CGG : Q1-17 results and first takeaways of the debt restructuring proposition made by the company

CGG released this morning Q1-17 results below expectations. But the group above all released an update on debt restructuring negotiations and unveiled the details of its restructuring proposition. - CGG's debt restructuring proposal is extremely complex. It is at this stage delicate for us to express an opinion on an implicit haircut on listed debts. - In short, we retain the following items: - an agreement with all the stakeholders was not reached, therefore the draft proposition could be amended; - the 2017-19 business plan on which the restructuring is based seems to us, at a first reading, perhaps overly optimistic ... (virtually doubling sales in three years!); - the straight bonds and OCEANEs will be converted entirely into shares (as expected). Holders of straight bonds could hold between 76% and 89% of the share capital and holders of OCEANEs between 5% and 6%; - the OCEANEs would not be totally crammed-down, which is good news (it was a risk that we had mentioned in view of the absence of blocking minority in the voting committee), although we will not express our opinion at this stage on the comparison between the current market price vs estimated recovery rate; - there will be new money (contrary to what company’s management said a few months ago i.e. that the business plan could be done without new money – we understand that this is a requirement of the stakeholders); - the company will use the 30-day grace period to avoid paying the coupon on its 2020 EUR straight bond on 15 May. - >