Offshore seismic data company ION Geophysical has this week said its Board of Directors has started a process to evaluate a range of strategic alternatives to strengthen its financial position and maximize stakeholder value "as the company continues to assess conditions in the capital markets and right-size the business."
ION, which provides seismic data to offshore oil and gas companies, said that these strategic alternatives include, among others, a sale or other business combination transaction, sales of assets, private or public equity transactions, debt financing, or some combination of these.
Houston-based ION, which had 428 employees as at the release of the 2020 Annual Report in April this year, has engaged Tudor Pickering, Holt & Co. to assist with the evaluation process.
"There can be no assurance that such evaluation will result in one or more transactions or other strategic change or outcome. The company has not set a timetable for the conclusion of its consideration of strategic alternatives, and it does not intend to comment further unless and until the Board has approved a specific course of action or the company has otherwise determined that further disclosure is appropriate or required," ION said.
At the end of the second quarter, ION’s total liquidity of $32.8 million consisted of $26.7 million of cash (including net revolver borrowings of $19.8 million) and $6.1 million of remaining available borrowing capacity under the revolving credit facility.
In April 2021, the company completed its bond exchange and rights offering, which extended the bond maturity to 2025 with a lower interest rate and a convertible feature that the company said provided provides a path to convert the debt to equity.
In total, $116.2 million of New Notes due in December 2025 were issued, and 10.9 million shares of Common Stock that generated $14 million in net proceeds. A total of $7.1 million of Old Notes remained outstanding and due in December 2021.
ION said in August that while the company’s balance sheet was bolstered by those transactions and revenue in the second quarter improved sequentially, the timing of the market recovery remained uncertain and revenues for the first half of 2021 were lower than expected.
"These lower than planned revenues will have an impact on second half cash collections necessary to fund the company's operations and meet its debt and other obligations, therefore triggering a going concern issue for ION. The company continually evaluates conditions in the capital markets, and will continue to explore additional funding opportunities through private or public equity transactions, debt financing or other capital sources, such as the sale of non-strategic assets to meet its ongoing cash needs," ION said in its second-quarter presentation in August.
In other recent news, ION last week announced a third, fully underwritten phase of the company’s Mid North Sea High 3D new acquisition multi-client survey. The company, which does not own its own survey vessels, chartered the M/V Akademik Nemchinov, owned by Rosgeo Sevmorneftegeofizika.
The Mid-North Sea High program covers one of the few remaining underexplored areas offshore the UK, where relatively low development costs close to shore make it attractive for future investment, the company said. Adjacent to the initial phase, the survey location fills a gap in existing subsurface coverage and is strategically important to expanding ION’s regional footprint. Data collection of the ~700 sq km industry-supported survey is expected to occur from mid-September until late October.