Annual Report 2011 - PGS

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Notes to the consolidated financial statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS annum payable semi-annually in arrears. The equity element of the convertible notes was calculated to 17.1% of the nominal value ($68.4 million) and was recorded to shareholders’ equity, net of allocated portion of loan costs and taxes. In November 2011 the company issued $300 million Senior notes which are due in December 2018. The Senior notes were issued at 98.638% of the principal amount with a coupon of 7.375%. The Senior notes are ranked as senior obligations of the company and rank equally in right of payment with all other existing and future senior debt. At any time prior to December 15, 2015, the Company may redeem the Notes at its option, in whole or in part, at a redemption price equal to 100% of the principal amount thereof plus the Applicable Premium as of, and accrued and unpaid interest to, the date of redemption. Applicable Premium means the greater of (i) 1.0% of the principal amount of the Senior notes; and (ii) the excess of (a)the present value at such Redemption Date of the Redemption Price of the Note at December 15, 2015 (such Redemption Price being set forth in the table appearing below plus all required interest payments due on the Note during the period from such Redemption Date through December 15, 2015 (excluding accrued but unpaid interest), computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points, over (b)the principal amount of the Note, if greater. The Notes will also be redeemable at the Company’s option on or after December 15, 2015, in whole or in part, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest thereon to the applicable redemption date, if redeemed during the 12-month period beginning December 15 of the years indicated below: Year Percentage 2015 103.688% 2016 101.844% 2017 and thereafter 100.000% Bank credit facilities Under the senior secured credit facility established in June 2007 the Company has an RCF of $350 million originally maturing in 2012. In January 2011 the maturity was extended to 2015. The RCF has a $45 million sub-limit for issuance of letter of credits, whilst the bonding facility (for issuance of bid and performance bonds) included in this sub-limit under the previous RCF was in June 2007 replaced by a separate $15 million bonding facility (later increased to $30 million). The Company may borrow USD, or any other currency freely available in the London banking market to which the lenders have given prior consent, under the RCF for working capital and for general corporate purposes. Borrowings under the RCF bear interest at a rate equal to LIBOR plus a margin of 1.5% increased to 2.25% from January 25, 2011. At December 31, 2011 and 2010, the Company had zero outstanding in cash advances, and zero and $3.6 million, respectively, of standby letters of credit were outstanding under the RCF with an applicable margin of 1.5% per annum, and $0.1 million and $2.3 million, respectively, of bid and performance bonds were drawn under the separate committed bonding facility of $30 million, with an applicable margin of 1.4%. The Company has further a smaller $2 million and $10 million uncommitted bid and performance bond facilities intended for regional use. The Company also has an overdraft facility of NOK 50 million as part of our Norwegian cash pooling arrangement. This facility will continue until cancelled. Covenants The June 2007 credit facility contains financial covenants and negative covenants that restrict the Company in various ways. The facility provides that: • for the RCF part the total leverage ratio (see Note 26 for definitions of leverage ratios) may not exceed 3.00:1.0 in 2010 and 2.75:1.0 thereafter (maintenance covenant). The Term Loan has an incurrence test saying the Company cannot increase total leverage above 3.25:1.0 in 2010 and 3.00:1.0 in later test periods (rolling last 4 quarters). In addition, the credit agreement restricts or could restrict our ability, among other things, to sell assets without the sales proceeds being reinvested in the business or used to repay debt; incur additional indebtedness or issue preferred shares; prepay interest and principal on our other indebtedness; pay dividends and distributions or repurchase our capital stock; create liens on assets; make investments, loans, guarantees or advances; make acquisitions; engage in mergers or consolidations; enter into sale and leaseback transactions; engage in transactions with affiliates; amend material agreements governing our indebtedness; change our business; enter into agreements that restrict dividends from subsidiaries; and enter into speculative financial derivative agreements. The Company is in compliance with the covenants in its loan and lease agreements as of December 31, 2011. Pledged assets Certain seismic vessels and seismic equipment with a net book value of $55.1 million at December 31, 2010 were pledged as security under the Company’s short-term and long-term debt. As per above the mortgage note was repaid in 2010 and the mortgages were discharged in 2011. In addition shares in material subsidiaries have been pledged as security. Letters of credit and guarantees The Company had aggregate outstanding letters of credit and related types of guarantees, not reflected in the accompanying consolidated financial statements, of $11.9 million and $63.7 million as of December 31, 2011 and 2010, respectively. 29 PGS ANNUAL REPORT 2011 100 PGS Annual Report 2011
Notes to the consolidated financial statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 26 - Financial Instruments Fair values of financial instruments The carrying amounts of cash and cash equivalents, restricted cash, accounts receivable, accrued revenues and other receivables, other current assets, accounts payable and accrued expenses approximate their respective fair values because of the short maturities of those instruments. The carrying amounts and the estimated fair values of debt and derivatives instruments are summarized as follows: Carrying amounts December 31, 2011 December 31, 2010 Notional amounts Fair values Carrying amounts Notional amounts Fair values (In thousands of dollars) Loans measured at amortized cost: Long-term debt, current portion of long-term debt and deferred loan cost (Note 25) 954,318 --- 939,011 790,166 --- 768,718 Derivatives measured at fair value through consolidated statement of comprehensive income: Interest rate swaps/future interest rate agreements, net unrealized (loss) gain (a) (25,535) 500,000 (25,535) (28,117) 300,000 (28,117) Derivatives measured at fair value through consolidated statement of operations: Forward exchange contracts, net unrealized (loss) gain (a) (4,552) 139,472 (4,552) (35) 240,457 (35) Interest rate differential UK lease (Note 27) (2,693) --- (2,693) (5,774) --- (5,774) (a) The carrying amounts of forward exchange contracts and interest rate swaps are classified in the consolidated statements of financial position as follows: December 31, (In thousands of dollars) 2011 2010 Forward exchange contracts, net (qualifying hedges) (1,338) --- Interest rate swaps, net (qualifying hedges) (25,535) (28,117) Forward exchange contracts, net ( 3,214) (35) Total (30,087) (28,152) Classified as follows: Other current asset (short-term unrealized gain) (Note 17) 170 4,366 Other long-lived assets (long-term unrealized gain) (Note 21) --- 21 Accrued expenses (short-term unrealized loss) (Note 28) (10,226) (4,075) Other long-term liabilities (long-term unrealized loss) (Note 29) (20,031) (28,464) Total (30,087) (28,152) PGS ANNUAL REPORT 2011 30 PGS Annual Report 2011 101
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Operations Annual Report 2011 www.p
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Key Financial Figures Key Financial
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Operations PGS Annual Report 2011 2
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Operations in 2011. The performance
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Operations Data Processing and Tech
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