Norwegian marine geophysical company, PGS ASA, has successfully placed a new $450Million senior secured bond with 4-year.
The proceeds from the Bonds will together with cash held on balance sheet be used to repay $600Million of the Company’s Term Loan B (the “TLB”) maturing in March 2024 at par value. The Transaction is expected to be completed around March 31, 2023.
“The offshore seismic market is in strong recovery as multiple years of underinvestment in oil and gas exploration and development, combined with a materially changed energy security situation, drive a strong increase of E&P spending”, the company says in a release.
“The Transaction materially improves the Company’s debt maturity profile while still allowing PGS flexibility to pursue its deleveraging strategy without incurring excessive costs.
- After the Transaction, $138Million of the TLB maturing in March 2024 will remain outstanding and be repaid at par value from cash flow and liquidity sources
- The $50Million super senior loan maturing in March 2024 remains in place. The loan may be extended by one year at the Company’s discretion or alternatively be replaced by a revolving credit and guarantee facility of up to $75Mllion
- The Bonds are callable after two years with a customary declining call premium profile
PGS made a repayment of $83Million on its export credit financing (ECF) loans in early February 2023. The remaining balance of the ECF loans is $180Million gross (~$140Million net, if considering ~$40Million of restricted cash for debt service on the ECF loans).
The Bonds will carry a fixed interest of 13.5%. The total interest costs for the Company will be reduced following the Transaction as the Company will have significantly less debt. In addition, the interest on the remaining portion of the TLB is expected to be reduced by approximately 1% as a result of improved credit ratings and lower leverage. The Company remains committed to continue reducing its debt and thereby further reduce interest cost.
PGS insists it retains a strong liquidity reserve after the debt repayments.
DNB Markets, a part of DNB Bank ASA and Pareto Securities AS acted as joint bookrunners (the “Joint Bookrunners”) for the issuance of the Bonds. Advokatfirmaet BAHR AS is acting as Norwegian counsel to the Company and Wikborg Rein Advokatfirma AS is acting as Norwegian counsel to the Joint Bookrunners and Nordic Trustee.
PGS ASA and its subsidiaries provides a broad range of seismic and reservoir services, including data acquisition, imaging, interpretation, and field evaluation to the oil and gas industry, as well as to the broader and emerging new energy industries, including carbon storage and offshore wind.