Syndication of the $1 billion credit for the recapitalization of Petroleum Geo-Services ASA was launched at a bank meeting last Thursday. The financing, led by UBS, Credit Suisse First Boston and Barclays Capital, consists of a five-year, $150 million revolver and a seven-year, $850 million term loan. Pricing is expected to be in the LIBOR plus 1 3/4%-2% range on the revolver and the LIBOR plus 2%-2 1/4% range on the term loan. PGS will also retire its existing $746 million 10% senior notes due 2010 and refinance the existing $110 million revolver. The company plans to complete the refinancing before the end of the year. At the beginning of the month it completed the redemption of its 8% senior notes due 2006.
Standard & Poor's assigned a B+ rating to the revolver and a B rating to the term loan. The ratings agency said in a release that the positive outlook it assigned to the company is based on PGS' improved operating performance over the last 12-18 months, the company's strengthened cash flow and the potential for further debt reduction. Moody's Investors Service assigned a Ba3 to the facility.
PGS is a Norwegian public limited liability company, focused on providing geological services worldwide and production services in the North Sea. It has a market capitalization of NOK9.9 billion, about $1.5 billion. In a release regarding the refinancing, PGS said it is exploring possibilities for separating into two separate independently listed companies, Geophysical and Production, in 2006. The company plans to supply more information on the separation in December. Officials at PGS could not be reached.