- TGS submits a conditional offer for the multi-client data library of PGS for a cash consideration of
USD 600 million - The offer values the multi-client data library in excess of the full reported book value and secures PGS liquidity to repay the
USD 135 million revolving credit facility dueSeptember 2020 - TGS proposes a post-closing collaboration agreement for future PGS multi-client projects and preferential rights for PGS to offer their 3D-fleet for future TGS data acquisition
- A successful offer will broaden TGS´ multi-client geophysical data offering in all major mature and frontier basins world-wide
- The offer will be financed by on-balance cash, a new term loan facility and new equity
The proposed transaction presents an opportunity for PGS and its stakeholders to monetize its multi-client data library in excess of its full reported value, delivering substantial funds to PGS in what are challenging times for the entire seismic industry. The Offer will secure the liquidity required to repay PGS’
For TGS, the acquisition of PGS' multi-client data library would broaden the Company's offering as a multi-client geophysical data provider in all major mature and frontier basins world-wide.
Commenting on the Offer,
“We see a strong complement between our existing business and the PGS data library and the opportunity to leverage our expertise and scale to improve returns. Concurrently, a refocused and refinanced PGS will be a world-leading and highly innovative provider of acquisition technology and marine acquisition capacity, providing a strong platform for creating long-term value for the company´s stakeholders. The proposed transaction is thus aimed at safeguarding customers’ access to leading acquisition technology, high-quality data acquisition capacity and top tier data processing capabilities, whether they choose to purchase data through the contract model or the multi-client model. We believe the consolidation and further partnership between our two companies carries a strong industry logic and we look forward to initiate the dialogue with the management and board of PGS.”
Background for the Offer
Over the past years the seismic industry has seen a sharp drop in aggregate return on capital caused by a combination of a lower oil price, a more consolidated customer base and over-capacity on the supply side. As a result, industry players have changed their strategy towards specialization such that most companies have become either pure vessel operators or pure multi-client providers. TGS has since its inception focused on an asset light multi-client operation and has grown to become a leading global multi-client seismic company.
PGS has built a significant multi-client library and is a key player in the seismic industry. As opposed to TGS, PGS has been an integrated operator, and is today the only remaining player in the industry pursuing both data acquisition and multi-client seismic strategies.
Following recent market developments, TGS is of the view that a combination of the TGS and PGS multi-client businesses will improve the ability of the industry to deliver best in class services to its customers while creating value for its owners and other stakeholders. TGS strongly believes that the combination contemplated under the Offer will deliver more scale, better data and increased efficiencies in the seismic industry. At the same time, the transaction would position PGS credibly as one of the most solid in the seismic vessel and acquisition industry, supported by a robust balance sheet and strong technologies.
Key terms and financing of the Offer
- The Offer comprises the entirety of the multi-client data library of PGS, including all existing data and work-in-process, as well as the contractual arrangements associated with the foregoing (the “PGS MC Library”). The Offer assumes an effective date of
1 July 2020 . - The Offer values the
PGS MC Library atUSD 600 million , with full consideration in cash on completion, representing a meaningful premium to theUSD 565m book value (as reported by PGS in its financial report for the 2nd quarter of 2020). - The transaction contemplates a post-closing collaboration between the parties that comprises a framework arrangement for future acquisition services by PGS to TGS as well as the opportunity for TGS to participate in future multi-client opportunities pursued by PGS.
- The Offer is subject to a customary, limited scope, confirmatory due diligence and entering into definitive agreements for the transaction, and completion will be conditional upon any required approvals by an extraordinary general meeting in TGS in respect of the equity financing of the transaction, and other customary closing conditions, including relevant regulatory approvals.
The Offer will be financed by on-balance cash, a new term loan facility of
The Offer as presented to PGS is non-binding at this juncture and may be withdrawn by TGS at its sole discretion at any time until definitive agreements in respect of the Offer are entered into.
Timeline
The Offer presented to PGS is valid until
Advisors
ABG Sundal Collier ASA is engaged as financial advisor and
Dial-in details:
PIN Code for all countries: 938720
Please dial in 5-10 minutes prior to the call to ensure that you will be connected in time.
For further information, please contact:
Sven Børre Larsen
Head of Business Development and M&A
Tel: +47 909 43 673
E-mail: sven.larsen@tgs.com
CFO
Tel: +47 995 89 882
E-mail: fredrik.amundsen@tgs.com
About TGS
For more information visit TGS online at www.tgs.com
Important Notice
This announcement is not and does not form a part of any offer to sell, or a solicitation of an offer to purchase, any securities of the Company.
Neither this announcement nor any copy of it may be made or transmitted into
The securities referred to in this announcement have not been and will not be registered under the
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