- will be retained by ION and
will not become part of the land joint venture.
-- BGP will contribute land seismic equipment assets and intellectual
property to the joint venture, including an innovative land recording
system currently under development, its vibroseis business, and
various complementary land seismic equipment businesses. BGP's
geophone business, including associated BGP geophone joint ventures
with other parties, will be excluded.
-- The joint venture will be 51% owned by BGP and 49% owned by ION. The
joint venture will be governed by a board of directors consisting of
representatives from both owners. The joint venture's board will
appoint management, approve strategic and operating plans, and govern
the direction and performance of the company.
-- After taking into account the value of tangible and intangible assets
contributed to the joint venture by both parties, BGP's cash
investment to be paid to ION with respect to the joint venture will be
US$108.5 million.
Overview of Impact on ION Equity and Debt
-- At the joint venture closing, ION will issue a total of approximately
23.8 million shares of its common stock to BGP, after which BGP will
own approximately 16.66% of the outstanding common stock of ION. Cash
proceeds to ION from the stock sale will be approximately US$66.6
million. After the closing, ION will appoint a designee of BGP to its
Board of Directors to serve with the current nine members of ION's
Board.
-- ION will receive up to US$40 million in the form of bridge financing
arranged by BGP prior to the joint venture closing. If ION has drawn
the entire US$40 million in bridge financing, the outstanding bridge
financing amount will convert into approximately 14.3 million shares
of ION common stock and will be credited against the approximately
23.8 million shares of ION stock to be issued to BGP at the
transaction closing.
-- BGP has arranged for US$106.3 million of ION's outstanding long-term
debt to be refinanced at the joint venture closing.
-- ION will use a portion of the proceeds from the transaction to pay off
and retire US$98 million outstanding under its current revolving line
of credit and US$35 million owed from its acquisition of ARAM in
September 2008.
-- ION will receive a new US$100 million revolving credit facility at the
joint venture closing.
Potential Benefits of Combining Forces in Land Seismic Equipment
-- The joint venture will provide ION with preferred access to the
world's largest land seismic contractor, currently operating 110
seismic crews around the world.
-- The combination of assets and operations within the joint venture will
provide opportunities for improved economies of scope and scale, along
with enhanced efficiencies across the venture's supply chain, enabling
the joint venture to deliver products in a more timely manner and at
an overall lower cost to its customers.
-- The transaction will combine ION's strengths in innovative land
equipment with BGP's emerging geophysical product portfolio and
expertise in operating land seismic acquisition crews, allowing new
joint venture products to be designed and field-tested for
reliability, quality, and productivity to the benefit of all
customers.
-- The joint venture will align the land equipment technology assets and
expertise of both companies to enable the joint venture engineering
teams to develop innovative, market-leading land recording systems,
3C (full-wave) sensors, and vibroseis products.
Evercore Partners served as ION's financial advisor on the transaction, while Goldman Sachs (Asia) L.L.C. and Morgan Stanley Asia Limited advised BGP.
About ION
ION Geophysical Corporation is a leading provider of geophysical technology, services, and solutions for the global oil & gas industry. ION's offerings allow E&P operators to obtain higher resolution images of the subsurface to reduce the risk of exploration and reservoir development, and enable seismic contractors to acquire geophysical data more efficiently. Additional information about ION is available at www.iongeo.com.
About BGP
BGP is one of the world's leading geophysical service contractors. Services include 2-D, 3-D, 3-component, 4-D seismic and 3-D VSP commonly used to fill clients' requirements. BGP also supports non-seismic activities including gravity, magnetic, electromagnetic and geo-chemical surveys. Geological research services are also provided on a regular basis to the energy industry in China and in the world. Additional information about BGP is available at www.bgp.com.cn.
Contacts
ION (Financial community)
Brian Hanson, +1-281-879-3672
Chief Financial Officer
ION (Media affairs)
Chris M. Friedemann, +1-281-879-3690
Senior Vice President - Corporate Marketing
BGP (Media affairs)
Zhu Qiang, +86-312-382-1463
Deputy Chief Economist - BGP International
The information included herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include statements concerning benefits expected to result from the transactions, future sales and market growth, future liquidity and cash levels, future efficiencies, future product development, number of shares of ION's common stock to be outstanding in the future, and other statements that are not of historical fact. Actual results may vary materially from those described in these forward-looking statements. All forward-looking statements reflect numerous assumptions and involve a number of risks and uncertainties. These risks and uncertainties include risks associated with required regulatory approvals, timing and development of future products and services; risks associated with the economy and the volatile credit environment; risks associated with the integration of businesses; risks associated with competitors' product offerings and pricing pressures resulting therefrom; the risks that sources of capital may not prove adequate for ION; and technological and marketplace changes affecting product lines. Additional risk factors, which could affect actual results, are disclosed by ION from time to time in its filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2008 and its Quarterly Reports on Form 10-Q.
Financial community, Brian Hanson, Chief Financial Officer, +1-281-879-3672, or Media affairs, Chris M. Friedemann, Senior Vice President - Corporate Marketing, +1-281-879-3690, both of ION; or Media affairs, Zhu Qiang, Deputy Chief Economist of BGP International, +86-312-382-1463