Report of Foreign Issuer (6-k)
October 16 2017 - 6:49AM
Edgar (US Regulatory)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
6-K
Report of
Foreign Private Issuer
Pursuant to Rule
13a-
16 or
15d-
16
of the Securities Exchange Act of 1934
For the month of October 2017
CGG
Tour Maine Montparnasse - 33 Avenue du Maine BP 191 - 75755
PARIS CEDEX 15
(address
of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form
20-F
or Form
40-F.
Form
20-F ☒ Form
40-F ☐
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule
12g3-2(b)
under the Securities Exchange Act of 1934.
Yes ☐ No ☒
If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule
12g3-2(b):
82
Availability of a prospectus in connection with certain issuances
provided for under the draft safeguard plan and the Chapter 11 plan
in the context of the financial restructuring plan of CGG
Paris, France October, 13 2017
CGG announces
that, today, the
Autorité des marchés financiers
granted visa
n°17-551
to the prospectus (in the French language) made available to the public in connection with:
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the issuance and admission to trading on the regulated Euronext market in Paris (
Euronext Paris
) of up to 24,375,000 share subscription warrants (the
Warrants #1
) granted for free
by CGG to all shareholders on the basis of one (1) Warrant #1 for one (1) existing share, which may result in the issuance of up to 32,500,000 new shares at the subscription price of 3.12 per new share;
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the issuance and admission to trading on Euronext Paris of up to 37,524,400 new shares issued as part of an increase in share capital with removal of the shareholders preferential subscription rights, in favor of
(i) the holders of bonds convertible and/or exchangeable for new or existing shares, bearing interest at the rate of 1.75% and maturing on January 1, 2020, issued by the Company on June 26, 2015 and (ii) the holders of bonds
convertible into and/or exchangeable for new or existing shares, bearing interest at the rate of 1.25% and maturing on January 1, 2019, issued by the Company on November 20, 2012, that will be subscribed at their face value by way of
set-off
with the subscription price of 10.26 per new share;
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the issuance and admission to trading on Euronext Paris of up to 496,794,900 new shares issued as part of a capital increase with removal of the shareholders preferential subscription rights, in favor of
(i) the holders of high yield notes, bearing interest at the rate of 5.875% and maturing in 2020, issued by the Company on April 23, 2014, (ii) the holders of high yield notes, bearing interest at the rate of 6.5% and maturing in 2021,
issued by the Company on May 31, 2011, January 20, 2017 and March 13, 2017 and (iii) the holders of high yield notes, bearing interest at the rate of 6.875% and maturing in 2022, issued by the Company on May 1, 2014, that
will be subscribed at their face value by way of
set-off
with the subscription price of 3.12 per new share;
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the admission to trading on Euronext Paris of up to 123,817,300 new shares, with a subscription price of 0.01 per new share, resulting from the exercise of up to 123,817,300 share subscription warrants (the
Warrants #3
), granted for free by the Company to the subscribers of new second lien notes governed by New York State law (the
New Notes
);
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the admission to trading on Euronext Paris of up to 7,738,600 new shares, with a subscription price of 0.01 per new share, resulting from the exercise of up to 7,738,600 share subscription warrants granted for
free by the Company to the members of the ad hoc committee of Senior Notes holders;
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the admission to trading on Euronext Paris of up to 11,607,900 new shares, with a subscription price of 0.01 per new share, resulting from the exercise of up to 11,607,900 share subscription warrants granted for
free by the Company to the persons committed to backstop the subscription of the New Notes and the Warrants #3, in accordance with the provisions of the private placement agreement dated June 26, 2017 ;
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the admission to trading on Euronext Paris of the new shares to be issued upon exercise of the Warrants #1.
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These transactions would be implemented in the context of the financial restructuring plan, the terms of which were announced on June 14, 2017 by the
Company. The plan was approved on July 28, 2017 by a unanimous vote of the committee of banks and financial institutions, and by a majority of 93.5% of votes cast at the general meeting of bondholders. Furthermore, the various classes of
creditors concerned by the Chapter 11 proceedings massively voted in favor of the Chapter 11 plan which was confirmed by the relevant US court on October 10, 2017 (the order should be entered in the next few days). The works council of the
Company, also consulted with respect to the draft safeguard plan, rendered a favorable opinion at its meeting held on 2 October 2017.
The completion
of the foregoing transactions remains subject to:
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the approval by the Companys extraordinary general meeting of shareholders which is scheduled to convene on October 31, 2017 of the resolutions required to implement the draft safeguard plan, in particular
those relating to the share capital reduction by reducing the unit par value of the Companys shares to 0.01;
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the abovementioned share capital reduction being effectively carried out;
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the sanctioning of the draft safeguard plan approved by both the committee of banks and assimilated creditors, and the sole general meeting of bondholders on July 28, 2017, by the Commercial Court of Paris;
according to the current contemplated provisional timetable, the court should examine the request for the sanctioning of the draft safeguard plan on November 6, 2017;
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confirmation by the relevant US Court of the Chapter 11 plan and the recognition of the ruling sanctioning the draft safeguard plan within the framework of the Chapter 15 proceedings the
enforcement of which is not stayed;
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the obtaining of the AMF visa on the prospectus relating to the issue, with shareholders preferential subscription rights, of new shares with warrants in an amount of c. 112 million euros (including share
premium), priced at 1.56 per share, i.e. a nominal value of 0.01 and a share premium of 1.55 per new share, which share capital increase is tentatively scheduled to take place in December 2017, with settlement and delivery
scheduled for January 2018.
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the satisfaction of all conditions precedent provided for in the implementation documents of the restructuring, which includes notably the indenture of the new first lien notes, the indenture of the New Second Lien
Notes and the new interest second lien notes, or the terms and conditions of the various warrants.
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The prospectus comprises the CGG
reference document (
document de référence
), filed with the Financial Markets Authority on May 1, 2017 under number
D.17-0486,
the update of the Companys Reference Document filed
with the AMF on October 13th, 2017under number
D.17-0486-A01,
the securities note (including a summary of the prospectus) under visa
17-551
dated October 13th, 2017, and a summary of the prospectus (attached to this press release). Copies of the prospectus can be obtained free of charge from the registered office of CGG, Tour Maine
Montparnasse, 33 Avenue du Maine 75015 Paris, the Companys website (
www.cgg.com
) and the AMF website (
www.amf-france.org
).
Appendix
: Summary of the prospectus
The press release
shall not constitute an offer to sell or the solicitation of an offer to buy securities. There will not be any sale of these securities in any such state or country in which such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any state or country.
The securities referred to herein have not been and will not be registered under
the US Securities Act of 1933, as amended (the
Securities Act
) and may not be offered and sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities
Act.
About CGG:
CGG (
www.cgg.com
) is a
fully integrated Geoscience company providing leading geological, geophysical and reservoir capabilities to its broad base of customers primarily from the global oil and gas industry. Through its three complementary businesses of Equipment,
Acquisition and Geology, Geophysics & Reservoir (GGR), CGG brings value across all aspects of natural resource exploration and exploitation. CGG employs around 5,500 people around the world, all with a Passion for Geoscience and working
together to deliver the best solutions to its customers.
CGG is listed on the Euronext Paris SA (ISIN: 0013181864) and the New York Stock Exchange
(in the form of American Depositary Shares. NYSE: CGG).
Contacts
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Group Communications
Christophe Barnini
Tel: + 33 1 64 47 38 11
E-Mail: :
invrelparis@cgg.com
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Investor Relations
Catherine
Leveau
Tel: +33 1 64 47 34 89
E-mail:
:
invrelparis@cgg.com
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PROSPECTUS SUMMARY
AMF
Visa
no.
17-551
dated October 13, 2017
The summary consists of a series of key items of information, referred to as Elements, divided into five sections A through E and numbered A.1
through E.7.
This summary contains all Elements which must be included in the summary of a prospectus relating to this class of securities and this type
of issuer. As all Elements need not be provided, the numbering of the Elements in this summary is not continuous.
It is possible that no relevant
information can be provided concerning a given Element that must be included in this summary because of the class of securities and type of issuer concerned. In that case, the summary includes a brief description of the Element concerned, with the
indication not applicable.
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Section A Introduction and disclaimer
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A.1
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Note for readers
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This summary should be read as an introduction to the Prospectus.
Any decision to invest in the securities under the public offering or for whose admission to trading on a regulated market is requested should be based on
consideration of the prospectus as a whole by the investor.
Where a claim relating to
the information contained in the Prospectus is brought before a court, the plaintiff investor might, under the national legislation of the Member States, have to bear the costs of translating the Prospectus before the legal proceedings are
initiated.
Civil liability attaches only to those persons who have tabled the summary
including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, the key
information in order to aid investors when considering whether to invest in such securities.
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A.2
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Consent of the
issuer
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Not applicable.
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Section B Issuer
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B.1
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Issuing companys
name and business
name
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Company name: CGG (the
Company
and, together with all of its consolidated subsidiaries, the
Group
).
Business name: CGG
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B.2
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Registered office/
Legal form/
Governing law/
Country of origin
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Registered office: Tour Maine Montparnasse, 33 Avenue du Maine, 75015
Paris.
Legal
form:
Société anonyme
with a board of directors.
Governing law: French law.
Country of origin:
France.
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B.3
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Description of the
issuers operations
and principal lines
of business
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CGG is a world leader in geophysical services and equipment.
The Group offers an extensive line of services, equipment sold under the Sercel trademark, and technological solutions for a broad, worldwide customer base,
primarily in oil and gas exploration and production.
The Group is structured along the
following eight product lines:
Equipment (including the Sercel entities or brands, such as Metrolog, GRC and
De Regt);
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Marine Acquisition;
Land Acquisition
(including land electromagnetics and general geophysics);
Multi-physics;
Multi-clients and New business models;
Subsurface
imaging;
GeoSoftware (which covers the business and software development activities of Jason and
Hampson-Russell);
GeoConsulting (which covers the consulting business of Jason and Hampson-Russell as well
as the consulting and geology activities of Robertson along with the Data Management Services).
These lines of business are categorized into four segments for the purpose of the Groups financial reporting: Equipment, Contractual Data Acquisition,
Geology, Geophysics and Reservoir (GGR) and
Non-operated
Resources.
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B.4a
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Main recent
trends with effects
on the issuer and
its lines of business
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1.1.
Groups debt structure
As of September 30, 2017, the Groups financial indebtedness was, notably, as
follows:
(i) a secured financial debt, composed of:
i. Multicurrency Revolving Facility Agreement, a
revolving credit facility agreement, entered into on July 31, 2013 by the Company for an initial amount in principal of $325,000,000, reduced to approximately $300,000,000, fully drawn to date (the
French RCF
);
ii. Credit Agreement, a revolving credit facility
agreement, entered into on July 15, 2013 for an initial amount of $165,000,000, fully drawn to date (the
US RCF
); and
iii. Term Loan Credit Agreement, a bullet loan agreement, entered
into on November 19, 2015 by CGG Holding (U.S.) Inc. for an initial amount of $342,122,500 (the
TLB 2019
);
(together, the
Secured
Loans
);
The Secured Loans benefit from a number of
security interests granted by the Company and certain of its subsidiaries (including pledges of securities accounts on the main subsidiaries) and guarantees granted by certain Group companies.
(ii) two
issues of convertible bonds, namely:
i. an issue of convertible bonds (
obligations à option
de conversion et/ou déchange en actions nouvelles ou existantes
) on November 20, 2012 for a total initial amount of 360,000,000, reduced to approximately 34,900,000 (following an exchange transaction with
convertible bonds (
obligations à option de conversion et/ou déchange en actions nouvelles ou existantes
) which mature in 2020) due on January 1, 2019 (the
2019 Convertible Bonds
);
ii. an issue of convertible bonds (
obligations à option de
conversion et/ou déchange en actions nouvelles ou existantes
) on June 26, 2015 for a total initial amount of 325,100,000, due on January 1, 2020 (the
2020 Convertible Bonds
, and together with the
2019 Convertible Bonds, the
Convertible Bonds
);
The Convertible Bonds do not benefit from security interests of guarantees.
(iii) several
high-yield senior note issues under US law, namely:
i. an issue of notes dated April 23, 2014 maturing on
May 15, 2020 for a total amount of 400,000,000 bearing interest at a rate of 5.875% (the
Senior Notes 2020
)
ii. an issue of notes dated May 31, 2011, January 20, 2017
and March 13, 2017, maturing on June 1, 2021 for a total initial amount of $720,704,000 bearing interest at a rate of 6.5% (the
Senior Notes 2021
); and
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iii. an issue of notes dated May 1, 2014 maturing
on January 15, 2022 for a total initial amount of $500,000,000 bearing interest at a rate of 6.875% (the
Senior Notes 2022
and together with the Senior Notes 2020 and the Senior Notes 2021, the
Senior
Notes
).
The Senior Notes benefit from guarantees granted by certain Group
companies but do not benefit from any security interest.
(iv) a leasing contract to
finance the operational head office of its subsidiaries CGG Services SAS in Massy, by the end of October 1st, 2022.
Therefore, as of September 30, 2017, the financial debt amounted to $2,905,296,358. The summarized financial indebtedness of the Group is as
follows:
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Financial debt as of
September 30, 2017
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Total amount in
principal, excluding
accrued interests
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Accrued
interests
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IFRS
retreatments
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Total
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Secured Loans
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French RCF (EUR)
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124,600,000
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124,600,000
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French RCF (USD)
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160,000,000
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42,528
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-1,257,343
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158,785,185
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US RCF (USD)
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161,933,711
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420,376
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-621,942
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161,732,144
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TLB 2019 (USD)
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337,845,969
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71,607
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-957,297
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336,960,280
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Total Secured Loans (in USD
1
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806,882,440
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534,511
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-2
,
836
,
582
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804,580,369
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Senior Notes
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Senior Notes 2020 (EUR)
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400,000,000
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20,880,811
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-391,393
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420,489,418
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Senior Notes 2021 (USD)
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675,625,000
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36,419,977
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-1,520,312
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710,524,665
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Senior Notes 2022 (USD)
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419,636,000
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20,642,007
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-343,466
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439,934,541
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Total
Senior Notes
(in USD
1
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1,567,501,000
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81,713,869
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-2,325,857
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1,646,889,012
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Convertible Bonds
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Convertible Bonds 2019 (EUR)
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34,933,352
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110,071
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-1,826,089
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33,217,334
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Convertible Bonds 2020 (EUR)
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325,165,550
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4,310,671
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-31,702,005
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297,774,216
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Total
Convertible Bonds
(in EUR)
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360,098,902
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4,420,742
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-33,528,094
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330,991,550
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Other debts
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Leasing (USD)
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58,585,746
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58,585,746
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Other (USD)
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4,472,607
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4,472,607
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Total Other Debts (in
USD
1
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4,472,607
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58,585,746
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63,058,353
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Total financial debt as of September 30, 2017
(in USD
1
)
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2,803,988,810
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87,467,508
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13
,
840
,
040
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2
,
905
,
296
,
35
8
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(1) On the basis of an exchange rate of 1 EUR = 1.1806 USD.
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As of September 29, 2017:
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(i) the Senior Notes 2020 were traded at a price reflecting a discount of 54.5%
of their nominal value;
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(ii) the Senior Notes 2021 were traded at a price reflecting a discount of 55.5%
of their nominal value;
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(iii) the Senior Notes 2022 were traded at a price reflecting a discount of
54.8% of their nominal value;
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(iv) the Convertible Bonds 2019 were traded at a price reflecting a discount of
31.2% of their nominal value;
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(v) the Convertible Bonds 2020 were traded at a price reflecting a discount of
86.4% of their nominal value.
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Discussions with the stakeholders
Following the February 27, 2017 appointment by the President of the Paris Commercial Court of Maître Bourbouloux as
mandataire ad hoc
,
discussions took place with the Groups principal creditors aimed at reducing the Groups debt. CGG ,some of its principal creditors, and DNCA (in its capacity as long-term institutional shareholder and holder of the Companys Senior
Notes and Convertible Bonds) reached an agreement in principle on a financial restructuring plan on June 1, 2017 and, legally binding agreements
(lock-up
or restructuring support agreements) were signed
on June 13, 2017 which confirmed the agreement in principle, whereby the parties thereto have committed to undertake any action reasonably required to implement and carry out the restructuring.
To the Companys knowledge, as of October 4, 2017, no member of the ad hoc
Senior Notes holders committee or of the
ad hoc
Secured Lenders committee held more than 1 % of the Companys capital. At this date, DNCA who held (i) approximately 5.5 % of the total principal amount of the Senior Notes,
(ii) approximately 20.7 % of the total principal amount of the Convertible Bonds, and (iii) approximately 7.9 % of the share capital of the Company.
The draft safeguard plan was approved on July 28, 2017 by a unanimous vote of the committee of banks and financial institutions, and by a majority of
93.5% of votes cast at the general meeting of bondholders, including by DNCA. The Chapter 11 plan concerning the various classes of creditors subject to Chapter 11 proceedings was confirmed by the relevant US court on
October 10, 2017 (the order should be entered in the next few days). The works council of the Company, also consulted with respect to the draft safeguard plan, rendered a favorable opinion at its meeting held on October 2, 2017.
In order to implement the draft of the restructuring plan, the required resolutions will
first have to be approved by the Companys general meeting of shareholders, which is scheduled to convene on October 31,
2017. The plan will then have to be sanctioned by a judgment of the Paris Commercial Court, scheduled for
November 13,
2017, according to the indicative timetable, following a hearing on November 6, 2017. The judgment by the Paris Commercial Court on the safeguard plan will then have to be recognized in the United States under a Chapter
15 proceeding, which is tentatively expected to take place on November 20, 2017.
A Chapter 11 plan concerning some of the Groups foreign subsidiaries, which are debtors or guarantors of the Groups debt has been prepared. The
subsidiaries involved in the Chapter 11 plan are CGG Holding BV, CGG Marine BV, CGG Holding I (UK) Ltd, CGG Holding II (UK) Ltd, CGG Holding (US) Inc., CGG Services (US) Inc., Alitheia Resources Inc., Viking Maritime Inc., CGG Land (US) Inc., Sercel
Inc., Sercel-GRC Corp, CGG Marine Resources Norge AS, CGG Canada Services Ltd and Sercel Canada Ltd.
As part of these judicial proceedings, the holders of claims under the Secured Loans, the Senior Notes and the Convertible Bonds whose principal aggregate
amount, inclusive of the Convertible Bonds, is approximately equal to $2.8 billion) may not demand any early repayment, which provides protection to the Group to carry out its operational activities while leaving to stakeholders only a limited
timeframe to approve a financial restructuring plan.
Should one of the conditions set
out in subsection C.1of the Prospectus Summary fail to be satisfied, the financial restructuring plan may not be implemented. In this case, or if the implementation timetable is not met, according to the Company cash flow forecasts, the Group
liquidity would decrease below the required level to continue the operations no later than the first quarter of 2018, hence jeopardizing the ability of the Group to continue as a going concern. In addition, in such cases, the Group could be placed
under judicial reorganization proceedings (
redressement judiciaire
) in the short term, and be wound up in the medium term, as the case may be in the context of liquidation proceedings in various jurisdictions. Should such proceedings be
carried out, they could place the shareholders and the holders of American Depositary Shares in a situation where they would lose their entire investment in the Group, and the creditors, or some of them, with fewer recourses to recover their
claims
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For the purpose of the Prospectus Summary, (i)
Restructuring Effective Date
means the date on which all of the conditions relating to the effective nature of the completion of the restructuring plan under the US
proceeding of Chapter 11 of the Federal Bankruptcy Code and the safeguard (
sauvegarde
) or judicial reorganization proceedings (
redressement judiciaire
) plan (as applicable) have been satisfied or waived, including the completion of all
steps required to finalize the restructuring, such as the issuance of debt securities and other securities contemplated therein, irrespective of the fact that the time limits for challenges have not expired, such date being acknowledged by the Board
of directors or, upon delegation, by the CEO of the Company, and (ii)
Reference Date
means the date corresponding to the last day of the exercise period for the Rights Issue with PSR.
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Summary of the main characteristics of the draft safeguard plan
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|
The main characteristics of the draft safeguard plan are the following :
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The substantial reduction of the Companys gross
financial indebtedness level by way of equitization of the claims under the Senior Notes and Convertible Bonds
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Equitization of the Senior Notes
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The claims under the Senior Notes (principal plus accrued interest
other than interest referred to below) would be equitized at their face value at a subscription price of 3.12 per new share (the
Creditors Shares 2
) (except for the amount potentially used to backstop the capital increase
with preferential subscription right as described below);
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|
Accrued and unpaid interests under the Senior Notes for an amount
of $86 million would be paid in new high-yield second lien notes or would be paid in cash over a
ten-year
period subject to certain terms.
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Equitization of the Convertible Bonds
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The claims under the Convertible Bonds (principal plus accrued
interest other than interest referred to below) would be equitized at their face value at a subscription price of 10.26 per new share (the
Creditors Shares 1
);
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Accrued and unpaid interests for an amount of approximately
4.46 million would be paid in cash.
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A new money injection up to approximately $500 million
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|
The size of such new money injections was discussed and agreed between the parties on the basis of negative
sensitivities vis-à-vis the outlook for 2018 and 2019, based in particular on a less favorable assumption regarding the price per oil barrel, i.e. a simple stability compared to the current level of USD
50-55
per barrel, and a lower increase of exploration expenses.
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Share capital increase with preferential subscription right for approximately 112
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|
A share capital increase with preferential subscription right would
be implemented in an amount of up to approximately 112 million (the
Rights Issue with PSR
) by way of an issue of new shares with share warrants attached (the
Warrants #2
and
ABSA
),
at a subscription price of 1.56 per ABSA; three Warrants#2 would give the right to subscribe to two new shares at a price of 4.02 per new share, for a
5-year
exercise period. This capital increase
would be backstopped by DNCA Invest and the entities managed by DNCA Finance (the
DNCA Entities
), up to an amount of 71.39 million (compensated by a fee equal to 10 % of the amount backstopped), then by the holders
of Senior Notes for the remaining portion unsubscribed by the shareholders, by way of
set-off.
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Page 10
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Issuance of new high yield notes for an amount up to $375 million
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An issuance of new high-yield second-lien notes would be implemented
for an amount of $375 million, such issuance being subscribed in accordance with a private placement agreement dated June 26, 2017; the subscribers would benefit from an allocation of share warrants giving right to subscribe, with a
six-month
exercise period and for one euro cent (0.01) per new share, to 16% of the capital on a partially diluted basis after the restructuring transactions (the
Warrants #3
). The new notes
would be governed by New York state law, benefit from second-ranking security interests, and bear interest at a rate including a variable component indexed on the LIBOR for the tranche denominated in US dollars and EURIBOR for the tranche
denominated in euros (with a floor at 1%) plus 400 bps per annum and PIK of 850 bps per annum (the
New Second Lien Notes)
; the subscribers would benefit from a backstop commitment fee equal to 7 % of the total amount
subscribed;
This issuance of new notes would be backstopped by the members of the ad hoc committee
of the holders of Senior Notes (or their transferees) who will receive in this respect a backstop commitment fee equal to 3 % of the total amount of the issuance, and share warrants giving the right to subscribe, with a
six-month
exercise period and for one euro cent (0.01) per new share, to 1.5% of the capital on a partially diluted basis after the restructuring transactions (the
Backstop Warrants
);
The funds raised in
cash from (i) the Rights Issue with PSR and (ii) the issue of the New Second Lien Notes and Warrants #3 (net of backstop and commitment fees and other costs, expenses or fees related to the Rights Issue with PSR and the issue of the New
Second Lien Notes and Warrants #3) will be used as indicated in paragraph E.2a below.
The free allocation of share warrants to the shareholders enabling them to benefit
from the sector recovery
Share warrants would be allocated for free for each existing share (the
Warrants #1
). Three of such warrants would give right to subscribe, with a four-year exercise period, for four new shares of the Company at a subscription price of 3.12 per new share.
The free
allocation of share warrants to the members the ad hoc committee of the holders of Senior Notes
Share warrants would be allocated for free to the members of the ad hoc committee of the holders of Senior Notes (the
Coordination
Warrants
). Such warrants would give the right to subscribe, with a
six-month
exercise period and for one euro cent (0.01) per new share, to 1% of the capital on a partially diluted basis after
the restructuring transactions.
The extension of the maturity of the Secured Loans
The Secured Loans
would be subject, under certain conditions, partially repaid by anticipation up to $150 million (the
Initial Repayment
) by means of injection of new liquidity as described above.
The US RCF, the
French RCF and the TLB 2019 would be exchanged for new high-yield first lien notes, with a five-year maturity (2023), except in the event of early total repayment of the Secured Loans.
Such new high-yield
first lien notes would be governed by the New York State law and issued by CGG Holding (U.S.) Inc., and would bear interest at a rate with a floating LIBOR component (subject to a floor of 100 basis points) plus 650 basis point, in cash per year
and, with respect to capitalized interest
(payment-in-kind,
or PIK), a component determined on the Restructuring Effective Date based on the amounts still outstanding on
that date after taking into account the Initial Repayment, such bonds being issued (i) for the creditors of the US RCF and of the TLB 2019, and (ii) upon instruction from the Company, to the creditors under the French RCF as payment of
part of the debt owed by CGG Holdings (U.S.) to the Company;
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Page 11
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The issuances of Warrants #1, ABSA, Warrants #3, Coordination Warrants and Backstop Warrants are below referred to as the
Issuances Steps
.
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The Chapter 11 plan follows the characteristics of the draft safeguard plan described below for the creditors concerned, that is to say the creditors under the Secured Loans and the Senior Notes (the Chapter
11 plan and the draft safeguard plan are together referred to as the
Financial Restructuring Plan
).
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Financial debt and liquidity after completion of the transactions provided for in the Financial Restructuring Plan
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|
Following the transactions provided for in the Financial Restructuring Plan, the Group would benefit from a balance sheet with a level of gross financial debt reduced from approximately $2.9 billion to approximately
$1.2 billion. The maturities of the new notes would be as follows:
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The net debt / EBITDA ratio (leverage ratio) would be, immediately after completion of the transactions contemplated in the draft safeguard
plan, close to 2.1x, while it would have reached almost 8.5x in the absence of any financial restructuring.
The impacts of the Financial Restructuring Plan on the Groups liquidity are as follows:
the implementation
of the Financial Restructuring Plan is reflected, if cumulated, over the period of 2017-2019 by net savings of financial costs in cash (after interests payments, and principal repayments) of approximately $225 million, after considering the
costs related to the restructuring (fees of attorneys, banks, advisers, experts..) and given the tax advantages related to the safeguard proceedings;
the Group would have an increase of its cash flows close to $300 million
immediately after the implementation of the restructuring, corresponding to the residual products (i) of the Rights Issue with PSR and (ii) of the issuance of the New Second Lien Notes, after payment of the various compensations of
placement and backstop and partial repayment of the Secured Loans;
the Group would have a capacity to raise new secured debt in the future,
pari
passu
with the new first lien notes up to an amount of $200 million, the lenders having accepted to share their securities and guarantees up to a maximum amount of $900 million. After the restructuring, the amount of new first lien
notes would reach $677 million.
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Number of securities issued
The Company will notify the market of the precise date of the launch of the Rights Issue with PSR, for which a prospectus will be submitted to the AMF for its
approval (
visa
), and of the date of settlement and delivery of the different issuances. The settlement and delivery of all the issuances of Warrants #1, Warrants #3, Creditor Shares 1, Creditor Shares 2, Coordination Warrants, and Backstop
Warrants will occur concomitantly with the settlement
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Page 12
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and delivery of the issue, with shareholders preferential subscription rights, of new shares with warrants, subject to satisfaction of
all the above-mentioned conditions precedent. The issuances provided for under the draft safeguard plan and the Chapter 11 plan shall be regarded as a whole; if one of them could not be implemented, none of them would be implemented.
The Company will notify the market of the final number of shares to be issued under
issues reserved for creditors, after the centralization period of the Rights Issue with PSR.
Governance
Subject to the vote of the Companys general meeting of shareholders, the structure and composition of the Companys Board of Directors after the
restructuring will be determined in consultation with DNCA and the members of the ad hoc committee of Senior Notes holders who will have become and remained shareholders of the Company.
The structure and composition of the board of directors will have to comply with the
AFEP-MEDEF Code and will be put in place promptly and in any event no later than three months after the Restructuring Effective Date.
Challenge of the draft safeguard plan by certain Convertible Bonds holders
On August 4, 2017, certain holders of Convertible Bonds (Keren Finance, Delta
Alternative Management, Schelcher Prince Gestion, Financière de lEurope, Ellipsis Asset Management and HMG Finance) filed an appeal against the draft safeguard plan adopted by the committee of banks and assimilated creditors, and the
sole general meeting of bondholders on July 28, 2017, which will be examined during the hearing on the draft safeguard plan, scheduled for November 6, 2017.
Without disputing the results of the general meeting of bondholders vote, these holders of Convertible Bonds challenge the treatment of their claims
under the draft safeguard plan, arguing that the differences in treatment between the Convertible Bond holders and the Senior Notes holders is not justified by the differences in their situations and would be, in any event, disproportionate.
The Company considers that the holders of Convertible Bonds are not in the same situation
as the Senior Notes holders, in particular regarding the guarantees given to the latter, so that the differentiated treatment provided for in the draft safeguard plan is compliant with legal provisions.
Should this claim be declared well founded by the Court, the Court may not adopt the draft
safeguard plan in so far as it does not have the power to modify its terms.
If the
action was declared groundless and the draft safeguard plan is sanctioned by the Court, the Convertible Bonds holders might appeal this judgment, which will, nevertheless, remain fully enforceable on a provisional basis (the implementation of the
safeguard plan would not be suspended), except in the event of (i) an appeal from the public Prosecutors office (
Parquet
) or (ii) the suspension of the provisory enforcement pronounced by the first president of the Paris Court
of Appeal, by a summary proceedings (
en référé
) at the request of the claimants, pursuant to article
R. 661-1
of the French Commercial Code, and provided that the grounds
relied on in support of the appeal appear serious.
If such a request were granted, the
implementation of the Financial Restructuring Plan would be delayed or jeopardized. Although the Company believes that the occurrence of this risk of suspension of the provisional enforceability of the judgment sanctioning the plan prior to the
implementation of the Financial Restructuring Plan is unlikely, it cannot be completely ruled out. Furthermore, following the implementation of the Financial Restructuring Plan, the draft safeguard plan could be canceled with retroactive effect if
the Court of Appeal accepted the claimants requests. Such a cancellation could theoretically have the effect of invalidating the financial restructuring of the CGG group.
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B.5
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|
Group to which the issuer belongs
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The Company is the parent entity of the Group, which included 79 consolidated subsidiaries (73 in foreign countries and 6 in France) as of September 30, 2017.
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Page 13
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B.6
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Issuers principal shareholders and control
|
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As of September 30, 2017, based on the information available to the Company, its share capital and voting rights were divided as follows:
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Shares
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|
% capital
|
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|
Voting
rights
|
|
|
% of voting
rights
|
|
|
Bpifrance Participations
|
|
|
2,069,686
|
|
|
|
9.35
|
|
|
|
2,458,954
|
|
|
|
10.90
|
|
|
IFP Energies Nouvelles
|
|
|
107,833
|
|
|
|
0.49
|
|
|
|
107,833
|
|
|
|
0.48
|
|
|
Concert IFP Energies Nouvelles Bpifrance
Participations(a)
|
|
|
2,177,519
|
|
|
|
9.84
|
|
|
|
2,566,787
|
|
|
|
11.38
|
|
|
DNCA Finance(b)
|
|
|
1,756,314
|
|
|
|
7.94
|
|
|
|
1,756,314
|
|
|
|
7,78
|
|
|
CGG Actionnariat
|
|
|
273
|
|
|
|
0.0012
|
|
|
|
546
|
|
|
|
0.0024
|
|
|
Other shareholders
|
|
|
18,174,046
|
|
|
|
82.11
|
|
|
|
18,213,706
|
|
|
|
80.73
|
|
|
Treasury shares
|
|
|
24,997
|
|
|
|
0.11
|
|
|
|
24,997
|
|
|
|
0.11
|
|
|
Number of shares outstanding and voting rights
|
|
|
22,133,149
|
|
|
|
100
|
|
|
|
22,562,350
|
|
|
|
100
|
|
|
(a) Calculated on the basis of the number of shares and voting rights held by Bpifrance
Participations and IFP Energies Nouvelles as indicated in its declaration concerning the crossing of threshold addressed to the AMF on June 27, 2017 and on the basis of the total number of shares and voting rights of the Company as of
September 30, 2017.
(b) Calculated on the basis of the number of shares held by DNCA
Finance as indicated in its declaration concerning the crossing of threshold addressed to the Company on February 21, 2017 and on the basis of the total number of shares and voting rights of the Company as of September 30, 2017.
The shareholders table above is not presented on the diluted basis after dilution
resulting from the completion of the stock options, insofar as they are not in the money as of September 30, 2017.
Bpifrance Participations and IFP Energies Nouvelles entered into a shareholders agreement on March 8, 2012 pertaining to their equity interest in CGG,
with the aim of implementing a common policy on certain issues concerning the Company.
Following several declarations of thresholds crossing between July 21, 2017 and August 31, 2017, AMS Energie declared holding less than 1% of the
share capital and the voting rights of the Company and holding no more than 160,550 shares of the Company.
In the period from September 30, 2017 and the date of approval (
visa
) of the Prospectus, the Company was notified of the following changes in the
ownership of its shares:
Decrease below the 2% threshold by Dimensional Fund Advisors LP.
At the AMF request, the Company, at its earliest convenience, will inform the market, by
way of a press release, of statutory thresholds crossings that would have been notified to it from the visa date until the extraordinary general meeting of the shareholders of the Company, due to convene on October 31, 2017.
All shares fully paid up and held in registered form by the same shareholder for at least
two years are entitled to double voting rights compared to other shares, based on the portion of the share capital they represent (article
L. 225-123
of the French Commercial Code and article 14.6 of the
Companys articles of association).
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|
B.7
|
|
Selected key historical financial information
|
|
Half-year data
The selected financial information below relates to the half-year periods ended June 30, 2017, June 30, 2016 and June 30, 2015. The information
for June 30, 2017, June 30, 2016 and June 30, 2015 is derived from the half-year consolidated financial statements for the period ended June 30, 2017 and June 30, 2016.
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|
|
|
|
|
|
|
|
|
Consolidated income statement:
|
|
|
|
|
|
|
|
|
|
|
|
|
(In US$ millions)
|
|
First half of
2015
|
|
|
First half of
2016
|
|
|
First half of
2017
|
|
Operating Revenue
|
|
|
1,042.1
|
|
|
|
603.2
|
|
|
|
599.2
|
|
Gross margin
|
|
|
(28.9
|
)
|
|
|
(110.9
|
)
|
|
|
(195.1
|
)
|
Net income
|
|
|
(115.4
|
)
|
|
|
(208.9
|
)
|
|
|
(314.8
|
)
|
Minority interests net income
|
|
|
1.6
|
|
|
|
(2.0
|
)
|
|
|
(1.5
|
)
|
Shareholders net income
|
|
|
(117.0
|
)
|
|
|
(206.9
|
)
|
|
|
(313.3
|
)
|
Earnings per share (base)
1
|
|
|
(19.25
|
)
|
|
|
(10.64
|
)
|
|
|
(14.15
|
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|
Page 14
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|
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|
|
|
|
|
|
Other alternative performance indicators (NRC:
non-recurring
charges)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First half of
|
|
|
First half of
|
|
|
First half of
|
|
|
|
(In US$ millions)
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
EBITDAS
1
before NRC
|
|
|
257.0
|
|
|
|
130.9
|
|
|
|
148.7
|
|
|
EBITDAS after NRC
|
|
|
234.4
|
|
|
|
123.7
|
|
|
|
24.3
|
|
|
Operating income before NRC
|
|
|
(6.0
|
)
|
|
|
(104.0
|
)
|
|
|
(71.0
|
)
|
|
|
|
|
|
|
|
(1) EBITDAS is defined as earnings before interest, tax,
income from equity affiliates, depreciation, amortization net of amortization expense capitalized to Multi-client, and share-based compensation cost. Share-based compensation includes both stock options and allocation of free shares issued under
performance conditions. EBITDAS is presented as additional information because it is one measure used by certain investors to determine operating cash flow and historical ability to meet debt service and capital expenditure requirements. However,
other companies may present EBITDAS differently. EBITDAS is not a measure of financial performance under IFRS and should not be considered as an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to net
income as indicators of the Groups operating performance or any other measures of performance derived in accordance with IFRS.
Furthermore, on the first half of 2017, the Cash Flow from operations was $87 million before NRC, compared to $372 million for the first half of
2016. The Cash Flow from operations was $(13) million after cash NRC.
On the first
half of 2017, the Global Capex was $146 million, down 28%
year-on-year:
Industrial capex was $23 million, up 3%
year-on-year;
Research & development capex was $15 million, down 19%
year-on-year;
Multi-client cash capex was $108 million, down 33%
year-on-year;
Eventually, on the first half of 2017, after the payment of interest expenses and Capex and before NRC, Free Cash Flow was $(98) million compared to
$97 million for the first half of 2016. After cash NRC, Free Cash Flow was $(198) million.;
Consolidated balance sheet:
|
|
|
|
|
|
|
|
First half of
|
|
|
First half of
|
|
|
First half of
|
|
|
|
(In US$ millions)
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
|
Cash and short-term investment securities
|
|
|
223.6
|
|
|
|
451.2
|
|
|
|
314.8
|
|
|
Working capital needs
1
|
|
|
565.9
|
|
|
|
280.9
|
|
|
|
433.2
|
|
|
Net property, plant and equipment
|
|
|
1,112.3
|
|
|
|
768.4
|
|
|
|
350.1
|
|
|
Multi-client studies
|
|
|
1,013.9
|
|
|
|
990.1
|
|
|
|
832.9
|
|
|
Goodwill
|
|
|
2,037.8
|
|
|
|
1,228.9
|
|
|
|
1,229.6
|
|
|
Total assets
|
|
|
6,616.8
|
|
|
|
5,080.3
|
|
|
|
4,339.4
|
|
|
Debt
2
|
|
|
2,720.8
|
|
|
|
2,601.6
|
|
|
|
2,811.8
|
|
|
Shareholders equity attributable to the parent company shareholders
|
|
|
2,641.0
|
|
|
|
1,468.8
|
|
|
|
741.2
|
|
|
(1) Takes into account the receivables accounts and related accounts, stocks and work in
progress, tax assets, other current assets and assets
held-for-sale,
minus payable accounts and related accounts, staff cost liabilities, corporate income taxes to be
paid, customer deposits, deferred income, current portion of provisions and other current liabilities.
(2) Takes into account long term financial debt (including finance leases), short-term
financial debt (including short-term portion of the finance leases), short-term bank borrowings and accrued interest.
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|
Page 15
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|
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|
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|
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|
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|
|
|
|
|
|
|
|
|
|
Annual data
The selected financial information below relates to the financial years ended December 31, 2016, 2015 and 2014, and is derived from the consolidated
financial statements for financial year ended December 31, 2016.
|
|
|
Consolidated income statement:
|
|
|
|
|
Financial year closed on December 31
|
|
|
(In US$ millions)
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
Operating Revenue
|
|
|
3,095.4
|
|
|
|
2,100.9
|
|
|
|
1,195.5
|
|
|
Gross margin
|
|
|
(697.5
|
)
|
|
|
(1,157.6
|
)
|
|
|
(396.5
|
)
|
|
Net income
|
|
|
(1,149.6
|
)
|
|
|
(1,446.2
|
)
|
|
|
(576.6
|
)
|
|
Minority interests net income
|
|
|
7.8
|
|
|
|
4.0
|
|
|
|
(3.2
|
)
|
|
Shareholders net income
|
|
|
(1,154.4
|
)
|
|
|
(1,450.2
|
)
|
|
|
(573.4
|
)
|
|
Earnings per share (base)
1
|
|
|
(189.95
|
)
|
|
|
(238.50
|
)
|
|
|
(27.57
|
)
|
|
Other alternative performance indicators (NRC:
non-recurring
charges)
|
|
|
|
|
Financial year closed on December 31
|
|
|
(In US$ millions)
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
EBITDAS
1
before NRC
|
|
|
993.7
|
|
|
|
660.6
|
|
|
|
327.9
|
|
|
EBITDAS after NRC
|
|
|
775.7
|
|
|
|
452.8
|
|
|
|
273.6
|
|
|
Operating income before NRC
|
|
|
241.9
|
|
|
|
60.9
|
|
|
|
(213.0
|
)
|
|
Consolidated balance sheet:
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial year closed on December 31
|
|
|
(In US$ millions)
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
Cash and short-term investment securities
|
|
|
359.1
|
|
|
|
385.3
|
|
|
|
538.8
|
|
|
Working capital needs
1
|
|
|
539.4
|
|
|
|
428.5
|
|
|
|
334.6
|
|
|
Net property, plant and equipment
|
|
|
1,238.2
|
|
|
|
885.2
|
|
|
|
708.6
|
|
|
Multi-client studies
|
|
|
947.4
|
|
|
|
927.1
|
|
|
|
847.9
|
|
|
Goodwill
|
|
|
2,041.7
|
|
|
|
1,228.7
|
|
|
|
1,223.3
|
|
|
Total assets
|
|
|
7,061.0
|
|
|
|
5,513.0
|
|
|
|
4,861.5
|
|
|
Debt
2
|
|
|
2,778.9
|
|
|
|
2,884.8
|
|
|
|
2,850.4
|
|
|
Shareholders equity attributable to the parent company shareholders
|
|
|
2,693.0
|
|
|
|
1,312.2
|
|
|
|
1,120.7
|
|
|
(1) Takes into account the receivables accounts and related accounts, stocks and work in
progress, tax assets, other current assets and assets
held-for-sale,
minus payable accounts and related accounts, staff cost liabilities, corporate income taxes to be
paid, customer deposits, deferred income, current portion of provisions and other current liabilities.
(2) Takes into account long term financial debt (including finance leases), short-term
financial debt (including short-term portion of the finance leases), short-term bank borrowings and accrued interest.
|
|
B.8
|
|
Pro forma financial information
|
|
Not applicable.
|
|
B.9
|
|
Projected or estimated income
|
|
These forward-looking statements are given for the year 2017.
They are based on the consolidated financial statements for the fiscal year ended
December 31, 2016 and on the consolidated financial statements as of June 30, 2017 and are established in accordance with IFRS and accounting methods applied by the Group.
They are part of a context in which (i) the Groups management remains heavily
dependent on the evolution in the oil and
oil-related
market, which is particularly difficult to anticipate, and (ii) the Group has set up a draft safeguard plan for CGG and a Chapter 11 plan
for 14
|
|
Page 16
|
|
|
|
|
|
|
|
|
of the Groups foreign subsidiaries, in order to restructure its financial debt. Subject to the required approvals from the
shareholders, the Commercial Court of Paris and the US Courts, the financial restructuring should be effective early 2018.
|
|
|
|
|
CGG disclosed its outlook for the fiscal year 2017 on March 3, 2017 and confirmed them when it published its results for the first
quarter on May 12, 2017 and its results for the second quarter on July 28, 2017. This outlook consists of a view of its EBITDAS excluding restructuring costs related to the Transformation Plan similar to that of 2016 for a less favorable
cash generation.
|
|
|
|
B.10
|
|
Concerns and observtions on the historical financial information
|
|
Concerning the first half of 2017
The statutory auditors report on the first-half of 2017 consolidated financial statements contains the following observations:
|
|
|
|
|
Without calling into question the opinion expressed above, we draw your attention to the
following:
|
|
|
|
|
|
|
|
Note 1.3 Continuity of operations in the appendix to
the condensed half-year consolidated financial statements, which states that on June 14, 2017, a safeguard procedure was initiated for CGG SA, the parent company of the CGG Group, and a Chapter 11 procedure was initiated in the United States
with respect to 14 of its subsidiaries guaranteeing the secured debt and / or high yield bonds; that the Group liquidity as of June 30, 2017 does not allow to fully fund all the current operations until at least June 30, 2018; and that the
Groups ability to ensure its continuity of operations depends essentially on the effective and timely implementation of the financial restructuring plan. These factors indicate the existence of significant uncertainties that could call into
question the continuity of operations.
|
|
|
|
|
|
|
|
Note 1 Accounting Principles in the appendix to the
condensed half-year consolidated financial statements, which states that the consolidated financial statements for the year 2016 are still not approved by the shareholders meeting which will be held later in the year.
|
|
|
|
|
|
|
|
Concerning the fiscal year ended December 31, 2016
|
|
|
|
|
|
|
|
The statutory auditors report on the 2016 consolidated financial statements contains the following observations:
|
|
|
|
|
|
|
|
Without disputing the opinion expressed above, we would like to draw your attention on the following:
|
|
|
|
|
|
|
|
note 1.3 Continuity of operations to the consolidated
financial statements, which states that the Group is confronted in its business with material uncertainties which may raise questions as to its ability to maintain the continuity of operations;
After analysis of the situation and of the operation and cash flow
forecasts for the year 2017, the 2016 financial statements have been adopted by the board of directors on a going concern basis.
|
|
|
|
|
|
|
|
notes 1.3 Continuity of operations and 13
Indebtedness to the consolidated financial statements, which states that in the event of the Groups failure to comply in the future with certain financial covenants ratios and with the corresponding restrictions affecting the funds
available under the revolving credit facilities, the term loan B and the Nordic Loan, the acceleration of almost all of the debts should be anticipated, and CGG SA would then be unable to meet its accelerated repayment obligations with its available
cash, or to rapidly raise the required additional funds;
|
|
|
|
|
|
|
|
As regards this situation, CGG SA requested and obtained the disapplication of the financial covenants before the
quarterly terms of December 31, 2016 and March 31, 2017. To this end, the secured lenders of CGG Group unconditionally and irrevocably accepted not to test the financial leverage ratio and the interest coverage ratio at both these
dates.
|
|
|
|
|
|
|
|
Note 13 indicates that such agreements with the lenders are permanent amendments of the loan agreements and are
neither temporary or conditional waivers to test the ratios, nor a grace period. Considering the progress of the negotiations of the financial restructuring of the company and the timeline of the options contemplated,
it
|
Page 17
|
|
|
|
|
|
|
|
|
appears that reclassifying the financial debt as a current liability is the most appropriate accounting treatment
according to IAS 1 for the financial statements authorized for issue by the Board of Directors of April 27, 2017. This pure accounting reclassification does not question the going concern assumption, comforted by the main actions plans
successfully implemented as of April 27, 2017 and does not make immediately payable (CGG never breached its financial covenants) the US$2,682.0 million of finance debt classified as current liability nor does it reduce their maturity below 12
months.
|
|
|
|
|
|
|
|
note 1.1 Critical accounting policies to the
consolidated financial statements, which describes how depreciation and amortization rules were adapted subsequent to the amendment of IAS 16 and IAS 38 Clarification of acceptable methods of depreciation and amortization and the impact
in the consolidated financial statements for the fiscal year.
|
|
|
|
B.11
|
|
Net working capital
|
|
As of the date of this Prospectus, the Group does not have sufficient consolidated net working capital to meet its needs to comply with its
obligations over the next twelve months.
As of September 30, 2017, the Group has
liquidity of $334 million. According to the forecasted cash flows of the Group, in the event that :
(i) the Company would remain under the safeguard proceedings in France and its 14 subsidiaries under Chapter 11 in the United States,
(ii) such situation would not have commercial consequences,
(iii) no liquidity injection would be completed,
and given, notably, operational and financial costs of restructuring close to
$90 million, the amount of the deficiency of the working capital for the next 12 months, compared to the level required to enable the good implementation of the operations, would be between $25 and $50 million. Furthermore, the Group
considers that if the Financial Restructuring Plan were not implemented as described in paragraph B.4a, it would be exposed to adverse commercial consequences, with clients demonstrating their strong reluctance to commit (on projects of
pre-financing
of multi-clients projects for example), consequences that could lead to increase the deficiency of the working capital within 12 months by an amount in the range of
$100-150 million.
However, if the various
financial restructuring transactions described in this summary are completed (including the Rights Issue with PSR with respect to which a prospectus will be submitted to the AMF for approval (
visa
)), the Company certifies that, from its point
of view, its net working capital would be sufficient to meet its obligations for the twelve months following the date of the Prospectus.
|
|
|
|
|
|
Section C Securities
|
C.1
|
|
Nature, class and ID number
|
|
The Prospectus covers:
the issuance and admission to trading on Euronext Paris of up to 24,375,000 Warrants #1
granted for free by the Company to all shareholders, on the basis of one (1) Warrant #1 for one (1) existing share, which may result in the issuance of up to 32,500,000 new shares for a subscription price of three euros and twelve cents
(
3.12) per new share;
the issuance and admission to trading on Euronext Paris of up to 37,524,400 Creditor
Shares 1 issued as part of an increase in share capital with removal of the
shareholders preferential subscription rights, in favor of the holders of Convertible Bonds, that will be subscribed by way of
set-off
at their face value, at the subscription price of ten euros and twenty six cents (
10.26) per new share;
the issuance and admission to trading on Euronext Paris of up to 496,794,900 Creditor
Shares 2 issued as part of an increase in share capital with removal of the
shareholders preferential subscription rights, in favor of the holders of Senior Notes, that will be subscribed by way of
set-off
at their face value, at the subscription price of three euros and twelve cents (
3.12) per new share;
|
Page 18
|
|
|
|
|
|
|
|
|
the admission to trading on Euronext Paris of up to 123,817,300 new shares with a subscription price of one euro cent (0.01) per new
share resulting from the exercise of 123,817,300 Warrants #3 granted for free by the Company to the subscribers of New Second Lien Notes;
the admission to trading on Euronext Paris of up to 7,738,600 new shares resulting from
the exercise of up to 7,738,600 Coordination Warrants, with a subscription price of one euro cent (0.01) per new share, granted for free by the Company to the members of the ad hoc committee of
Senior Notes holders;
the admission to
trading on Euronext Paris of up to 11,607,900 new shares resulting from the exercise of up to 11,607,900 Backstop Warrants, with a subscription price of one euro cent (0.01) per new share, granted for free by the Company to persons committed
to backstop the subscription of the New Second Lien Notes and the Warrants #3, in accordance with the provisions of the Private Placement Agreement dated June 26, 2017;
the admission to trading on Euronext Paris of the new shares to be issued upon exercise
of the Warrants #1.
All the foregoing nominal values and amounts have been calculated
under the assumption of the completion of the share capital reduction by means of the diminution of the par value of the Companys shares to one euro cent (0.01) submitted for approval to the Companys general meeting of shareholders
scheduled to convene on October 31, 2017, and subject to the adjustments applicable to the warrants in the event of operations on capital.
The implementation of the Issuances Steps is subject to the following conditions:
the approval by the Companys extraordinary general meeting of shareholders which
is scheduled to convene on October 31, 2017 of the resolutions required to implement the draft safeguard plan, in particular those relating to the share capital reduction by reducing the unit par value of the Companys shares to one euro
cent (0.01);
the abovementioned share capital reduction being effectively carried out;
the sanctioning of
the draft safeguard plan approved by both the committee of banks and assimilated creditors, and the sole general meeting of bondholders on July 28, 2017, by the Commercial Court of Paris; according to the current contemplated provisional
timetable, the court should examine the request for the sanctioning of the draft safeguard plan on November 6, 2017;
confirmation by the relevant US Court of the Chapter 11 plan and the
recognition of the ruling sanctioning the draft safeguard plan within the framework of the Chapter 15 proceedings the enforcement of which is not stayed;
the obtaining of the AMF
visa
on the prospectus relating to the Rights Issue with
PSR, which share capital increase is tentatively scheduled to take place in December 2017, with settlement and delivery scheduled for January 2018;
the satisfaction of all conditions precedent provided for in the implementation
documents of the restructuring, which includes notably the indenture of the new first lien notes, the indenture of the New Second Lien Notes and the new interest second lien notes, or the terms and conditions of the various warrants.
it being specified that the Restructuring Effective Date shall occur at the latest on
February 28, 2017.
ISIN Code of the Creditor Shares 1 and Creditor Shares 2:
FR0013181864
|
C.2
|
|
Currency of the issue
|
|
Euro.
|
Page 19
|
|
|
|
|
C.3
|
|
Number and nominal value of the securities issued
|
|
On the date of the Prospectus
visa
, the Companys share capital amounted to 17,706,519, fully paid up, divided into 22,133,149 ordinary shares with a nominal value of 0.80 each. The share capital
reduction through diminution of share par value to one euro cent (0.01) will be submitted for approval to the Companys general meeting of shareholders scheduled to convene on October 31 2017.
|
|
|
|
|
|
|
|
It should be noted that:
|
|
|
|
|
|
|
|
(i) the nominal value of the issue of Creditor Shares 2 and the
number of Creditor Shares 2 to be issued, will be determined on the basis of (a) the total aggregate amount of principal and accrued unpaid interest outstanding on the Senior Notes as of the Reference Date, and (b) the portion of the Rights
Issue with PSR which the holders of Senior Notes actually subscribe for by way of
set-off
against their claim under the Senior Notes, as part of their backstop commitment;
|
|
|
|
|
|
|
|
(ii) the nominal value of the issue of Creditor Shares 1 and the number of
Creditor Shares 1 to be issued will be determined based on the aggregate of principal and accrued unpaid interest on the Convertible Bonds as of the Reference Date;
|
|
|
|
|
|
|
|
(iii) the number of Warrants #3 to be issued and the number of new shares for which
they may be exercised, the number of Coordination Warrants to be issued and the number of new shares for which they may be exercised and the number of Backstop Warrants to be issued and the number of new shares for which they may be exercised, will
be determined based on the number of Creditor Shares 1 and Creditor Shares 2 issued, and of the Rights Issue with PSR.
|
|
|
|
|
|
|
|
A press release will be issued by the Company as soon as possible after the centralization period of the Rights Issue with PSR, with the detailed final information on the number of securities issued.
|
|
|
|
|
|
|
|
The total number of Creditor Shares 1 allocated to each holder of Convertible Bonds shall be determined on the basis of their total claims against the Company relating to the Convertible Bonds on the Reference Date, compared to the
total aggregate amount (principal and accrued and unpaid interests) outstanding on the Convertible Bonds as of the same date (after taking into account in the calculation the cash payment for 4.46 million, as described in paragraph B.4a of the
summary), rounded down to the nearest whole number of Creditor Shares 1. Only whole numbers of Creditor Shares 1 will be delivered to the holders of Convertible Bonds.
|
|
|
|
|
|
|
|
The total number of Creditor Shares 2 allocated to each holder of Senior Notes shall be determined on the basis of their total claims against the Company relating to the Senior Notes on the Reference Date, compared to the total
aggregate amount (principal and accrued and unpaid interests) outstanding on the Senior Notes as of the same date (after taking into account in the calculation the payment of $86 million, as described in paragraph B.4a of the summary, and as
the case may be, any amount used by the holders of Senior Notes to backstop the Rights Issue with PSR), rounded down to the nearest whole number of Creditor Shares 2. Only whole numbers of Creditor Shares 2 will be delivered to the holders of Senior
Notes.
|
|
|
|
|
|
|
|
The total number of Warrants #3 to be granted to subscribers of New Second Lien Notes will be determined in such a manner as to entitle them to subscribe for an aggregate number of new shares not in excess of 16% of share capital
after the issue of Creditor Shares 1 and Creditor Shares 2, the Rights Issue with PSR, the exercise of the Coordination Warrants, the Backstop Warrants, and the Warrants #3, but before the exercise of the Warrants #1 and the Warrants #2 (the
Diluted Number
of Shares
), for a subscription price of 0.01 euro.
|
|
|
|
|
|
|
|
The total number of Coordination Warrants to be granted to the members of the ad hoc committee of Senior Notes holders will be determined in such a manner as to entitle them to subscribe for an aggregate number of new shares not in
excess of 1% of the Diluted Number of Shares, for a subscription price of 0.01 euro.
|
|
|
|
|
|
|
|
The total number of Backstop Warrants to be granted to the persons committed to backstop the subscriptions of the New Second Lien Notes and Warrants #3, in accordance with the private placement agreement dated June 26, 2017,
will be determined in such a manner as to entitle them to subscribe for an aggregate number of new shares not in excess of 1.5% of the Diluted Number of Shares, for a subscription price of 0.01 euro.
|
Page 20
|
|
|
|
|
|
|
|
|
|
|
|
|
In any event, the Issuance Steps may not lead to issuance of securities the number, or the number of new shares they entitle to, of which would be higher than those set out in paragraph C.1.
|
|
|
|
|
|
|
|
|
|
|
The table below shows the number of Creditor Shares 1, Creditor Shares 2, Warrants #3, Coordination Warrants and Backstop Warrants to be issued under the Financial Restructuring Plan, depending on the portion of the Rights Issue
with PSR subscribed by the existing shareholders, with the following assumptions:
|
|
|
|
|
|
|
|
|
|
|
the Reference Date is December 20, 2017;
|
|
|
|
|
|
|
the total aggregate amount of principal and accrued unpaid interest
outstanding on the Reference Date is 1,467,924,425 under the Senior Notes and 366,024,528 under the Convertible Bonds;
|
|
|
|
|
|
|
a Rights Issue with PSR (including premium) for an amount of
112.2 million euros.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portion of the Rights
Issue with PSR
subscribed by the existing
shareholders (in %)
|
|
Number of
Creditor
Shares 1
|
|
Number of
Creditor
Shares 2
|
|
Number of
Warrants #3
|
|
Number of
Coordination
Warrants
|
|
Number of
Backstop
Warrants
|
|
100%
|
|
35,240,022
|
|
445,890,969
|
|
112,922,085
|
|
7,057,630
|
|
10,586,445
|
|
50%
|
|
35,240,022
|
|
445,890,969
|
|
112,992,085
|
|
7,057,630
|
|
10,586,445
|
|
0%
|
|
35,240,022
|
|
432,806,118
|
|
110,353,281
|
|
6,897,080
|
|
10,345,620
|
|
|
|
|
|
|
|
|
|
The maximum number of new shares that would be issued upon the exercise of Warrants #3, Coordination Warrant and Backstop Warrant, is equal to the number of Warrants #3, Coordination Warrant and Backstop Warrant insofar as those
warrants give rights to subscribe to one (1) new share of the Company (and subject to the adjustments applicable to the warrants in the event of transactions on the share capital).
|
|
|
|
|
|
C.4
|
|
Rights attached to
|
|
a) Rights attached to the Creditor Shares 1 and Creditor Shares 2
|
|
|
the issued securities and shares
|
|
Under current French law and the Companys articles of association, the principal rights
|
|
|
|
attached to the Creditor Shares 1 and Creditor Shares 2 are as follows:
|
|
|
|
|
right to dividends;
|
|
|
|
|
|
|
|
voting right;
|
|
|
|
|
|
|
|
preferential subscription right to subscribe
for securities of the same class;
|
|
|
|
|
|
|
|
right to liquidation dividends in the event of
the Companys windup.
|
|
|
|
|
|
|
|
All shares fully paid up and held in registered form by the same shareholder for at least two years are entitled to double voting rights in relation to other shares, based on the portion of the share capital they represent (article
L.
225-123
of the French Commercial Code and article 14.6 of the Companys articles of association).
|
|
|
|
|
|
|
|
Form:
the Creditor Shares 1 and Creditor Shares 2 may be held in either registered or bearer form, at the subscribers option.
|
|
|
|
|
|
|
|
Eligibility (
jouissance
) and listing of the Creditor Shares 1 and Creditor Shares 2:
the Creditor Shares 1 and Creditor Shares 2 will entitle their holders to all rights attached to them from their date
of issue and to all distributions decided by the Company after that date.
|
|
|
|
|
|
|
|
According to the tentative schedule, the Creditor Shares 1 and Creditor Shares 2 will be admitted for trading on Euronext Paris from their issue date, i.e. on January 17, 2018.
|
|
|
|
|
|
|
|
b) Rights attached to the Warrants #1
|
|
|
|
|
Subject to the right of the Companys Board of Directors to suspend the exercise of the Warrants #1 in the event of an increase in share capital, merger (
absorption
or
fusion
), spin-off (
scission
) or
issuance of new shares or securities conferring rights to receive shares, or
|
Page 21
|
|
|
|
|
|
|
|
|
|
|
|
other financial transactions conferring preferential subscription rights or reserving a priority subscription period for the benefit of shareholders of the Company, the holders of Warrants #1 will be entitled to acquire new Company
shares by exercising their Warrants #1 at any time during a period of four (4) years from the Restructuring Effective Date.
|
|
|
|
|
|
|
|
Three (3) Warrants #1 will entitle their holder to subscribe for four (4) new shares (the
Warrants #1 Exercise Ratio
), for a subscription price of 3.12 per new share (the holders having to exercise
their Warrants #1 by multiples of three)
|
|
|
|
|
|
|
|
The Warrants #1 Exercise Ratio may be adjusted following transactions implemented by the Company after the issue date of the Warrants #1, in accordance with applicable French laws and regulations and in compliance with contractual
provisions, to protect the rights of holders of Warrants #1.
|
|
|
|
|
|
|
|
The Warrants #1 Exercise Ratio will not be adjusted because of the Rights Issue with PSR and the issuance of the securities referred to in
this Securities Note, as these various issues are already factored into the Warrants #1 Exercise Ratio.
In accordance with article L.
228-103
of the French Commercial Code, the holders of Warrants #1 shall be grouped into a
body (
masse
), which shall benefit from legal personality and which shall be subject to the same provisions as those provided for in articles L.
228-47
to L.
228-64,
L.
228-66
and L.
228-90
of the French Commercial Code.
|
|
|
|
|
|
|
|
The meeting of the holders of Warrants #1 is competent to authorize any amendment of the terms and conditions of the Warrants #1 and to make any decision relating to the subscription or allocation of the Warrants #1.
|
|
|
|
|
|
|
|
The representative of the
masse
of holders of Warrants #1 will be:
|
|
|
|
|
|
|
|
Aether Financial Services
|
|
|
|
|
36 rue de Monceau
75008 Paris
|
|
|
|
|
|
|
|
Pursuant to applicable French law at the date hereof, the meeting of the Holders of Warrants #1 can validly deliberate if the Holders of Warrants #1, present or represented, hold at least 25% of the voting rights of the Warrants #1
on first convening and 20% of the voting rights of the Warrants #1 on second convening. Decisions of the holders are made with a
two-third
majority of the votes of the Holders of Warrants #1 present or
represented during the meeting (articles L.
225-96
and L.
228-103
of the French Commercial Code). One Warrant #1 gives right to one vote at the general meetings of
holders of Warrants #1.
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Application will be submitted for the Warrants #1 to be admitted to trading on the Euronext Paris market.
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The new shares issued upon exercise of Warrants #1 will be ordinary shares of the Company of the same class as the Companys existing shares. They will entitle their holders to all rights attached to them from their date of
issue and to all distributions decided by the Company after that date, and applications will be submitted periodically to have them admitted to trading on Euronext Paris under the same quotation line as existing shares (ISIN code: FR0013181864), as
well as on the New York Stock Exchange (in the form of American Depositary Shares; NYSE: CGG).
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c) Rights attached to the Warrants #3, Coordination Warrants and Backstop Warrants
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Subject to the right of the Companys Board of Directors to suspend the exercise of the Warrants #3, Coordination Warrants and Backstop Warrants in the event of an increase in share capital, merger
(
absorption
or
fusion
),
spin-off
(
scission
) or issuance of new shares or securities conferring rights to receive shares, or other financial transactions conferring preferential subscription rights or reserving
a priority subscription period for the benefit of shareholders of the Company (in which case the respective exercise period of the Warrants #3, Coordination Warrants and Backstop Warrants will be extended accordingly), the holders of Warrants #3,
Coordination Warrants and Backstop Warrants will be entitled to acquire new Company shares by exercising their warrants at any time during a period of six (6) months from the Restructuring Effective Date.
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One (1) Warrant #3, one (1) Coordination Warrant or one (1) Backstop Warrant will respectively entitle their holder to subscribe for one (1) new share (the
Creditor Warrants
Exercise
Ratio
) for a subscription price of 0.01 euro per new share.
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Page 22
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The Creditor Warrants Exercise Ratio may be adjusted following transactions implemented
by the Company after the issue date of the Warrants #3, Coordination Warrants and Backstop Warrants, in accordance with applicable French laws and regulations,
and in compliance with contractual provisions, for the purpose of protecting the rights of holders of Warrants #3, Coordination Warrants and Backstop Warrants.
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The Creditor Warrants Exercise Ratio will not be adjusted because of the Rights Issue with PSR and the issuance of the securities referred to in this Securities Note, as these various issues are already factored into the Creditor
Warrants Exercise Ratio.
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In accordance with article L.
228-103
of the French Commercial Code, the holders of Warrants #3, Coordination Warrants and Backstop Warrants shall be grouped into a body (
masse
), which
shall benefit from legal personality and which shall be subject to the same provisions as those of articles L.
228-47
to L.
228-64,
L.
228-66
and L.
228-90
of the French Commercial Code.
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The general meetings of holders of each class of warrants are competent to authorize any amendment of the terms and conditions of the warrant class concerned, and to make any decision relating to the subscription or allocation of
the warrant class concerned.
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The representative of the
masse
of holders of Warrants #3 will be:
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Aether Financial Services
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36 rue de Monceau
75008 Paris
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The representative of the
masse
of holders of Coordination Warrants will be:
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Aether Financial Services
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36 rue de Monceau
75008 Paris
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The representative of the
masse
of holders of Backstop Warrants will be:
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Aether Financial Services
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36 rue de Monceau
75008 Paris
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Pursuant to applicable French law at the date hereof, the meeting of holders of a given class of warrants can validly deliberate if the of holders of such given class of warrants, present or represented, hold at least 25% of the
voting rights of the given class of warrants on first convening and 20% of the voting rights of the given class of warrants on second convening. Decisions of the masse are made with a
two-third
majority of the
votes of the holders of a given class of warrants, present or represented, during the
masse
meeting (articles L.
225-96
and L.
228-103
of the French Commercial
Code). One warrant of a given class gives right to one vote at the the meeting of holders of that class.
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The new shares issued upon exercise of Warrants #3, Coordination Warrants and Backstop Warrants will be ordinary shares of the Company, of the same class as the Companys existing shares. They will entitle their holders to all
rights attached to them from their date of issue and to all distributions decided by the Company after that date, and applications will be submitted periodically to have them admitted to trading on Euronext Paris under the same quotation line as
existing shares (ISIN code: FR0013181864), as well as on the New York Stock Exchange (in the form of American Depositary Shares; NYSE: CGG).
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C.5
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Restrictions on
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Not applicable.
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free trading
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C.6
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Applications for admission to trading of the Creditor Shares 1 and Creditor Shares 2
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Applications will be made for the Creditor Shares 1, Creditor Shares 2 and the Warrants #1 to be admitted to trading on Euronext Paris, as
soon as they are issued, on the same quotation line as the Companys existing shares (ISIN code FR0013181864), and on the New York Stock Exchange (in the form of American Depositary Shares; NYSE: CGG).
No application will be made for the Warrants #3, Coordination Warrants and Backstop
Warrants to be admitted to trading on the regulated Euronext Paris market. However, application will be made for them to be accepted for clearance through Euroclear France, which will clear the trades of Warrants #3, Coordination Warrants and
Backstop Warrants among custodians. Application will also be made for the warrants to be accepted for clearance through Euroclear Bank S.A./N.V., and Clearstream Banking SA (Luxembourg).
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The ISIN code of the Warrants #1, Warrants #3, Coordination Warrants and Backstop Warrants will be communicated at a later stage.
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Page 23
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C.7
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Dividend policy
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The Company has not paid out any dividends for the past six years.
As the Group prioritizes the reduction of its debt and the growth of the Group, the Company does not consider proposing a dividend distribution at the next
general meeting of shareholders.
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C.8
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Restrictions on the exercise of the Warrants
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The Companys Board of Directors may suspend the exercise of the Warrants #1, Warrants #3, Coordination Warrants and Backstop Warrants
in the event of an increase in share capital, merger (
absorption
or
fusion
),
spin-off
(
scission
) or issuance of new shares or securities conferring rights to receive shares, or other
financial transactions conferring preferential subscription rights or reserving a priority subscription period for the benefit of shareholders of the Company.
If the right to exercise the Warrants #3, Coordination Warrants and Backstop Warrants is suspended, the respective exercise period of those warrants will be
extended accordingly.
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C.11
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Applications for admission to trading of the Warrants #1
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According to the indicative timetable, application will be made for the Warrants #1 to be admitted to trading on the regulated Euronext Paris market from the date of their issuance (i.e., according to the indicative timetable,
January 17, 2018), under an ISIN code which will be communicated at a later stage.
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C.15
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Influence of the underlying instrument on the value of the investment
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The respective value of the Warrants #1, Warrants #3, Coordination Warrants and Backstop Warrants depends primarily on: (i) the specific characteristics of these classes of warrants, i.e. their exercise price, exercise ratio
and exercise period, and (ii) the nature of the underlying instrument and market conditions, such as the quoted price of underlying shares and their volatility.
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C.16
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Expiration date of the Warrants #1, Warrants #3, Coordination Warrants and Backstop Warrants
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a) Warrants #1
The Warrants #1 will expire on the last day of the fourth year following the Restructuring Effective Date.
The Warrants #1 will lapse and accordingly lose all value at the close of trading on
Euronext Paris (5.30 p.m. Paris time) on the date corresponding to the fourth anniversary of the Restructuring Effective Date (or on the next Business Day if that day is not a Business Day) or earlier in the event of (i) the Companys
liquidation or (ii) the redemption of all Warrants #1, as set forth in section 4.2.13 of this Securities Note.
b) Warrants #3, Coordination Warrants and Backstop Warrants
The Warrants #3, Coordination Warrants et Backstop Warrants will expire on the last day of the sixth month following the Restructuring Effective Date, subject
to the cases of extension of the exercise period referred to in paragraph C.8.
The
Warrants #3, Coordination Warrants and Backstop Warrants will lapse and accordingly lose all value at the close of trading on Euronext Paris (5.30 p.m. Paris time) on the last day of the sixth month following the Restructuring Effective Date (or on
the next Business Day if that day is not a business day) or earlier in the event of (i) the Companys liquidation or (ii) the redemption of all Warrants #3 or Coordination Warrants or Backstop Warrants, subject to the cases of extension of
the exercise period referred to in paragraph C.8.
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C.17
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Settlement procedure for the Warrants #1, Warrants #3, Coordination Warrants and Backstop Warrants
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The settlement and delivery of the Warrants #1 will be managed by BNP Paribas Securities Services.
The settlement and delivery of the Warrants #3, Coordination Warrants and Backstop
Warrants will be managed by Lucid Issuer Services Limited.
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C.18
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Terms and conditions relating to the proceeds from Warrants #1, Creditor Shares 1, Creditor Shares 2,
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The subscriptions of Creditor Shares 1 and Creditor Shares 2 will be by way of
set-off
against due
and payable claims relating to the Convertible Bonds and Senior Notes, respectively, so that their issuance will not generate any proceeds for the Company.
The Warrants #1, Coordination Warrants and Backstop Warrants will be granted for free, so that their issuance will not generate any proceeds for the
Company.
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Page 24
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Warrants #3, Coordination Warrants and Backstop Warrants
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The Warrants #3 issued for free concomitantly with the New Second Lien Notes and in favor of the subscribers of the New Second Lien Notes
will generate, together with the New Second Lien Notes, (but without taking into account the proceeds resulting from the exercise of this Warrants #3), proceeds of $375,000,000 (including a tranche in euros not in excess of the euro-equivalent of
$100,000,000).
The cost of (i) the issuance of the Warrants #1, Creditor Shares 1,
Creditor Shares 2, Warrants #3, Coordination Warrants and Backstop Warrants and (ii) the completion of the Rights Issue with PSR (financial intermediaries fees and legal and administrative expenses) is estimated at approximately
20 million.
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C.19
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Issue price of the Creditor Shares 1 and Creditor Shares 2 / exercise price of the Warrants #1, Warrants #3, Coordination Warrants and Backstop Warrants
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Issue price of the Creditor Shares 1
Ten euros and
twenty-six
cents (10.26) per new share.
Issue price of the Creditor Shares 2
Three euros and twelve cents (3.12) per new share.
Exercise price of the Warrants #1
Three Warrants #1 will give right to subscribe to four new shares, at a subscription price
of three euros and twelve cents (3.12) per new share.
Exercise price of the
Warrants #3
One Warrant #3 will give right to subscribe to one new share, at a
subscription price of one euro cent (0.01) per new share.
Exercise price of
the Coordination Warrants
One Coordination Warrant will give right to subscribe to
one new share, at a subscription price of one euro cent (0.01) per new share.
Exercise price of the Backstop Warrants
One Backstop Warrant will give right to subscribe to one new share, at a subscription price of one euro cent (0.01) per new share.
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C.20
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Information on the underlying instruments
|
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See C.22 below.
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C.22
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Information concerning the underlying shares
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The exercise of all Warrants #1 is expected to result in the creation of a maximum number of 32,500,000 new Company shares.
The exercise of all Warrants #3 is expected to result in the creation of a maximum number
of 123,817,000 new Company shares.
The exercise of all Coordination Warrants is
expected to result in the creation of a maximum number of 7,738,600 new Company shares.
The exercise of all Backstop Warrants is expected to result in the creation of a maximum number of 11,607,900 new Company shares.
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Nature, class and code number of the new Company shares to be created upon exercise of the Warrants.
The new Company shares to be created upon exercise of the Warrants will be ordinary shares
of the same class as the existing Company shares. They will entitle their holders to all rights attached to them from their date of issue and to all distributions decided by the Company after that date.
Applications will periodically be made for the new Company shares resulting from the
exercise of the Warrants to be admitted to trading on Euronext Paris, on the same quotation line as exiting Company shares and under the same ISIN code FR0013181864, as well as on the New York Stock Exchange (in the form of American Depositary
Shares; NYSE: CGG).
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Currency in which the new Company shares resulting from the exercise of Warrants will be issued
The new Company shares resulting from the exercise of the Warrants will be issued in
euros.
Right attached to the new Company shares resulting from the exercise of the
Warrants
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Page 25
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Under current French law and in accordance with the Companys articles of association, the principal rights attached to the new Company
shares resulting from the exercise of the Warrants are as follows:
right to dividends right to a share of the issuers profit;
voting right;
preferential subscription right to
subscribe for securities of the same class;
right to liquidation dividends in the event of the Companys windup.
Restriction on the free trading of new Company
shares resulting from the exercise of the Warrants
No clause in the articles of association places restrictions on the trading of new Company shares resulting from the
exercise of the Warrants.
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Section D Risks
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D.1
|
|
Principal risks specific to the Company or its business
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|
Investors are invited to consider the risk factors which are specific to the Group and its business, and which include the following
principal risks:
Risks associated with the Companys financial
restructuring
The principal risks associated with the Groups financial
restructuring are set out below:
in the absence of implementation of the restructuring operations, the
cash level of the Group would be insufficient as early as the first quarter of 2018, which could compromise its ability to operate as a going concern, and the Group may be placed under judicial reorganization proceedings (
redressement
judiciaire
) in the short term, and wound up in the medium term, as the case may be in the context of judicial liquidation proceedings in various jurisdictions;
risk stemming from the absence of implementation of the share capital
reduction submitted to the Companys general meeting of shareholders scheduled to convene on October 31, 2017;
should the Companys general meeting of shareholders not approve
the resolutions required to implement the draft safeguard plan on October 31, 2017, the signatories of the
lock-up
and restructuring support agreements could be released from their commitments;
risks stemming from the dilutive impact of the Companys
financial restructuring measures on the equity interests of the current shareholders and holders of American Depositary Shares;
risks related to the potential rejection by the competent court in the
US of the Chapter 11 plan and the request for recognition of the judgment sanctioning the safeguard plan under the Chapter 11 proceeding, as well as rejection by the Paris Commercial Court of the draft safeguard plan;
risks stemming from a potential appeal against the judgment
sanctioning the Companys safeguard plan;
risks stemming from a potential appeal suspending the confirmation by
the competent court in the US of the Chapter 11 plan or the recognition by the competent court in the US of the judgment sanctioning the safeguard plan, under the Chapter 15 proceeding;
risk related to the effect of insolvency procedures;
risk stemming from the fact that the Groups revenues and the
liquidity available until the Restructuring Effective Date may be insufficient to fund the operational needs of the Group.
risks associated with the business of the Company and its
subsidiaries
, including risks:
stemming from current economic uncertainty and the volatility of oil
and natural gas prices which could have a significant adverse effect on the Group;
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Page 26
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inherent to international operations;
relating to acquisitions;
stemming from the transfer to a third-party of the Groups
shallow water activities and seabed seismic acquisition activities using ocean bottom nodes (OBN) and cables;
stemming from the potentially accelerated impairment of goodwill;
stemming from the Groups large investment in the acquisition and
processing of seismic data for multi-client studies, without knowing for certain whether it will be able to sell this data, when and at what price;
stemming from currency fluctuations that can materially affect the
Groups results of operations;
stemming from the fact that the Groups working capital needs are
difficult to forecast and may vary significantly, which could result in additional financing requirements that the Group may not be able to meet on satisfactory terms, or at all;
stemming from the potential impact of fluctuations in the fuel costs
on the Groups results of operations;
stemming from the fact that the Groups results of operations may
be affected by the weight of intra-group production;
stemming from the fact that technological changes and new products and
services are frequently introduced in the market, and the Groups technology could be rendered obsolete by these introductions, or the Group may not be able to develop and produce new and enhanced products on a cost-effective and timely
basis;
stemming from the fact that the Group depends on proprietary
technology and is exposed to risks associated with the misappropriation or infringement of that technology;
stemming from the fact that the Groups failure to attract and
retain qualified employees may adversely affect its future business and operations;
stemming from the Groups ability to generate profits, which
cannot be guaranteed in the future as the Group has at times reported losses in the past;
stemming from commercial risk and counter-party risk;
industry-related risks
including the risks:
stemming from the fact that the volume of the Groups business
depends on the level of capital expenditures by the oil and gas industry, and reductions in such expenditures may have a material adverse effect on its business;
stemming from the fact that the Groups backlog includes
contracts that can be unilaterally delayed or terminated at the clients option;
stemming from the fact that the Group is subject to intense
competition in the markets where we carry out its operations, which could limit its ability to maintain or increase our market share or maintain our prices at profitable levels;
stemming from the fact that the Group has taken significant measures
to adapt its fleet to changes in the seismic market, and depending on the seismic market in the future, it may make further adjustments that could impose exceptional charges;
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stemming from the high levels of fixed costs that are incurred
regardless of the Groups level of business activity, including in relation to bareboat charter;
stemming from the fact that the Groups revenue derived from
marine seismic data acquisition vary significantly during the year;
stemming from the fact that the Groups business and that of its
customers are subject to governmental regulations, which may adversely affect its operations or demand for its products in the future;
stemming from the environment;
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Page 27
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risks relating to the Groups debt
including the risks:
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stemming from the Groups debt agreements
which contain restrictive covenants that may limit its ability to respond to changes in market conditions or pursue business opportunities;
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stemming from the fact that if the Group is unable
to comply with the restrictions and covenants in the indentures governing our Senior Notes, the agreements governing its credit facilities and other current and future debt agreements, there could be a default under the terms of these indentures and
agreements, which could result in an acceleration of repayment;
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stemming from the fact that the Group and its
subsidiaries may incur additional debt;
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stemming from the fact, in order to service and/or
refinance its indebtedness and make capital expenditures, the Group requires a significant amount of cash or will have to implement a debt restructuring plan, and its ability to generate cash or implement such plan will depend on many factors beyond
our control;
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stemming from the fact that, in order to comply
with its undertakings relating to its debt and/or to refinance that debt, and to realize investments, the Group will need a significant amount of cash or will have to implement a restructuring plan, and its ability to generate such cash or to carry
out such plan will depend on several factors that are beyond its control;
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stemming from liquidity risks;
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stemming from the fact that, following the
Restructuring Effective Date, the Group will have a new debt structure and its ability to service its debt will notably depend on factors that are beyond its control;
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stemming from interest-rate risks;
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stemming from its exposure to exchange-rate
risks;
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other risks of a financial nature
including
currency risks and risks relating to shares and financial instruments;
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insurance-related risks;
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risks stemming from
outsourcing
.
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D.3
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Principal risks
|
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Risks associated with the Creditor Shares 1 and Creditor Shares 2
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specific to the offered securities
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The principal risks associated with the Creditor Shares 1 and Creditor Shares 2 are set out below:
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the Companys shareholders will experience a
significant dilution caused by the issuance of the Creditor Shares 1 and Creditor Shares 2;
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the volatility and liquidity of the Companys
shares could fluctuate significantly;
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given the significant number of issued shares in
the context of the Issuance Steps, sales of a significant number of shares of the Company could take place quickly after the Restructuring Effective Date, or such sales could be anticipated by the market, which could have a negative impact on the
market price of the shares;
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the Companys shares could become subject to
the French tax on financial transactions, and the European tax on financial transaction, if adopted, could apply to the Companys shares.
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Risks associated with the Warrants
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The principal risk factors associated with the Warrants are set out below:
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the market for the Warrants #1 could provide
little liquidity and be highly volatile;
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the liquidity of the market for Warrants #3,
Coordination Warrants and Backstop Warrants could be limited;
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in case of a drop in the price of the
Companys shares, the Warrants could decline in value;
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the price of the Company shares could fluctuate
and fall below the subscription price of the new shares issued upon exercise of the various classes of Warrants, and if that decline were to occur after the Warrants had been exercised by their owners, these owners would incur losses if they
immediately sold those shares;
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Page 28
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shareholders who did not exercise their Warrants or who sold them
could be diluted if other Warrant holders decided to exercise them;
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sales of Warrants could occur on the market and could have an
adverse impact on the value of the respective Warrants;
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the terms and conditions of each class of Warrants may be
modified and those modifications would be binding on all of their respective holders;
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the holders of Warrants have only limited protection against the
dilution of their interests;
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the holders of Warrants #1 will be responsible for handling the
fractional entitlements in case of exercise of the Warrants #1.
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E.1
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Net proceeds from
the issue of
Warrants #1,
Creditor Shares 1,
Creditor Shares 2
and Warrants #3,
Coordination
Warrants and
Backstop Warrants /
Estimated
total
cost of the offering
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The subscription for the Creditor Shares 1 and Creditor Shares 2 will be by way of
set-off
against
due and payable claims, under the Convertible Bonds and Senior Notes, respectively, so that their issuance will not generate any proceeds for the Company. These transactions will be used to reduce the Companys gross residual debt of (i)
362 million from the Convertible Bonds and (ii) 1,391 million from the Senior Notes, with the assumption of a Reference Date on December 20, 2017, according to the indicative timetable.
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The Warrants #1, Coordination Warrants and Backstop Warrants will be granted for free, so that their issuance will not generate any
proceeds for the Company.
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The Warrants #3 do not generate any proceeds for the Company since they are issued for free but are issued with the New Second Lien Notes
that will allow to generate, proceeds of $375,000,000 (including a tranche in euros not in excess of the euro-equivalent of $100,000,000).
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The cost of (i) the issuance of the Warrants #1, Creditor Shares 1, Creditor Shares 2, Warrants #3, Coordination Warrants and
Backstop Warrants and (ii) the completion of the Rights Issue with PSR (financial intermediaries fees and legal and administrative expenses) is estimated at approximately 20 million.
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E.2a
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Reasons for the
offering / planned
use of the proceeds
and estimated net
proceeds from the
issuance of the
Warrants #1,
Creditor Shares 1,
Creditor Shares 2,
Warrants
#3,
Coordination
Warrants and
Backstop Warrants
|
|
|
Reasons for the offering
|
|
|
|
The purpose of the offering is to carry out the proposed financial restructuring of the Company, as set out in B.4 above.
|
|
|
|
Use of the proceeds from the issues
|
|
|
|
The subscriptions of Creditor Shares 1 and Creditor Shares 2 will be by way of
set-off
against due
and payable claims under the Convertible Bonds and Senior Notes, respectively, so that their issuance will not generate any proceeds for the Company. These transactions will be used to reduce the Companys gross residual debt of (i)
362 million from the Convertible Bonds and (ii) 1,391 million from the Senior Notes, with the hypothesis of a Reference Date on December 20, 2017, according to the indicative timetable.
|
|
|
|
The funds raised in cash from (i) the Rights Issue with PSR and (ii) the issue of the New Second Lien Notes and Warrants #3 (net
of backstop and commitment fees and other costs, expenses or fees related to the Rights Issue with PSR and the issue of the New Second Lien Notes and Warrants #3) will be used as follows:
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|
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|
|
first, up to $250 million, to provide for the Groups
financial and operating needs (including (i) the payment of accrued and unpaid interests under the Convertible Bonds at the Reference Date which has not been equitized in the context of the Creditor Shares 1 issuance (i.e. an amount of
approximately 4.46 million), (ii) the payment of restructuring-related fees and expenses other than the backstop fees and expenses and all other fees relating to the Rights Issue with PSR and the issue of the New Second Lien Notes and Warrants
#3);
|
Page 29
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secondly, to make the Initial Repayment, on a pro rata basis, to
the secured lenders, the amount of such repayment being limited to a maximum of $150 million in aggregate;
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|
|
the balance would be kept by the Company to cover (x) its
financial needs (including the payment of restructuring-related fees and expenses other than,
inter alia
, subscription and backstop fees and expenses) and (y) any delay in the Groups redeployment.
|
E.2b
|
|
|
Reasons for the
offering of the
Warrants #1,
Creditor Shares 1,
Creditor Shares 2,
Warrants #3,
Coordination
Warrants and
Backstop Warrants
|
|
|
See E.2a above.
|
|
|
|
E.3
|
|
|
Terms and
conditions of the
offering
|
|
|
a) Warrants #1
|
|
|
|
Offering period:
not applicable.
|
|
|
|
Terms:
up to 24,375,000 Warrants #1 granted for free by the Company to all of its historical shareholders (i.e. those shareholders
with a proof of registration of their shares at the date determined to benefit from the detachment of the preferential subscription rights to the Rights Issue with PSR), on the basis of one (1) Warrant #1 for one (1) existing share, with three
(3) Warrants #1 giving the right to subscribe for (4) new shares at the subscription price of three euros and twelve cents (3.12) per new share.
|
|
|
|
|
|
|
b) Creditor Shares 1
|
|
|
|
|
|
|
Offering period:
not applicable.
|
|
|
|
|
|
|
Terms:
issue with removal of the shareholders preferential subscription rights, in favor of the holders of Convertible Bonds,
in the amount of a portion of their claims relating to the Convertible Bonds, in compliance with article L.
225-138
of the French Commercial Code.
|
|
|
|
|
|
|
Subscription price of the Creditor Shares 1: ten euros and
twenty-six
cents
(
10.26)
|
|
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|
|
c) Creditor Shares 2
|
|
|
|
|
|
|
Offering period:
not applicable.
|
|
|
|
|
|
|
Terms:
issue with removal of the shareholders preferential subscription rights, in favor of holders of Senior Notes, in the
amount of a portion of their claims under the Senior Notes, in compliance with article L.
225-138
of the French Commercial Code.
|
|
|
|
|
|
|
Subscription price of the Creditor Shares 2: three euros and twelve cents (
3.12)
|
|
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|
d) Warrants #3
|
|
|
|
|
|
|
Offering period:
not applicable.
|
|
|
|
|
|
|
Terms:
up to 123,817,300 Warrants #3 issued by the Company at the same time as the New Second Lien Notes, and granted to the
subscribers of New Second Lien Notes
pro
rata
their subscriptions to New Second Lien Notes, with one (1) Warrant #3 entitling them to subscribe for one (1) new share, for the subscription price of one euro cent (0.01)
per new share. The Warrants #3 issued by the company will be exercisable for an aggregate number of new shares not in excess of 16% of the Diluted Number of Shares. The exact number may only be determined once the Reference Date and the result of
the Rights Issue with PSR are definitively known.
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|
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|
e) Coordination Warrants
|
|
|
|
|
|
|
Offering period:
not applicable.
|
|
|
|
|
|
|
Terms:
up to 7,738,600 Coordination Warrants to be granted to the members of the ad hoc committee of Senior Notes holders (as said committee existed in its composition on June 14, 2017), with one (1) Coordination
Warrant entitling them to subscribe for one (1) new share, for the subscription price of one euro cent (0.01) per new share. The Coordination Warrants will be exercisable for an aggregate number of new shares not
in
|
Page 30
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|
excess of 1% of the Diluted Number of Shares. The exact number may only be determined once the Reference Date and the result of the Rights
Issue with PSR are definitively known.
|
|
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|
f) Backstop Warrants
|
|
|
|
|
|
|
Offering period:
not applicable.
|
|
|
|
|
|
|
Terms:
up to 11,607,900 Backstop Warrants granted for free by the Company to persons committed to backstop the subscription of the
New Second Lien Notes and the Warrants #3, in accordance with the provisions of the Private Placement Agreement of June 26, 2017, with one (1) Backstop Warrant entitling them to subscribe for one (1) new share, for the subscription
price of one euro cent (0.01) per new share. The Backstop Warrants will be exercisable for an aggregate number of new shares not in excess of 1.5% of the Diluted Number of Shares. The exact number may only be determined once the Reference Date
and the result of the Rights Issue with PSR are definitively known.
|
|
|
|
|
|
|
Conditions to which the issuance of the Warrants #1, Creditor Shares 1, Creditor
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|
|
|
|
|
|
Shares 2, Warrants #3, Coordination Warrants and Backstop Warrants are subject
|
|
|
|
|
|
|
The implementation of the financial restructuring transactions remains subject to the conditions referred to in paragraph C.1 above:
|
|
|
|
|
|
|
The settlement and delivery of all the issuances of Warrants #1, Warrants #3, Creditor Shares 1, Creditor Shares 2, Coordination Warrants,
and Backstop Warrants will occur concomitantly with the settlement and delivery of the issue, with shareholders preferential subscription rights, of new shares with warrants, subject to satisfaction of all the above-mentioned conditions
precedent.
|
|
|
|
|
|
|
The issuances provided for under the draft safeguard plan and the Chapter 11 plan shall be regarded as a whole; if one of them could not
be implemented, none of them would be implemented.
|
|
|
|
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|
|
Independent expert assessment
|
|
|
|
|
|
|
The Companys Board of Directors has appointed Ledouble SAS to act as an independent expert in accordance with applicable law for the
purpose of assessing the fairness of the restructuring transactions to the Companys shareholders.
|
|
|
|
|
|
|
The experts conclusions are set forth below.
|
|
|
|
|
|
|
Following our work on valuing CGG shares and reviewing the financial terms and conditions of the Transaction, based on the
assumption that the CGG Group continues as a going concern in its current structure, we believe the salient points for the Shareholders are as follows:
|
|
|
|
|
|
|
The Transaction, which will equitize more than
1.8 billion of debt, meets an immediate need to reduce the Groups indebtedness, which is essential if it is to continue as a going concern.
|
|
|
|
|
|
|
The Groups continuation as a going concern is contingent
on:
|
|
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|
|
|
|
A recovery in business and an improvement in margins, in
accordance with Managements Business Plan forecasts; and
|
|
|
|
|
|
|
At least a partial refinancing in the future to meet payments
falling due with respect to the
non-equitized
Secured Debt and the unsubordinated second lien New Second Lien Notes to be issued.
|
|
|
|
|
|
|
As regards the value range resulting from our valuation
and the subordination of Shareholders ranking them after the Creditors, it appears that the Shareholders would have potentially lose their entire investment without a financial restructuring which is essential to the continuity of the Groups
operations.
|
|
|
|
|
|
|
The subscription prices of 3.12 and 10.26
for the Reserved Capital Increases for the Creditors, respectively the Senior Noteholders and the CB holders, show a premium over our multi-criteria valuation of CGG.
|
Page 31
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|
The $375 million issue of high-yield New Second Lien Notes
governed by the laws of New York State will be accompanied by the allotment of three classes of Warrants with an exercise price of 0.01, exercise of which will increase the dilution of CGG Shareholders. All of the impacts of these New Second
Lien Notes are included in our analysis of the Shareholders position.
|
|
|
|
|
|
|
Based on the CGG valuation range, our analysis of the
Shareholders interest,
pre-
and post-Restructuring, shows that:
|
|
|
|
|
|
|
The Shareholders will not lose value based on the valuations of
CGG that include a Business Plan execution risk, which lead to negative
pre-Restructuring
equity values;
|
|
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|
|
A valuation based on share price as of May 11, 2017 could
result in a loss of up to 60% for the Shareholders due to the high share price relative to CGGs intrinsic value.
|
|
|
|
|
|
|
The Rights Issue with PSR, at a subscription price of
1.56, shows a discount to the multi-criteria valuation of CGG based on Managements Business Plan; the discount disappears if we assume a delay in achieving the Business Plan forecasts. Shareholders not wishing to subscribe to the
offering will be able to sell their Rights.
|
|
|
|
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|
|
Shareholders will receive Warrants that, albeit out of the money
at present and therefore excluded from our analysis, have a long exercise period.
|
|
|
|
|
|
|
In view of the current situation and the intrinsic value of the Group, we are of the opinion that the Transaction taken as a whole is
fair to CGG Shareholders.
|
|
|
|
|
|
|
The independent experts opinion is reproduced in its entirety in Schedule 1 to this Securities Note.
|
|
|
|
|
|
|
Suspension of the right of holders of Convertible Bonds to convert them into shares
|
|
|
|
|
|
|
As part of the Companys financial restructuring, the holders of Convertible Bonds are expected to subscribe for the Creditor Shares
1 by way of
set-off
against their claims against CGG relating to the Convertible Bonds.
|
|
|
|
|
|
|
The right of holders of Convertible Bonds to convert them into shares will be suspended, according to the indicative timetable, from
November 28, 2017 (at 12 a.m. Paris time), to no later than February 28, 2018 (at 11.59 p.m. Paris time) as prescribed by law and regulations and in accordance with the terms and conditions of the Convertible Bonds, with the understanding
that, on that date, if the financial restructuring is completed, there will no longer be any Convertible Bonds outstanding (as the claims of their holders will have been set off by the subscription for the Creditor Shares 1).
|
|
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|
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|
|
Suspension of the right to exercise stock options currently in their exercise period
|
|
|
|
|
|
|
The right to exercise stock options resulting from CGG option plans and currently in their exercise period will be suspended, based on the
indicative timetable, from November 28, 2017 (at 12 a.m. Paris time) to no later than February 28, (11.59 p.m. Paris time) as prescribed by law and regulations and in accordance with the provisions of option plan rules.
|
|
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|
|
Placing and underwriting
|
|
|
|
|
|
|
Not applicable.
|
|
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|
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|
|
Guarantee
|
|
|
|
|
|
|
Not applicable.
|
|
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|
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|
|
Subscription commitments and intentions
|
|
|
|
|
|
|
The issuance of the Warrants #1, Creditor Shares 1, Creditor Shares 2, Warrants #3, Coordination Warrants and Backstop Warrants is subject
to the approval of the necessary resolutions by the combined general meeting of shareholders scheduled to convene on October 31, 2017.
|
Page 32
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|
|
Under the draft safeguard plan: (i) the DNCA Entities committed to backstop in cash the Rights Issue with PSR up to an amount of 71.39 million (share premium
included);
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|
|
(ii) the Senior Notes holders also committed to backstop the portion of the unsubscribed Rights Issue with PSR (if needed after implementing the commitment to subscribe from the DNCA Entities), it being specified that
this backstop commitment would be implemented by
set-off
with part of their claims on the Company under the Senior Notes;
|
|
|
(iii) some eligible Senior Notes holders have committed to subscribe to the New Second Lien Notes Issuance, giving access to the Warrants #3, pursuant to the provisions of a private placement agreement as of
June 26, 2017;
|
|
|
(iv) the New Second Lien Notes Issuance is furthermore backstopped by the members of the ad hoc committee of Senior Notes holders (or their transferees under certain conditions), in accordance with the terms of a
private placement agreement as of June 26, 2017.
|
|
|
Restrictions applicable to the offering
|
|
|
The distribution of this Prospectus, the sale or offering of (i) the Companys shares (including the Creditor Shares 1 and Creditor Shares 2), (ii) the Warrants #1, (iii) the Warrants #3, (iv) the Coordination
Warrants and (v) the Backstop Warrants as well as the subscription of the new shares issued pursuant to the exercise of the Warrants #1, Warrants #3, Coordination Warrants and Backstop Warrants may be subject to specific regulations in certain
countries, including the United States of America.
|
|
|
Exercise,
non-disposal
or
lock-up
commitments
|
|
|
No exercise,
non-disposal
or
lock-up
commitments will be made concerning the Warrants #1, Creditor Shares 1, Creditor Shares 2, Warrants #3,
Coordination Warrants and Backstop Warrants.
|
|
|
Indicative timetable
|
|
|
July 28,
2017
|
|
Approval of the safeguard plan by the committee of banks and assimilated creditors, and the sole general meeting of bondholders
|
|
|
|
|
Publication by the Company of a press release announcing that approval and its financial results for the first half of 2017
|
|
|
|
|
|
October 10,
2017
|
|
Approval hearing of the Chapter 11 plan by the competent US court
|
|
|
October 13,
2017
|
|
Approval (
visa
) of the Prospectus by the AMF
|
|
|
|
|
Announcement of the AMFs approval (
visa
) of the Prospectus and online posting of the Prospectus on the Companys
website.
|
|
|
|
|
Publication by the Company of a press release describing (i) the main features of the issues of Warrants #1, Creditor Shares 1, Creditor
Shares 2, Warrants #3, Coordination Warrants and Backstop Warrants, and (ii) the conditions for obtaining the Prospectus
|
|
|
October 24,
2017
|
|
Expiration of the period in which third parties may lodge suspensive appeals against the decision by the competent US court to approve the Chapter 11 plan
|
|
|
October 31,
2017
|
|
Combined general meeting of the Companys shareholders
|
|
|
|
|
Publication of a press release announcing the results of the votes on resolutions by the general meeting of shareholders
|
|
|
November 6,
2017
|
|
Hearing on the draft safeguard plan by the Paris Commercial Court
|
Page 33
|
|
|
|
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|
|
November 13,
2017
|
|
Sanctioning of the safeguard plan by the Paris Commercial Court
|
|
|
|
|
|
|
|
|
|
|
|
November 20,
2017
|
|
Recognition by the competent US court, under the Chapter 15 proceeding, of the judgment sanctioning the safeguard plan
|
|
|
|
|
November 22,
2017
|
|
Expiration of the period in which creditors may file objections to the share capital reduction voted by the combined general meeting of shareholders on October 31 2017
|
|
|
|
|
November 28,
2017
|
|
Start of the suspension period of the exercise of stock options and the conversion of bonds into shares by the holders of Convertible Bonds
|
|
|
|
|
December 4,
2017
|
|
Expiration of the period in which third parties may lodge suspensive appeals against the decision by the competent US court to recognize the judgment sanctioning the safeguard plan, as part of the Chapter 15 proceeding
|
|
|
|
|
December 5,
2017
|
|
Approval (
visa
) by the AMF of the prospectus covering the Rights Issue with PSR
|
|
|
|
|
December 7,
2017
|
|
Accounting day at the end of which the holders of shares registered on their securities account will be entitled to preferential subscription rights
|
|
|
|
|
December 8,
2017
|
|
Detachment of the preferential subscription rights and opening of the trading period of the preferential subscription rights on Euronext Paris
|
|
|
|
|
December 12,
2017
|
|
Opening of the subscription period for the Rights Issue with PSR
|
|
|
|
|
December 18,
2017
|
|
Closing of the trading period of the preferential subscription rights
|
|
|
|
|
December 20,
2017
|
|
End of the subscription period for the Rights Issue with PSR
|
|
|
|
|
January 17,
2018
|
|
Settlement and delivery of the ABSA, the Warrants #1, Creditor Shares 1, Creditor Shares 2, Warrants #3, Coordination Warrants and Backstop Warrants.
|
|
|
|
|
|
|
Date on which (i) the new shares issued in the context of the Rights Issue with PSR, (ii) the Creditor Shares 1, (iii) the Creditor
Shares 2, (iv) the Warrants #2 and (v) the Warrants #1 are admitted to trading on Euronext Paris
|
|
|
|
|
The public will be notified of any change in the above indicative timetable by means of an announcement which will be posted by the Company on its website (
www. cgg.com
).
|
|
|
|
E.4
|
|
Interests which
may significantly
influence the
offering
|
|
In the context of the transactions required by the draft safeguard plan:
|
|
|
|
i. the Rights Issue with PSR is backstopped in cash, up to the amount of approximatively 71.39 million (including share premium), by the DNCA Entities. The backstop commitment in cash will be compensated by a
fee equal to 10% of the amount committed, namely an amount of approximately 7.14 million for the DNCA Entities);
|
|
|
|
ii. the unsubscribed portion of the Rights Issue with PSR (if needed after the implementation of the subscription commitment of the DNCA Entities) is subject to a backstop commitment by the Senior Notes holders that
would be executed by
set-off
with
|
Page 34
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|
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part of their claims on the Company under the Senior Notes at their face value. No commission is paid as part of the backstop commitment for the Rights Issue with PSR of the Senior Notes holders by
set-off
of their claims;
|
|
|
|
|
|
|
|
iii. some eligible Senior Notes holders have committed to subscribe to the New Second Lien Notes Issuance, pursuant to the provisions of a private placement agreement as of June 26, 2017. The subscription commitment in cash
will be compensated by a fee equal to 7% of the amount committed (payable during the achievement of the issuance and under the condition of such achievement, in cash or by
set-off
(at the discretion of the
company) with the subscription price of the New Second Lien Notes);
|
|
|
|
|
|
|
|
iv. the New Second Lien Notes Issuance is furthermore backstopped by the members of the ad hoc committee of Senior Notes holders (or their transferees under certain conditions) who will receive as such:
|
|
|
|
|
|
|
|
a. a backstop commission of 3% of the total amount of the New Second Lien Notes Issuance (payable during the after completion of the issuance and subject to such completion, in cash or by
set-off
(at the discretion of the company) with the subscription price of the New Second Lien Notes); and
|
|
|
|
|
|
|
|
b. the Backstop Warrants. The Backstop Warrants can be exercised at a subscription price of 0.01 euro per new share.
|
|
|
|
|
|
|
|
v. The draft safeguard plan provides for the issuance and the free allocation of the Coordination Warrants by the Company. The Coordination Warrants can be exercised at a subscription price of 0.01 euro per new share.
|
|
|
|
E.5
|
|
Person or entity
offering to sell their
securities /
Lock-up
agreement
|
|
Person or entity offering to sell their securities:
Not applicable
Lock-up
agreement:
not applicable.
|
|
|
|
E.6
|
|
Amount and
|
|
Dilution
|
|
|
percentage of
|
|
|
|
|
dilution
|
|
Assuming (i) the Reference Date is December 20, 2017, (ii) the total amount of the financial debt in principal and accrued but unpaid interest as of the Reference Date is equal to 366,024,528 under the Convertible
Bonds and 1,467,924,425 under the Senior Notes, (iii) the Company holds 24,997 shares as treasury shares, and (iv) the total amount of the Rights Issue with PSR (share premium included) is approximately equal to 112.2 million euros, the
persons holding shares of the Company prior to the implementation of the restructuring (on the basis of a share capital composed of 22,133,149 shares) would hold, following all the issuances contemplated in the draft safeguard plan and taking into
account the exercise of all the Warrants #3, Backstop Warrants and Coordination Warrants:
|
|
|
|
|
|
|
|
(i) 3.2% of the capital, before the exercise of the Warrants #1
and Warrants #2, and
|
|
|
|
|
|
|
|
(ii) 6.7% of the capital, taking into account the exercise of all
Warrants #1 (and considering they were exercised by existing shareholders) and Warrants #2,
|
|
|
|
|
|
|
|
if the Rights Issue with PSR is subscribed only by the DNCA Entities and the Senior Notes holders as part of their backstop commitment, no share being subscribed by the persons holding shares of the Company before the
implementation of the restructuring transactions.
|
|
|
|
|
|
|
|
In the event the Rights Issue with PSR is fully subscribed in cash by the persons holding shares of the Company prior to the implementation of the restructuring (on the basis of a share capital composed of 22,133,149 shares),
such persons would hold, following all the issuances contemplated in the draft safeguard plan and taking into account the exercise of all the Warrants #3, Backstop Warrants and Coordination Warrants:
|
|
|
|
|
|
|
|
(i) 13.3% of the share capital of the Company, before the exercise
of the Warrants #1 and Warrants #2, and
|
Page 35
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|
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|
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|
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|
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|
|
(ii) 21.9% of the share capital of the Company, taking into
account the exercise of all Warrants #1 and Warrants #2 (and considering they were exercised by the aforementioned shareholders).
|
|
|
|
|
|
|
|
The tables below show the effect of these financial restructuring transactions on the relative amount of equity
per share and the percentage of equity interest in the Company held by the shareholders and the
different
stakeholders, on the basis of the assumptions set forth on the first paragraph above.
|
|
|
|
|
|
|
|
Theoretical impact of the restructuring on the relative amount of shareholders equity
|
|
|
|
|
|
|
|
As an indication, the theoretical impact on the relative amount of the consolidated shareholders equity, Group
share, per share of the issues of the Creditor Shares 1, the Creditor Shares 2 and the new shares
to be issued
upon exercise of the Warrants #1, the Warrants #2, the Warrants #3, the Coordination Warrants and the
Backstop Warrants is presented hereafter
(calculated on the basis of consolidated shareholders equity,
Group
share, on June 30, 2017 and 22,133,149 Company shares outstanding on June 30, 2017
including treasury
shares)
. The identity of the subscribers, by subscription by cash to the Rights Issue with PSR
(existing
shareholders, or DNCA Entities due to their subscription commitment) has no impact on the results presented
below :
|
|
|
|
|
|
|
|
|
|
|
Amount of equity
per share (in US
dollars
(1)
)
|
|
|
|
|
Assumption 1: 0% of the Rights Issue with PSR subscribed
by the holders of Senior Notes as part of their backstop commitment
|
|
Non-
diluted
basis
|
|
Diluted
basis
(2)
|
|
|
|
|
|
|
|
|
|
Before the issue of 761,062,572 new shares under the Rights Issue with PSR, the Creditor Shares 1 and the Creditor Shares 2, and the new shares to be issued if all Warrants #1, Warrants #2, Warrants #3, Coordination Warrants and
Backstop Warrants are exercised
|
|
35.08
|
|
39.77
|
|
|
|
|
|
|
|
|
|
After the issue of 683,629,882 new shares under the Rights Issue with PSR, the Creditor Shares 1 and Creditor Shares 2, and the new shares resulting from the exercise of all Warrants #3, Coordination Warrants and Backstop Warrants,
but before the exercise of Warrants #1 and Warrants #2.
|
|
4.00
|
|
4.17
|
|
|
|
|
|
|
|
|
|
After the issue of 761,062,572 new shares under the Rights Issue with PSR, the Creditor Shares 1, the Creditor Shares 2 and the new shares
resulting from the exercise of all Warrants #1, Warrants #2, Warrants #3, Coordination Warrants and Backstop Warrants.
|
|
4.01
|
|
4.17
|
|
|
|
|
(1)
Reuters euro / US dollar exchange rate on June 14, 2017 at 12.00
noon (Paris time) of 1.1206 US dollar for one euro used to translate the amount of this capital increase into US dollars.
(2)
If all 446,937 exercisable and
non-exercisable
stock options are exercised.
|
|
|
|
|
|
|
|
|
|
|
Amount of equity
per share (in US
dollars
(1)
)
|
|
|
|
|
Assumption 2: 36.38% of the Rights Issue with PSR subscribed
by the holders of Senior Notes as part of their backstop commitment
|
|
Non-
diluted
basis
|
|
Diluted
basis
(2)
|
|
|
|
|
|
|
|
|
|
Before the issue of 745,007,541 new shares under the Rights Issue with PSR, the Creditor Shares 1 and the Creditor Shares 2, and the new shares to be issued if all Warrants #1, Warrants #2, Warrants #3, Coordination Warrants and
Backstop Warrants are exercised
|
|
35.08
|
|
39.77
|
Page 36
|
|
|
|
|
|
|
|
|
|
|
|
|
After the issue of 667,574,851 new shares under the Rights Issue with PSR, the Creditor Shares 1 and Creditor Shares 2, and the new shares resulting from the exercise of all Warrants #3, Coordination Warrants and Backstop Warrants,
but before the exercise of Warrants #1 and Warrants #2.
|
|
4.09
|
|
4.26
|
|
|
|
|
|
|
|
|
|
After the issue of 745,007,541 new shares under the Rights Issue with PSR, the Creditor Shares 1, the Creditor Shares 2 and the new shares
resulting from the exercise of all Warrants #1, Warrants #2, Warrants #3, Coordination Warrants and Backstop Warrants.
|
|
4.09
|
|
4.25
|
|
|
|
|
(1)
Reuters euro / US
dollar exchange rate on June
14, 2017 at 12.00 noon (Paris time) of 1.1206 US dollar for one euro used to
translate the amount of this capital increase into US dollars.
|
|
|
|
|
(2)
If all 446,937
exercisable and
non-exercisable
stock options are exercised.
|
|
|
|
|
|
|
|
Theoretical impact of the restructuring on the positions of the shareholders
|
|
|
|
|
|
|
|
As an indication, the theoretical impact of the issues of the Creditor Shares 1, the Creditor
|
|
|
|
|
Shares 2 and the new shares to be issued upon exercise of the Warrants #1, the Warrants
|
|
|
|
|
#2, the Warrants #3, the Coordination Warrants and the Backstop Warrants on the equity interest of a shareholder with 1% of the Companys shares outstanding prior to these issues, depending on the percentage of the Rights Issue
with PSR subscribed by the persons holding the shares of the Company before the implementation of the restructuring transactions, is presented hereafter:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders interest
(in
%
)
|
|
|
|
|
Assumption 1: 100% of the Rights Issue with PSR subscribed by the existing shareholders
|
|
Non-
diluted
basis
|
|
Diluted
basis
(1)
|
|
|
|
|
|
|
|
|
|
Before the issue of 761,062,572 new shares under the Rights Issue with PSR, the Creditor Shares 1 and the Creditor Shares 2, and the new shares to be issued if all Warrants #1, Warrants #2, Warrants #3, Coordination Warrants and
Backstop Warrants are exercised
|
|
1.00
|
|
0.980
|
|
|
|
|
|
|
|
|
|
After the issue of 683,629,882 new shares under the Rights Issue with PSR, the Creditor Shares 1 and Creditor Shares 2, and the new shares resulting from the exercise of all Warrants #3, Coordination Warrants and Backstop Warrants,
but before the exercise of Warrants #1 and Warrants #2.
|
|
0.133
|
|
0.131
|
|
|
|
|
|
|
|
|
|
After the issue of 761,062,572 new shares under the Rights Issue with PSR, the Creditor Shares 1, the Creditor Shares 2 and the new shares
resulting from the exercise of all Warrants #1, Warrants #2, Warrants #3, Coordination Warrants and Backstop Warrants.
|
|
0.219
|
|
0.216
|
|
|
|
|
(1)
If all
446,937
exercisable and
non-exercisable
stock options are exercised.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders interest
(in
%
)
|
|
|
|
|
Assumption 2: 50% of the Rights Issue with PSR subscribed by the existing shareholders
|
|
Non-
diluted
basis
|
|
Diluted
basis
(2)
|
|
|
|
|
|
|
|
|
|
Before the issue of 761,062,572 new shares under the Rights Issue with PSR, the Creditor Shares 1 and the Creditor Shares 2, and the new shares to be issued if all Warrants #1, Warrants #2, Warrants #3, Coordination Warrants and
Backstop Warrants are exercised
|
|
1.00
|
|
0.980
|
Page 37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
After the issue of 683,629,882 new shares under the Rights Issue with PSR, the Creditor Shares 1 and Creditor Shares 2, and the new shares resulting from the exercise of all Warrants #3, Coordination Warrants and
Backstop Warrants, but before the exercise of Warrants #1 and Warrants #2.
|
|
0.082
|
|
0.081
|
|
|
|
|
|
|
|
|
|
After the issue of 761,062,572 new shares under the Rights Issue with PSR, the Creditor Shares 1, the Creditor Shares 2 and the
new shares resulting from the exercise of all Warrants #1, Warrants #2, Warrants #3, Coordination Warrants and Backstop Warrants.
|
|
0.142
|
|
0.141
|
|
|
|
|
(1)
If all
446,937
exercisable and
non-exercisable
stock options are exercised.
|
|
|
|
|
|
|
|
|
|
|
Shareholders interest
(in
%
)
|
|
|
|
|
Assumption 3: 0% of the Rights Issue with PSR subscribed
by the existing shareholders
|
|
Non-
diluted
basis
|
|
Diluted
basis
(2)
|
|
|
|
|
|
|
|
|
|
Before the issue of 761,007,541 new shares under the Rights Issue with PSR, the Creditor Shares 1 and the Creditor Shares 2, and the new shares to be issued if all Warrants #1, Warrants #2, Warrants #3, Coordination
Warrants and Backstop Warrants are exercised
|
|
1.00
|
|
0.980
|
|
|
|
|
|
|
|
|
|
After the issue of 667,574,851 new shares under the Rights Issue with PSR, the Creditor Shares 1 and Creditor Shares 2, and the new shares resulting from the exercise of all Warrants #3, Coordination Warrants and
Backstop Warrants, but before the exercise of Warrants #1 and Warrants #2.
|
|
0.032
|
|
0.032
|
|
|
|
|
|
|
|
|
|
After the issue of 745,007,541 new shares under the Rights Issue with PSR, the Creditor Shares 1, the Creditor Shares 2 and the
new shares resulting from the exercise of all Warrants #1, Warrants #2, Warrants #3, Coordination Warrants and Backstop Warrants.
|
|
0.067
|
|
0.067
|
|
|
|
|
(1)
If all
446,937
exercisable and
non-exercisable
stock options are exercised.
|
|
|
|
|
|
|
|
Tables of shareholders interest after financial
restructuring:
|
|
|
|
|
The tables hereunder reflect the holding of capital of the different categories of stakeholders after the implementation of the share transactions planned by the Financial Restructuring Plan, depending on the percentage
of the Rights Issue with PSR subscribed by the existing shareholders.
|
|
|
|
|
|
|
|
|
|
Assumption 1: prior to the exercise of the
Warrants #1 and the Warrants #2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portion of the Rights
Issue with PSR
subscribed by the existing
shareholders (in %)(1)
|
|
Portion held
by the existing
shareholders
|
|
Portion held
by DNCA as
part of its
backstop
commitment
|
|
Portion held
by the Senior
Notes holders
|
|
Portion held
by the holders
of Convertible
Bonds
|
|
100%
|
|
13.3%
|
|
|
|
81.7%
|
|
5.0%
|
|
50%
|
|
8.2%
|
|
5.1%
|
|
81.7%
|
|
5.0%
|
|
0%
|
|
3.2%
|
|
6.6%
|
|
85.1%
|
|
5.1%
|
|
(1)
|
excluding any backstop commitment by DNCA.
|
Page 38
|
|
|
|
|
|
|
|
|
Assumption 2: after issuance of the new shares resulting from
exercise of the Warrants #1 and the Warrants #2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portion of the Rights
Issue with PSR
subscribed by the existing
shareholders (in %)(1)
|
|
Portion held
by the existing
shareholders
|
|
Portion held
by DNCA as
part of its
backstop
commitment
|
|
Portion held
by the Senior
Notes holders
|
|
Portion held
by the holders
of Convertible
Bonds
|
|
100%
|
|
21.9%
|
|
|
|
73.6%
|
|
4.5%
|
|
50%
|
|
14.2%
|
|
7.7%
|
|
73.6%
|
|
4.5%
|
|
0%
|
|
6.7%
|
|
9.9%
|
|
78.8%
|
|
4.6%
|
(1)
|
excluding any backstop commitment by DNCA.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E.7
|
|
Estimate of the expenses charged
by the issuer to
the investors
|
|
Not applicable.
|
|
|
Page 39
THIS FORM
6-K
REPORT IS HEREBY INCORPORATED BY REFERENCE INTO CGGS
REGISTRATION STATEMENT ON FORM
S-8
(REGISTRATION STATEMENT NO.
333-150384,
NO.
333-158684,
NO.
333-166250,
NO.
333-173638,
NO.
333-188120
AND NO.
333-197785)
AND SHALL BE A PART
THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.
SIGNATURES
Pursuant to
the requirements of the Securities Exchange Act of 1934, CGG has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
Date October 13
th
, 2017
|
|
|
|
By
/s/ Stéphane-Paul FRYDMAN
|
|
|
|
|
S.P. FRYDMAN
|
|
|
|
|
Chief Financial Officer
|
Page 40