ION Geophysical, based in west Houston, has reached agreement with 84% of its senior note holders for a debt-for-equity swap that will reduce debt by up to $120 million. The deal was made without going through Chapter 11 restructuring.
The company was originally an offshore seismic data provider. More recently, it has been trying to grow its business in mission critical software to optimize vessel movements and operations.
The company has debt, net of cash, of $92 million and negative shareholders’ equity of $61 million. It has $121 million of loan notes due in December 2021. The agreement calls for these notes to be redeemed for $18 million of cash and $107 million of new convertible notes due in 2025.
If all the loan note holders convert, the company will no long-term debt and equity of $73 million. At the midpoint of the conversion price range, the loan note holders will own approximately 74% of the proforma equity. Existing shareholders will be diluted down to 21%. The remaining 5% is from a $25 million rights issue the company is planning to make. The company expects that most of the participants in the rights issue will elect to receive loan notes rather than equity.
ION has relatively new senior management. CEO Christopher Usher was appointed to the role in May 2019, though he joined the company in 2012. Mike Morrison has been interim CFO since his predecessor, Steve Bate, retired in February. Mr. Morrison joined the company back in 2002.
[Update 12-29-20 The company issued an 8-K announcing that Mr. Morrison was appointed CFO back in September. Oops. Base salary $300k]
ION’s largest shareholder is China National Petroleum Corporation, who own 10.6% of the stock.