Viridien · EURONEXT:VIRI

Viridien — CGG — Q2 2017 Earnings Presentation

39 slides from Viridien's earnings presentation, 2017

1. Slide 1: 2nd Quarter 2017 Financial Results

   2nd Quarter 2017 Financial Results Quarterly EBITDA boosted by solid multi-client sales Focused on the swift delivery of our financial restructuring All results are presented before Non-Recurring Charges & write-off, unless stated otherwise

2. Slide 2: Forward-looking statements

   Forward-looking statements This presentation contains forward-looking statements, including, without limitation, statements about CGG (“the Company”) plans, strategies and prospects. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore,

3. Slide 3: Agenda

   Agenda  Q2 2017 operational review  Q2 2017 financial review  Financial restructuring in progress  Outlook  Appendix 3

4. Slide 4: Q2 highlights: EBITDA boosted by multi-client sales

   Q2 highlights: EBITDA boosted by multi-client sales  Revenue at $350m  GGR up 12%, with solid multi-client quarterly sales  Still low Equipment sales  Contractual data acquisition up due to good marine operational performance in very challenging market conditions  EBITDAs at $120m Sercel Wirele

5. Slide 5: Maintaining strong operations through swift delivery of the financial restructuring plan

   Maintaining strong operations through swift delivery of the financial restructuring plan  Nordic debt restructuring completed on April 20  Company financial restructuring proposal on May 12  Agreement in principle with a majority of secured lenders and a majority of unsecured lenders reached on J

6. Slide 6: Q2 2017 Operational Review

   Q2 2017 Operational Review Passion for Geoscience cA Cc G G

7. Slide 7: GGR: solid multi-client sales boosted by licensing rounds

   GGR: solid multi-client sales boosted by licensing rounds Revenue  Total revenue at $221m, up 12% y-o-y (In million $) MC Revenue SI & Reservoir  Multi-Client at $133m, up 39% y-o-y 221 196  Multi-client sales particularly active in Gulf of Mexico (US & Mexico) and Brazil 158 96 133  Prefunding

8. Slide 8: Equipment: persistent low volumes

   Equipment: persistent low volumes Revenue (In million $)  Total sales at $53m, up 20% y-o-y Land Equipment Marine Equipment  Sales split: 49% Land and 51% Marine 53  Land sales: equipment delivered to Algeria and India; 44 active gauges business 32 27  Marine sales: low marine sales including so

9. Slide 9: Contractual Data Acquisition: continuing competitive market environment

   Contractual Data Acquisition: continuing competitive market environment Revenue  (In million $) Total revenue at $82m, up 39% y-o-y Land & MP Marine  Marine revenue at $61m, up 173% y-o-y  52% allocation to marine contractual activities (71% in Q1 82 2017) 67 21 59  Outstanding fleet operational

10. Slide 10: Non-Operated Resources (N.O.R)

    Non-Operated Resources (N.O.R) OPINC  EBITDAs at $(2)m (In million $)  Operating Income at $(5)m Q2 2016 Q1 2017 Q2 2017  Amortization of excess streamers (5)  Global Seismic Shipping (GSS) (20) (23)  50/50 with Eidesvik, accounted for in Equity from Investments  3 active vessels and 4 cold-st

11. Slide 11: Q2 2017 Financial Review

    Q2 2017 Financial Review Passion for Geoscience cA Cc G G

12. Slide 12: Q2 2017 P&L

    Q2 2017 P&L In Million $ Q2 2016 Q1 2017 Q2 2017 Total Revenue 290 249 350 Group EBITDAs excluding NOR 109 37 122 NOR (5) (8) (2) Group EBITDAs 104 29 120 Group OPINC excluding NOR 0 (47) 2 NOR (23) (20) (5) Group OPINC (22) (67) (3) Equity from Investments (5) 3 (3) Net financial costs (44) (48) (4

13. Slide 13: Strong EBITDA but negative FCF as expected

    Strong EBITDA but negative FCF as expected EBITDAs  EBITDAs at $120m, up 16% y-o-y (In million $) 120 104  Operating Cash Flow at $52m, down (61)% y-o-y  As anticipated, negative working capital effect at $(57)m in Q2 2017 compared to $+15m in Q2 2016 35.8% 34.3% 29 11.5%  Capex at $78m, down (3

14. Slide 14: Debt increase

    Debt increase Debt and Liquidity by end June  Group Net Debt at $2,497m as of June 2017  Group Liquidity at $315m  Maintenance covenants not applicable at June-end, as a result of French Safeguard and US Chapter 11 procedures 14 * Negative FCF including cash NRC

15. Slide 15: Liquidity rapidly tightening

    Liquidity rapidly tightening 15

16. Slide 16: Financial Restructuring in progress

    Financial Restructuring in progress 16

17. Slide 17: CGG's priorities

    CGG’s priorities  Protect the corporate interest of the Company and the full value of its businesses  Timetable to deliver the targeted financial restructuring is of the essence in the present market environment  Preserve the Group’s integrity  Highly interlinked technologies, production units a

18. Slide 18: Financial restructuring objectives met (1/2)

    Financial restructuring objectives met (1/2)  Norwegian legacy Maritime Liabilities and Nordic Debt fully addressed in Q1  c. $200m nordic debt externalization and extension from 2019 up to 2027 Maritime Costs Profile as of 31/12/2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Maritime

19. Slide 19: Financial restructuring objectives met (2/2)

    Financial restructuring objectives met (2/2)  Full Equitization of the principal amount of the unsecured debt leading to substantial Group deleveraging  $1.9bn coming from $1.5bn Senior Notes and $0.4bn Oceanes  Extension of the maturity of the secured debt to 2023, 5 years from restructuring clo

20. Slide 20: Restructuring of the debt according to its seniority

    Restructuring of the debt according to its seniority Gross amount Restructuring Maturity extended by + Secured debt c. $800m fully secured and guaranted 5 years to 2023 Up to $150m repayment No claim equitization Level of seniority Full equitization at €3.12 per share c. $1,500m unsecured High Yield

21. Slide 21: Pre-arranged restructuring in France and in the US

    Pre-arranged restructuring in France and in the US  Comprehensive Safeguard proceeding  Opening of French Safeguard proceedings (procédure de sauvegarde) in respect of CGG SA, the group parent company, on June 14, 2017  Helene Bourbouloux, former mandataire ad hoc, appointed as judicial administr

22. Slide 22: $2.1bn net debt reduction by YE 2017 on pro forma basis

    $2.1bn net debt* reduction by YE 2017 on pro forma basis  Net Debt before restructuring  Net Debt after restructuring  $2.45bn by YE 2016  $0.45bn by YE 2016 (pro forma basis)  $2.85bn target by YE 2017  $0.725bn target and pro forma by YE 2017 = $(2.1)bn reduction 22 * Net Debt including Capi

23. Slide 23: Senior debt profile: maturities moved to 2023/2024

    Senior debt profile: maturities moved to 2023/2024  Senior debt down from $2.75bn before Restructuring to $1.1bn post restructuring  Maturities extended to January 2023 and January 2024, assuming January 2018 for the Restructuring completion date  Average cost of debt at 7.0% cash + 5.0% PIK  c.

24. Slide 24: Group Leverage: back below 2x beginning of 2018

    Group Leverage: back below 2x beginning of 2018 Based on mid-point of Business Plan targets, post Restructuring, Net Financial Debt* over EBITDA ratio below 2x 24

25. Slide 25: Group Liquidity: $1bn improvement at YE 2019 horizon

    Group Liquidity: $1bn improvement at YE 2019 horizon Restructuring Savings (over 2017-2019) Additional Liquidity  ML mitigation & Nordic Loan: c. $300m  Net New Money: c. $300m  Cost of Debt reduction net of fees: c. $200m  Basket allowing for new Secured debt: c. $200m 25

26. Slide 26: Outlook

    Outlook (ccc cgg.com Passion for Geoscience

27. Slide 27: Next steps

    Next steps  Voting commitments received in favor of the Plan  Required qualified majorities provided from different creditors categories  Creditors’ committees/ bondholders general meeting for French Safeguard proceeding in respect of CGG S.A.  To be held on July 28  Creditors vote for prearran

28. Slide 28: Shareholder to participate to the Company recovery

    Shareholder to participate to the Company recovery PSR* + 2 sets of warrants for shareholders Warrant #2 Warrant #1 5-year maturity 4-year maturity 1 given for 1 new share 1 given for 1 existing share subscribed through the right issue 3 warrants to subscribe to 4 new shares at €3.12 3 warrants to s

29. Slide 29: Outlook: 2017 market outlook unchanged

    Outlook: 2017 market outlook unchanged  Unchanged 2017 guidance  2017 operating results expected to be in line with 2016  Multi-client cash capex expected to be at $250-300m, with cash prefunding rate above 70% and industrial capex at $75-100m  Cash generation expected to be lower in 2017 due to

30. Slide 30: Appendix

    Appendix Details of the June 14, 2017 announcement

31. Slide 31: Shareholding post financial restructuring

    Shareholding post financial restructuring Post Debt Including Shareholding Pre New Money (Pre Penny Warrants) Equitisation Warrants 1 Existing shareholders 4,4% 9,8% Convertible bondholders 7,0% 6,6% Senior Notes holders 88,5% 83,6% Total 100% 100% Post Debt Including Including Shareholding Post New

32. Slide 32: Equitization of the Unsecured Debt

    Equitization of the Unsecured Debt SUMMARY OF MAIN ECONOMIC TERMS  HYB: up to $86m accrued and unpaid interest to be paid on closing with new HY Bonds1 Treatment of the Unsecured Debt Coupon  CB: $5m2 accrued and unpaid interest to be paid on closing in cash  HYB outstanding amount of c.$1,545m23

33. Slide 33: New Money

    New Money SUMMARY OF MAIN ECONOMIC TERMS  Issuing New Shares at $1.75 coupled with Warrants #2 with a strike price per new share of $4.5 / 5 year maturity  Each new money share gives access to 1 warrant #2. 3 Warrants # 2 give right to subscribe to 2 new shares $125m Rights Issue  Open to all exi

34. Slide 34: Agreement: Governance

    Agreement: Governance  The structure and composition of the Company’s board of directors after completion of the Restructuring will be determined in consultation with DNCA and the members of the Ad Hoc Senior Noteholder Committee who will have become and remain shareholders of the Company. Governan

35. Slide 35: Headline Terms of the Agreement: Secured Lenders 1/2

    Headline Terms of the Agreement Secured Lenders (US & French RCF and TLB) – 1/2 AREAS TO BE ADDRESSED HEADLINE TERMS1 Borrower  CGG Holdings (US) Inc.  Bond format Form  NY Law  Adjusted guarantee package compared to existing package, reflecting release of following guarantors: CGG MRN, CGG Hold

36. Slide 36: Headline Terms of the Agreement: Secured Lenders 2/2

    Headline Terms of the Agreement Secured Lenders (US & French RCF and TLB) – 2/2 AREAS TO BE ADDRESSED HEADLINE TERMS  Callable at par (in whole but not in part) at any time during the first 6 months after Closing Date (for avoidance of doubt from end of month 3 until end of month 6 the repayment wi

37. Slide 37: Headline Terms of the Agreement - New HYB Terms (1/2)

    Headline Terms of the Agreement - New HYB Terms (1/2) AREAS TO BE ADDRESSED HEADLINE TERMS  CGG SA Issuer  Format: US$ documentation consistent with existing US$ HYB  $375m in cash Amount  (i) USD Tranche and (ii) EUR Tranche for up to USD100 million  Up to $86m from the payment of accrued and

38. Slide 38: Headline Terms of the Agreement - New HYB Terms (2/2)

    Headline Terms of the Agreement - New HYB Terms (2/2) AREAS TO BE ADDRESSED HEADLINE TERMS  Year 1: 120%  Year 2: 120% Call  Year 3: 112.5%  From Year 4: par  Incurrence based covenants only, consistent with existing US$ HYB due 2022 subject to increase in baskets for Covenants operational purp

39. Slide 39: Thank you

    Thank you (ccc Visit our website at cgg.com Passion for Geoscience

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