Each one in plain English, with the numbers worked through for a shareholder.
29 Feb 2016material agreement▼ BadMajor
On Feb 26, 2016 ION signed a support agreement with holders of over two-thirds of its $175M 2018 second-priority notes, who agreed to tender in a proposed exchange offer. Each $1,000 of old notes would get $1,000 of new 9.125% second-priority notes due 2021 plus ten ION common shares, with up to $15.0M cash buyback via a Dutch auction at $430-$600 per $1,000, and the old notes' collateral released. This would dilute existing shareholders through new share issuance (an inference from the ten-shares-per-note term); it needs 90% participation and is not guaranteed to close.
The NYSE notified ION on Aug 11, 2015 that its 30-trading-day average share price ($0.98 as of Aug 7) was below the $1.00 minimum. ION has six months to regain compliance (possibly longer if shareholder approval is needed); shares keep trading meanwhile, but failing to cure would lead the NYSE to start delisting procedures.
ION cut its PNC revolver from $80.0M to $40.0M, raised borrowing margins (base-rate margin 1.50% to 2.50%; LIBOR margin 2.50% to 3.50%), added a 0.75% unused line fee, and dropped the maximum senior secured leverage covenant; nothing was drawn. The same filing carried Q2 2015 results: revenue $36.8M, adjusted net loss $44.7M, net income $56.1M helped by $100.8M of special items mainly a partial reversal of a litigation reserve, cash $117.1M. The WesternGeco lawsuit is named as a risk to results and liquidity. Brian Hanson is now President and CEO.
On August 22, 2014, ION signed a new PNC Bank-led credit facility replacing the 2010 China Merchants Bank facility. It allows up to $175.0M in total: a $125.0M revolver (lenders committed $80.0M, with $45.0M subject to accordion provisions and a borrowing base) plus an uncommitted term facility of up to $50.0M. Nothing was drawn at filing; revolver matures at the earlier of Aug 22, 2019 or 90 days before the 2018 notes mature (unless refinanced). It is secured by substantially all assets of the borrowers and limits dividends and buybacks.
ION filed Amendment No. 1 to its S-4 for an exchange offer, letting holders swap the $175.0M of 8.125% second-priority notes due 2018 (issued May 2013 in an unregistered sale) for identical notes registered with the SEC. This continues the Feb 2014 S-4 filing; the filing says ION gets no cash and no debt or capitalization change results. The offer's expiration date is still blank, so it is not yet effective.
ION dismissed Ernst & Young as its auditor on March 20, 2014, and engaged Grant Thornton for the year ending December 31, 2014; the Audit Committee approved the change. The filing states E&Y's reports for 2012 and 2013 were unqualified and there were no disagreements. The only reportable event was the 2013 cash flow presentation material weakness, which the filing says was reported as remediated at Dec 31, 2013. No reason for the change is given.
ION filed a registration statement for an exchange offer, swapping the unregistered $175M 8.125% second-priority notes due 2018 (issued May 2013) for identical registered notes. It receives no cash proceeds and debt and capitalization do not change; this fulfils the registration rights agreement from the note sale. It does not involve a business combination, despite the form type. The filing also describes OceanGeo B.V. (formerly GeoRXT B.V.) as a joint venture in which ION owns 70%.
On Nov 12, 2013 ION said its Q1 and first-half 2013 cash flow statements should no longer be relied on, because spending on its multi-client seismic data libraries was shown under operating rather than investing activities (e.g., Q1 operating cash flow restated from $34.3M to $49.6M). The company says balance sheets, income statements, cash balances and liquidity are unaffected, but it reported a material weakness in controls over cash flow statements and delayed its Q3 10-Q (expected by Nov 18, 2013). This is a new accounting issue, separate from the 2009 China sales restatement.
13 May 2013security holder rights change● NeutralMajor
ION completed a private sale of $175M of 8.125% Senior Secured Second Priority Notes due May 15, 2018 on May 13, 2013, secured behind the China Merchants Bank credit facility and guaranteed by three US subsidiaries. Proceeds are intended to repay outstanding borrowings under that bank facility and for general purposes, including possible further capital contributions to its GeoRXT B.V. seabed seismic joint venture. ION also agreed to register an exchange offer for the notes.
ION amended its March 2010 senior credit facility with China Merchants Bank (which replaced the old HSBC-led facility) on May 29, 2012. The $98.25M term loan was converted into revolving debt, total revolving capacity rose to $175.0M (from $100.0M), interest margins fell (2.5% to 1.4% and 3.5% to 2.4%), and ION Sàrl and other foreign subsidiaries were released. The INOVA JV (49% ION, with BGP) still provides a stand-by letter of credit backing ION's obligations.
31 Mar 2010asset acquisition disposition▲ GoodMajor
The BGP deal closed on March 25, 2010. ION issued BGP 23,789,536 shares at $2.80 (10,204,082 from converting the domestic convertible note and 13,585,454 bought for about $38.0 million cash), leaving BGP with about 16.62% of ION. ION and BGP formed the INOVA Geophysical joint venture, with BGP taking 51%. The old bank credit facility was refinanced with a new one, and the warrant and the October 2009 registration rights agreement were terminated. BGP gets a board seat (Guo Yueliang, expected around April 1, 2010), pre-emptive rights to keep its ownership share, and a standstill until March 25, 2014. This resolves the October 2009 term sheet and the bridge financing, and existing holders are diluted by the new shares (inference).
25 Mar 2010material agreement termination▲ GoodMajor
On March 19 and 24, 2010 ION signed the final BGP agreements, which replace the October 2009 term sheet. BGP will buy 23,789,536 ION shares at $2.80 and 51% of the INOVA Geophysical land-equipment joint venture for $108.5 million cash plus 49% of a BGP subsidiary. Of the shares, 10,204,082 come from converting the $28.6 million domestic convertible note (now assigned from Bank of China to BGP) and 13,585,454 are bought for about $38.0 million cash. BGP would hold about 16.62% of ION and may nominate a director. A new bank credit facility will refinance the existing one at closing, expected around March 25, 2010. This continues and firms up the October 2009 deal.
ION reported that it never launched the employee option exchange program shareholders approved on May 27, 2009, and has no current plans to launch it or a similar program. This closes the open thread on that program. The filing is a notice with no transaction value.
ION said its unaudited second-quarter 2009 results can no longer be relied on and will be restated. It had booked revenue on a FireFly land seismic system sale in China that should not have been recognized, because a sales employee did not forward all the documentation. This lowers Q2 revenue by about $11.3 million and widens the Q2 operating loss from about $0.2 million to $7.5 million. About $3.3 million of extra stock compensation expense for 2006-2008 is also included. The problem surfaced during due diligence for the BGP deal; the customer has accepted the system and payment is expected in Q4 2009. A 10-Q/A is expected by November 9, 2009, and Ernst & Young has not audited the adjustments.
27 Oct 2009capital raising announcement● NeutralMajor
On October 23, 2009 ION signed a binding term sheet with BGP (a China National Petroleum Corporation subsidiary and long-time customer) for a joint venture in ION's land-based seismic equipment business. BGP would pay $108.5 million cash for 51% of the JV, buy shares at $2.80 to reach 19.99% held with any shares from the bridge loan and warrant, and arrange a new $100.0 million credit line and a refinancing of the term loan (about $106.3 million outstanding at Sept 30, 2009). Alongside, the sixth credit amendment raised the revolver from $100.0 million to $140.0 million, added Bank of China as a lender, and relaxed or waived some covenants. ION drew a $40.0 million convertible bridge loan from Bank of China on Oct 27, 2009 and issued BGP a warrant. Closing is subject to US and Chinese approvals including CFIUS review, with an outside date of March 31, 2010 and a $5.0 million break-up fee for either side. This follows the mid-2009 financing scramble (Jefferies bridge repaid, share placement, ICON loan) and is a new strategic partner. Existing holders face dilution (inference).
ION's ARAM subsidiaries took a $20.0 million secured equipment loan from ICON ION, LLC ($12.5 million advanced June 29, 2009, up to $7.5 million more due July 17), secured by ARAM seismic rental equipment and guaranteed by ION. It carries a fixed 15% interest rate, matures July 31, 2014, and is for working capital and general corporate purposes. This is the optional equipment financing the credit amendment had allowed.
15 June 2009material agreement termination▲ GoodMajor
On June 9, 2009 ION repaid the full $40.8 million Jefferies Bridge Loan (due January 31, 2010), using about $3.0 million of cash and about $38.0 million from the share sale. This closes out the bridge debt from the 2008 ARAM acquisition financing.
ION announced it closed the private placement of 18,500,000 shares at $2.20 (about $40.7 million gross) on June 4, 2009. The press release also includes its estimated ranges for 2009 results, but the figures are not in the filing text.
What it means for a shareholder
18.5m new shares at $2.20 to raise about $40.7m. Shares on issue before the raise aren't in the record, so the dilution can't be worked out.
ION agreed to sell 18,500,000 new shares at $2.20 each (about $40.7 million gross, about $38.0 million net) to seven investors, versus a $3.04 closing price that day, to repay the Jefferies bridge loan along with about $3.0 million of cash. It also amended its bank credit agreement (fifth amendment) with looser financial covenants and higher interest margins if leverage exceeds 2.25 to 1.0. The filing says management expected it would probably breach covenants by September 30, 2009 without action. Existing shareholders face dilution from the new shares (inference).
ION filed its definitive proxy statement (April 23, 2009) containing the same employee option-exchange proposal for the May 27, 2009 annual meeting. The program still has not started and needs stockholder approval. The filing itself adds no new terms.
ION filed its preliminary proxy statement and flagged a proposal, to be voted on at the May 27, 2009 annual meeting, letting employees (not the CEO or directors) swap high-priced stock options for shares of common stock. The exchange has not started and cannot be completed without stockholder approval. This is a preliminary notice, not an offer.
ION refinanced the debt taken on for the September 2008 ARAM acquisition: a new $40.8 million Bridge Loan from Jefferies replaced the short-term note, the $35.0 million senior seller note was restated as a subordinated note now due September 2013 (previously September 2009), and the $10.0 million subordinated seller note was cancelled in exchange for a Canadian tax refund claim. The planned $175 million senior notes offering could not be completed because of credit market conditions, so ION repaid $72.0 million of revolver debt from its own cash. The senior credit facility was amended again, including higher interest margins (175 to 287.5 basis points) and permission to adopt a shareholder rights plan. The $35.0 million purchase price escrow was ended and the sellers released from certain indemnity obligations.
4 Dec 2008security holder rights change● NeutralMajor
ION's 20-day average share price ($4.3280) fell below the $4.4517 minimum in its agreement with Fletcher International, which holds all of its Series D preferred stock. ION chose to reset the conversion price to $4.4517 and end Fletcher's right to redeem the preferred, so dividends must now be paid in cash. Fletcher also gave notice raising the cap on shares it can receive to 9,669,434 from Feb 1, 2009 (about 8.85% of outstanding common stock).
