VGS Seismic Canada Inc.
TSX VENTURE : VGS

VGS Seismic Canada Inc.

January 10, 2008 10:33 ET

VGS Announces Payment of Bridge Loan and Completion of Convertible Debenture Financing Agreement

CALGARY, ALBERTA--(Marketwire - Jan. 10, 2008) - VGS Seismic Canada Inc. ("VGS" or "the Company") (TSX VENTURE:VGS) announces the settlement of the bridge loan from its lender, Plainfield Offshore Holdings VI Inc. ("Plainfield") for the full amount of $3,000,000 plus interest by cash payment on December 31, 2007. Funds to settle this loan were generated internally from cash re-license sales by VGS.

VGS is also pleased to announce the signing of amended credit facilities with Plainfield. The terms of the revised financing are as previously announced in VGS's press release dated November 20, 2007 and material change report filed November 23, 2007. VGS has increased its borrowing capacity under the amended credit facility from $20.0 million to $21.5 million and has extended the maturity of the credit facility by one year to February 16, 2010. In addition, the revised financing provides, among other items, that the $10.0 million in escrow is being used to fully repay the note that is convertible at $1.50 per share; $11.5 million will be available for by way of new convertible notes from which $1.5 million is for a potential normal course issuer bid if and when VGS decides to implement, subject to regulatory approval; the availability of such funds will be extended from the original date of August 16, 2007 to September 30, 2008; the new convertible notes will bear interest at 9.5% per annum as per the existing convertible notes and will be convertible at the option of Plainfield at a price equal to the volume weighted average price of the Class A shares for the twenty (20) business days immediately preceding each drawdown date, plus a conversion premium of 25%; and new financial covenant of a minimum of $6.0 million of cash EBITDA (excluding non-recurring expenses) for the fiscal year of 2007.

The board of directors of VGS formed a special independent committee, comprised solely of disinterested directors, to review and consider the revised financing and the committee recommended approval of such financing to the board (excluding the interested director) which has approved the revised financing.

Because an affiliate of Plainfield holds approximately 16% of the outstanding Class A shares of VGS, Plainfield is a "related party" and the revised financing constitutes a "related party transaction" under the policies of the TSX Venture Exchange, Ontario Rule 61-501 and Quebec Regulation Q-27 all of which required the revised financing to be approved by a majority of the Class A shares and Class B shares, voting separately (excluding the shares held by Plainfield) at a duly called meeting of the shareholders of VGS. VGS obtained from TSX Venture Exchange, Ontario Securities Commission and Quebec Securities Commission an exemption to obtain the majority approvals described above by way of written approval from the requisite number of shareholders rather than holding a shareholders meeting. Written approval of the revised financing was obtained from Class A shareholders representing 76.5% of the outstanding VGS Class A shares and from Class B shareholders representing 69.8% of the outstanding VGS Class B shares (excluding the shares held by Plainfield). The revised financing was also conditionally approved by TSX Venture Exchange.

"This revised financing provides VGS with increased liquidity and certain, flexible additional capital required to carry out growth plans, in particular the seismic data generation and acquisition program for the fall/winter of 2007-2008" said Steve Vasey, VGS's President and CEO. "The extended maturity gives VGS more time to carry out its plans and increase cash flow and the longer availability allows VGS to pursue projects at its discretion without having to pay full interest on the funds before they are deployed. This is an excellent sign of support from our lender and we look forward to growing the database and continuing to provide risk reduction for our shareholders and cost effective seismic solutions to Western Canadian oil businesses."

Based in Calgary, Alberta, VGS Seismic Canada Inc. identifies, creates and markets digital seismic data for licensing to oil and natural gas exploration companies. To date, the Corporation's growing data library is concentrated in British Columbia, Southern Alberta and Eastern Saskatchewan. VGS shares trade on the TSX Venture Exchange under the symbol VGS.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • VGS Seismic Canada Inc
    Scott Milroy
    Chief Financial Officer
    (403) 263-6050
    or
    VGS Seismic Canada Inc
    Steve Vasey
    Chief Executive Officer
    (403) 263-6050