HOUSTON and BEIJING, October 23 /PRNewswire/ --
-- ION to Receive US$175 Million Capital Infusion from BGP Majority of ION Debt to be Repaid or Refinanced at Closing
ION Geophysical Corporation (NYSE: IO) and BGP Inc., a world-leading geophysical company, today announced that they have signed a term sheet to create a joint venture that will provide land seismic products worldwide. The joint venture will align ION's innovative land equipment business with BGP's own expertise and experience in land seismic operations to create a new enterprise with the resources, technology and experience required to provide state-of-the-art products and services on a global basis.
ION will significantly enhance its financial position through total cash proceeds of US$175 million from BGP. BGP will receive a 51 percent interest in the joint venture and an approximate 16.66 percent interest in ION. Prior to the joint venture closing, ION will also receive up to US$40 million of bridge financing arranged by BGP. At the transaction's closing, ION will refinance and reduce its long-term debt, and receive an expanded replacement revolving line of credit. Overall, after closing ION expects to have over US$100 million in liquidity from cash and spare capacity on its revolving line of credit.
Bob Peebler, ION's CEO, commented, "Our Board of Directors and senior leadership team are delighted to be forging this transformative partnership with BGP. ION and BGP have been doing business together for more than two decades, with each company contributing to the other's growth and success. This transaction will create not only a new global leader in land seismic equipment capable of seizing high-value opportunities in the fastest-growing geophysical markets, but also a financially stronger ION through a significant de-leveraging of the company."
Mr. Wang Tiejun, President of BGP, added, "As an ION customer for many years, BGP has always been impressed with ION's vision and products, which have proven to be capable of improving the operational efficiency and the safety and environmental effectiveness of land seismic acquisition. By joining forces through our planned joint venture, we believe we can combine BGP's operational knowledge and experience, and emerging land seismic product portfolio, with ION's innovative products and culture to become the leading land seismic technology company of the 21st century. It is the intention of both ION and BGP that our joint venture will provide products and field support services to all land seismic contractors around the world, not just to BGP. The sale of products and the provision of field-support services to both in-house BGP crews and third party land seismic contractors is a proven industry model that will benefit the broader land contractor community and the hundreds of seismic crews that operate around the world."
The transaction is subject to the completion of regulatory reviews and receipt of applicable approvals in the United States and the People's Republic of China, which are expected to be completed by the first quarter of 2010. Prior to closing, ION and BGP will file a joint voluntary notice of the transaction for review by the Committee on Foreign Investment in the United States (CFIUS), a government inter-agency committee chaired by the Secretary of the Treasury.
The term sheet has been unanimously approved by BGP and by ION's Board of Directors and is not subject to approval by ION's shareholders. ION's current bank group has amended ION's credit facility to the extent necessary to allow the transactions to proceed.
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