VGS Seismic Canada Inc.
TSX VENTURE : VGS

VGS Seismic Canada Inc.

November 20, 2007 18:53 ET

VGS Announces Convertible Debenture Financing

CALGARY, ALBERTA--(Marketwire - Nov. 20, 2007) - VGS Seismic Canada Inc. ("VGS or "the Company") (TSX VENTURE:VGS) today announces its agreement with its lender, Plainfield Offshore Holdings VI Inc. ("Plainfield") to increase and amend its existing credit facility and convertible debentures.

The current credit facilities provide for borrowing capacity of $20.0 million to be issued by way of convertible notes maturing on February 16, 2009 bearing interest at 9.5% per annum and secured by a fixed and floating charge debenture over the assets of VGS. VGS has drawn down $10.0 million by convertible notes which are convertible to Class A voting shares of VGS at $0.75 per shares. The remaining $10.0 million has also been drawn down by convertible notes which are convertible to Class A voting shares of VGS at $1.50 per share, such funds are in escrow and are available for drawdown by VGS upon satisfying certain conditions precedent. Plainfield has also provided a non-convertible secured bridge loan to VGS in the amount of $3.0 million bearing interest at 9.5% per annum which is fully drawn and matures on earlier of December 31, 2007 or five (5) days after the closing of any amendment to the credit facility.

Under the revised financing VGS has increased its borrowing capacity under the 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 will be used to fully repay the note that is convertible at $1.50 per share; $11.5 million will be available for draw down 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%; new financial covenant of a minimum of $6.0 million of cash EBITDA (excluding non-recurring expenses) for the fiscal year of 2007; and the bridge loan will now mature on the earlier of the volume weighted average market price of the Class A shares for the immediately preceding twenty (20) business days being $0.40 (or greater) per share or December 31, 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.

The revised financing is subject to regulatory approvals including the approval of TSX Venture Exchange. In addition, 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 require 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. Because holding a shareholders meeting is costly and time consuming, VGS is applying to TSX Venture Exchange, Ontario Securities Commission and Quebec Securities Commission for 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. Subject to obtaining the written majority shareholder approvals described above, the revised financing will close no earlier than five business days after the date of this press release. However, the revised financing is expected to close less than 21 days from the date of filing of the material change report in respect of the revised financing because VGS requires the funding from the revised financing to assist in implementing its fall/winter seismic programs.

"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 Steven 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 and gas companies."

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