ION and BGP Announce Joint Venture for Land Seismic Equipment


    
    ION to Receive $175 Million Capital Infusion from BGP Majority of ION Debt
    to be Repaid or Refinanced at Closing




    
</pre>
<p><location>HOUSTON</location> and <location>BEIJING</location>, <chron>Oct. 23</chron> /CNW/ -- ION Geophysical Corporation (NYSE:   IO) and BGP Inc., a world-leading geophysical company, today announced that they have signed a term sheet to create a joint venture that will provide land seismic products worldwide.  The joint venture will align ION's innovative land equipment business with BGP's own expertise and experience in land seismic operations to create a new enterprise with the resources, technology and experience required to provide state-of-the-art products and services on a global basis.</p>
<p/>
<p>ION will significantly enhance its financial position through total cash proceeds of <money>$175 million</money> from BGP.  BGP will receive a 51 percent interest in the joint venture and an approximate 16.66 percent interest in ION.  Prior to the joint venture closing, ION will also receive up to <money>$40 million</money> of bridge financing arranged by BGP.  At the transaction's closing, ION will refinance and reduce its long-term debt, and receive an expanded replacement revolving line of credit.  Overall, after closing ION expects to have over <money>$100 million</money> in liquidity from cash and spare capacity on its revolving line of credit.</p>
<p/>
<p>Bob Peebler, ION's CEO, commented, "Our Board of Directors and senior leadership team are delighted to be forging this transformative partnership with BGP.  ION and BGP have been doing business together for more than two decades, with each company contributing to the other's growth and success.  This transaction will create not only a new global leader in land seismic equipment capable of seizing high-value opportunities in the fastest-growing geophysical markets, but also a financially stronger ION through a significant de-leveraging of the company."</p>
<p/>
<p><person>Mr. Wang Tiejun</person>, President of BGP, added, "As an ION customer for many years, BGP has always been impressed with ION's vision and products, which have proven to be capable of improving the operational efficiency and the safety and environmental effectiveness of land seismic acquisition.  By joining forces through our planned joint venture, we believe we can combine BGP's operational knowledge and experience, and emerging land seismic product portfolio, with ION's innovative products and culture to become the leading land seismic technology company of the 21st century.  It is the intention of both ION and BGP that our joint venture will provide products and field support services to all land seismic contractors around the world, not just to BGP. The sale of products and the provision of field-support services to both in-house BGP crews and third party land seismic contractors is a proven industry model that will benefit the broader land contractor community and the hundreds of seismic crews that operate around the world."</p>
<p/>
<p>The transaction is subject to the completion of regulatory reviews and receipt of applicable approvals in the <location>United States</location> and the People's Republic of <location>China</location>, which are expected to be completed by the first quarter of 2010.  Prior to closing, ION and BGP will file a joint voluntary notice of the transaction for review by the Committee on Foreign Investment in the <location>United States</location> (CFIUS), a government inter-agency committee chaired by the Secretary of the Treasury.</p>
<p/>
<p>The term sheet has been unanimously approved by BGP and by ION's Board of Directors and is not subject to approval by ION's shareholders.  ION's current bank group has amended ION's credit facility to the extent necessary to allow the transactions to proceed.</p>
<pre>
    

    Key Aspects of the Joint Venture
    --  ION will contribute its Land Imaging Systems assets and intellectual
        property to the joint venture, including its ARAM, Aries®, Scorpion®,
        and FireFly® product lines as well as its VectorSeis® land sensor and
        vibroseis businesses, but excluding ION's Sensor geophone business. 
        All other ION businesses -- including ION's Marine Imaging Systems,
        Concept Systems, Data Management Solutions, GXT Imaging Solutions,
        Integrated Seismic Solutions (ISS), and BasinSPAN(TM) seismic data
        libraries -- will be retained by ION and will not become part of the
        land joint venture.
    --  BGP will contribute land seismic equipment assets and intellectual
        property to the joint venture, including an innovative land recording
        system currently under development, its vibroseis business, and
various
        complementary land seismic equipment businesses.  BGP's geophone
        business, including associated BGP geophone joint ventures with other
        parties, will be excluded.
    --  The joint venture will be 51% owned by BGP and 49% owned by ION.  The
        joint venture will be governed by a board of directors consisting of
        representatives from both owners.  The joint venture's board will
        appoint management, approve strategic and operating plans, and govern
        the direction and performance of the company.

    --  After taking into account the value of tangible and intangible assets
        contributed to the joint venture by both parties, BGP's cash
investment
        to be paid to ION with respect to the joint venture will be $108.5
        million.


    Overview of Impact on ION Equity and Debt
    --  At the joint venture closing, ION will issue a total of approximately
        23.8 million shares of its common stock to BGP, after which BGP will
        own approximately 16.66% of the outstanding common stock of ION.  Cash
        proceeds to ION from the stock sale will be approximately $66.6
        million.  After the closing, ION will appoint a designee of BGP to its
        Board of Directors to serve with the current nine members of ION's
        Board.
    --  ION will receive up to $40 million in the form of bridge financing
        arranged by BGP prior to the joint venture closing.  If ION has drawn
        the entire $40 million in bridge financing, the outstanding bridge
        financing amount will convert into approximately 14.3 million shares
of
        ION common stock and will be credited against the approximately 23.8
        million shares of ION stock to be issued to BGP at the transaction
        closing.
    --  BGP has arranged for $106.3 million of ION's outstanding long-term
debt
        to be refinanced at the joint venture closing.
    --  ION will use a portion of the proceeds from the transaction to pay off
        and retire $98 million outstanding under its current revolving line of
        credit and $35 million owed from its acquisition of ARAM in September
        2008.

    --  ION will receive a new $100 million revolving credit facility at the
        joint venture closing.


    Potential Benefits of Combining Forces in Land Seismic Equipment
    --  The joint venture will provide ION with preferred access to the
world's
        largest land seismic contractor, currently operating 110 seismic crews
        around the world.
    --  The combination of assets and operations within the joint venture will
        provide opportunities for improved economies of scope and scale, along
        with enhanced efficiencies across the venture's supply chain, enabling
        the joint venture to deliver products in a more timely manner and at
an
        overall lower cost to its customers.
    --  The transaction will combine ION's strengths in innovative land
        equipment with BGP's emerging geophysical product portfolio and
        expertise in operating land seismic acquisition crews, allowing new
        joint venture products to be designed and field-tested for
reliability,
        quality, and productivity to the benefit of all customers.

    --  The joint venture will align the land equipment technology assets and
        expertise of both companies to enable the joint venture engineering
        teams to develop innovative, market-leading land recording systems, 3C
        (full-wave) sensors, and vibroseis products.


    
</pre>
<p>Evercore Partners served as ION's financial advisor on the transaction, while Goldman Sachs (Asia) L.L.C. and Morgan Stanley Asia Limited advised BGP.</p>
<pre>
    

    About ION
    
</pre>
<p>ION Geophysical Corporation is a leading provider of geophysical technology, services, and solutions for the global oil & gas industry. ION's offerings allow E&P operators to obtain higher resolution images of the subsurface to reduce the risk of exploration and reservoir development, and enable seismic contractors to acquire geophysical data more efficiently. Additional information about ION is available at <a href="http://www.iongeo.com">www.iongeo.com</a>.</p>
<pre>
    

    About BGP
    
</pre>
<p>BGP is one of the world's leading geophysical service contractors. Services include 2-D, 3-D, 3-component, 4-D seismic and 3-D VSP commonly used to fill clients' requirements. BGP also supports non-seismic activities including gravity, magnetic, electromagnetic and geo-chemical surveys. Geological research services are also provided on a regular basis to the energy industry in <location>China</location> and in the world. Additional information about BGP is available at <a href="http://www.bgp.com.cn">www.bgp.com.cn</a>.</p>
<p/>
<p> </p>
<pre>
    
    Contacts
    ION (Financial community)
    Brian Hanson, +1 281.879.3672
    Chief Financial Officer
    
</pre>
<p> </p>
<pre>
    
    ION (Media affairs)
    Chris M. Friedemann, +1 281.879.3690
    Senior Vice President - Corporate Marketing
    
</pre>
<p> </p>
<pre>
    
    BGP (Media affairs)
    Zhu Qiang, +86 312.382.1463
    Deputy Chief Economist - BGP International

    
</pre>
<p>The information included herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  These forward-looking statements include statements concerning benefits expected to result from the transactions, future sales and market growth, future liquidity and cash levels, future efficiencies, future product development, number of shares of ION's common stock to be outstanding in the future, and other statements that are not of historical fact.  Actual results may vary materially from those described in these forward-looking statements. All forward-looking statements reflect numerous assumptions and involve a number of risks and uncertainties.  These risks and uncertainties include risks associated with required regulatory approvals, timing and development of future products and services; risks associated with the economy and the volatile credit environment; risks associated with the integration of businesses; risks associated with competitors' product offerings and pricing pressures resulting therefrom; the risks that sources of capital may not prove adequate for ION; and technological and marketplace changes affecting product lines.  Additional risk factors, which could affect actual results, are disclosed by ION from time to time in its filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended <chron>December 31, 2008</chron> and its Quarterly Reports on Form 10-Q.</p>
<pre>
    



    

For further information: For further information: Financial community, Brian Hanson, Chief Financial Officer, +1-281-879-3672, or Media affairs, Chris M. Friedemann, Senior Vice President - Corporate Marketing, +1-281-879-3690, both of ION; or Media affairs, Zhu Qiang, Deputy Chief Economist of BGP International, +86 312.382.1463 Web Site: http://www.iongeo.com http://www.bgp.com.cn

Organization Profile

ION GEOPHYSICAL CORPORATION

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890