CGG : Valuation of rights to new money bonds

Following a contact with the company, we understand that the rights to new money are attached to the holders of straight bonds on 1 June (the "record date") and are therefore "nominative". Two situations may arise in the event of a bond purchase/sale after 1 June: - 1/ investors who did not hold bonds on 1 June buy these bonds from holders who held them on 1 June but who decided not to exercise their rights to new money. As a result, buyers become bondholders without rights and cannot participate in the new money. They will only be entitled to the equitisation of bonds without the penny warrants attached to the new high-yield bonds; - 2/ investors who did not hold bonds on 1 June buy them from holders who held them on 1 June and who decided to exercise their rights to new money: in this case, at the time of the transfer of securities, a seller will have to obtain from a buyer consent to vote in favour of the plan and participate in the new money. This formally involves the transfer of the "subscription commitment" and the attached documents. - We fine-tuned our recovery calculations on the 2020 straight bonds to make a distinction between new money providers (members and non-members of the ad hoc committee – which will receive different fees) and holders who will not participate. These calculations always depend on two key parameters: 1/ the enterprise value (baseline scenario of $ 1.7bn with conservative EBITDA of $ 339m and EV/EBITDA multiple of 5x) and 2/ the market price at which the new HY CGG bonds will be traded (baseline assumption of 75%). - Based on our calculations, post-restructuring recovery rates (before the dilution linked to warrants 1 and 2) for participants in new money would be 60% for members of the ad-hoc committee of holders and 57% for the other holders. For the holders who do not wish to or cannot participate in the new money, we estimate recovery at 50%. Thus, according to our calculations, the rights to new money have a 7 to 10 figures implicit value. Note that these calculations are highly sensitive to the assumptions of enterprise value and market price for the new bonds. - - >