CGG launched a US$378.8 million (€350 million) rights offering to existing shareholders to fund its “transformational plan” to convert CGG from a seismic acquisition company into an integrated geosciences group.
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The CGG Oceanic Vega. Image from CGG. |
According to the French firm, the net proceeds of the issuance will be used to reinforce the shareholders’ equity of CGG and improve its liquidity as it finances its transformation plan.
For 2016, net proceeds will mainly be used to cover the shortfall in CGG’s consolidated net working capital of some $175 million. In addition, net proceeds will finance the company’s activities, which will permit CGG to reduce its reliance on drawings under the group’s revolving credit facilities, CGG said.
Under the rights offering, each shareholder will obtain one preferential subscription right for every share it holds as of the close of trading on 13 January 2016.
The subscription price for the new shares has been set at about $0.72 (€0.66) per share on the basis of three new shares for one existing share. The subscription price represents a 71.55% discount to the closing price on 11 January 2016 and a 38.60% discount to the theoretical ex-right price (TERP).
According to CGG, Bpifrance, which holds 7.04% of CGG’s share capital, and IFP Energies Nouvelles, which holds 3.58% of CGG’s share capital, have undertaken to exercise together all of their rights on an irreducible basis, representing 10.62% of the CGG’s share capital.
France’s Total undertook to subscribe, strictly if necessary, for new shares that may remain unsubscribed at the end of the rights exercise period, up to a maximum amount of nearly $38 million (€35 million), CGG said.
CGG included that there is a possibility that the undertakings could be terminated up to and including the date of delivery of the new shares.
The subscription period for the new shares will run from 14 January 2016 to 27 January 2016.
“This capital increase of €350 million will be entirely dedicated to financing the transformation of CGG and will allow the company to complete its strategic positioning in order to serve even better our clients and our shareholders and to propose an attractive future to our employees,” Jean-Georges Malcor, CGG CEO said.
CGG announced its implementation of a new step of its transformation plan at the beginning of November. The plan also included 950 job cuts, representing a 13% reduction of its staff, and a reduction in its vessel fleet.
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