Thursday after the bell, ION Geophysical, Corp. (IO) and BGP Inc. announced signing a term sheet to form a joint venture for the production of land seismic products.
Under the agreement, ION would receive net proceeds of $175 million from BGP. In exchange, BGP would get a 51% stake in the joint venture and a 16.66% stake in ION.
The joint venture would bring together ION's land equipment business with BGP's expertise in land seismic operations to produce land seismic products.
Prior to closing of the deal, ION will receive up to $40 million of bridge financing arranged by BGP to refinance and reduce its long-term debt, and receive an expanded replacement revolving line of credit. On closure, ION expects to have a total of more than $100 million in liquidity from cash and spare capacity on its revolving line of credit.
The agreement is subject to regulatory approval from the U.S. and People's Republic of China. Prior to closing, ION and BGP will file a joint voluntary notice to the Committee on Foreign Investment in the United States.
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.
ION Geophysical stock closed Friday's regular trading session at $3.54, down $0.08, on the NYSE.
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