July 29, 2003

PGS files for Chapter 11
Seismic vessel and FPSO operator Petroleum Geo-Services ASA says it has voluntarily filed a petition for protection under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York.
PGS describes the filing as "an important development in the restructuring process which, as previously announced on June 18, 2003, is intended to, among other things, maximize recovery to stakeholders of the company and provide a solid capital structure, aligned with projected future cash flows, that can support the company's future business development. This filing follows a previously announced agreement with a majority of both the company's banks and bondholders and its largest shareholders whereby they have agreed to support the company's Plan of Reorganization (the "Plan") in the Chapter 11 case."
PGS says the case "will be at the parent company (PGS ASA) level only and will not involve the company's operating subsidiaries, which will continue full operations, leaving current and future customers, lessors, vendors, employees and subsidiary creditors unaffected. It is intended that none of the company's subsidiaries would be involved in a Chapter 11 case."
PGS says the proposed restructuring "involves a restructuring of the PGS Group's total debt to a sustainable level, from approximately US$2.5 billion to approximately US$1.3 billion. This is achieved through conversion of the existing bank and bond debt into new debt and a majority of PGS's post-restructuring equity."

The company says it also filed the Plan with the Court, which reflects the previously announced terms of the restructuring.  In summary, the major terms of the Plan are as follows:

  • PGS's US$2,140 million senior unsecured creditors ("Affected Creditors"), comprising US$680 million of bank debt and US$1,460 million of bond debt, would be entitled to select between two alternative recovery packages, one consisting of a senior unsecured term loan facility and the other consisting of a combination of unsecured notes and 91% of PGS post-restructuring equity, to be reduced to 61% after PGS shareholders acquire 30% of the total post-restructuring shares for US$85 million. Both recovery packages would be entitled to cash in excess of US$50 million, as further defined in the Plan.
  • Creditors of the PGS Group other than the Affected Creditors and holders of PGS Trust I Trust Preferreds ("Trust Preferreds") would not be affected by the restructuring and would retain their existing claims upon completion of the restructuring.
  • Holders of Trust Preferreds would be given 5% of PGS's post-restructuring equity.
  • Existing shareholders would be given 4% of PGS's post-restructuring equity and the right to acquire shares on the terms set forth above to reach 34% of the equity, underwritten by three of PGS's major shareholders, Umoe AS (US$60 million), CGG (US$22 million) and TS Industri Invest (US$3 million).
  • Under the Plan, PGS would have the right to establish a US$70 million secured working capital facility and a US$40m bonding facility.

In connection with the filing of the Plan, the company also filed with the Court a related disclosure statement (the "Disclosure Statement") that includes, among other things, background information regarding the company and the circumstances giving rise to its Chapter 11 filing, a description of the terms and conditions of the Plan (including the treatment proposed for holders of claims and interests) and relevant valuation analyses and financial projections which are updated from the analyses and projections previously disclosed on June 18, 2003.  The company has also submitted the Plan, Disclosure Statement and a draft prospectus with the Oslo Stock Exchange.  PGS intends to make available copies of the filing documents on its website at www.pgs.com .
PGS says it intends for the restructuring to be completed before the year-end 2003, following Court approval of disclosure materials and creditor and shareholder approval.

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