The bankruptcy court overseeing the Chapter 11 proceedings of Global Geophysical Services on Feb. 6 confirmed the company’s reorganization plan, according to a court order entered in the case.
As reported, the company rescheduled its plan-confirmation hearing for Friday after coming to terms on $120 million in exit financing. The hearing had been adjourned to a “date to be determined” on Dec. 19, 2014.
As reported, the exit facility was less than the $150 million contemplated under the company’s proposed reorganization plan. In disclosing the terms of the financing last week to the bankruptcy court in Corpus Christie, Texas, the company also disclosed that its DIP lenders had as a result agreed to “less favorable treatment” than spelled out in the plan.
The exit facility is comprised of a $60 million first-lien term loan, a $25 million first-lien revolver, and a $35 million pay-in-kind second-lien facility (see “Global Geophysical nets exit loan of only $120M; DIP recovery nicked,” LCD, Feb. 3, 2015).
Under the less-favorable treatment agreed to by DIP lenders, holders of the DIP A term loan will receive 99% of their aggregate claims in cash, and 1% in the form of new second-lien exit debt (compared to all cash under the proposed reorganization plan), while holders of the DIP B term loan will now receive second-lien debt (compared to cash under the proposed reorganization plan) after converting $51.9-68.1 million of their claim to equity in the reorganized company, which amount will be reduced on a pro rata basis from the proceeds of a rights offering, the amount of which will correspond to the amount of the DIP that is converted to equity.
As reported, the company’s DIP facility was comprised of an initial $60 million A term loan and an additional $91.88 million B term loan that was subsequently added to resolve a battle over the DIP, with the proceeds of the B term loan going to pay off the company’s pre-petition secured lender claims (see “Global Geophysical nets court approval of upsized $151.8M DIP loan,” LCD, April 25, 2014).
The lenders under the DIP are a group of holders of the company’s 10.5% notes due 2017.
Shares under the rights offering would be offered to certain senior noteholders (those qualified as accredited investors) at $8.0887 per share, representing a 15% discount to the per share equity value based on an enterprise value of $190 million. At the maximum conversion amount, the shares (about 3.47 million) would represent 37.41% of the reorganized company, while at the minimum conversion level (about 2.85 million shares) they would represent 28.5%.
The ultimate conversion/rights offering amount would depend upon a formula tied to the company’s cash balance as of Dec. 31, with the maximum conversion amount occurring of the cash balance is less than negative $11.3 million, and the minimum conversion amount occurring of the company’s cash balance exceeds $5 million.
The company’s base case assumes a projected cash balance of negative $6 million, with 34.53% of the shares represented in the conversion amount.
Beyond participation in the rights offering, senior noteholders, with allowed claims of roughly $262.87 million, are also slated to receive a pro rata share of equity in the reorganized company ranging from 11.95-32.71%.
The projected recoveries for those noteholders eligible to participate in the rights offering range from 6.89-13.85%, while the projected recoveries for note holders not eligible for the rights offering are slightly less, or 5.01-12.65% (see “Global Geophysical reorg plan puts enterprise value at $190M,” LCD, Sept. 24, 2014). – Alan Zimmerman