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Rating Action:

Moody's assigns (P)Ba3 rating to CGG's new senior notes; placed under review for downgrade

Global Credit Research - 14 Apr 2014

London, 14 April 2014 -- Moody's Investors Service has today assigned a (P)Ba3 rating to CGG SA's (CGG or the company) envisaged EUR360 million senior notes due 2020, under review for downgrade. Moody's has also placed the ratings on all pari-passu senior notes (rated Ba3) under review for downgrade.

CGG's corporate family rating (CFR) at Ba3, probability of default rating (PDR) at Ba3-PD, and Baa3 ratings on the senior secured bank facilities issued by CGG SA and CGG Holding (U.S.) Inc are unchanged.

Moody's issues provisional ratings in advance of the final sale of securities. Upon closing of the transaction and a conclusive review of the final documentation, Moody's will endeavour to assign definitive ratings. A definitive rating may differ from a provisional rating.

RATINGS RATIONALE

The review for downgrade reflects uncertainties over the final amount of convertible bonds in the company's capital structure, depending on the use of proceeds from the EUR360 million senior notes due 2020 being launched by CGG.

Concurrent with the issuance of the new senior notes, CGG is launching a tender offer for its convertible bonds due in 2016. These bonds do not benefit from any guarantees from operating subsidiaries (guarantors of the senior notes represented approximately 36% of CGG's consolidated revenues for the year ended 31 December 2013), and hence are effectively subordinated, to the extent of the guarantees, to all the group's other debt. The refinancing of this class of debt by the senior notes will lead to reduction in debt cushion for the senior notes, which could result in a one notch downgrade of the senior notes depending on the percentage of convertible bonds redeemed. The transaction is leverage neutral and consequently has no impact on the CFR or PDR. The Baa3 ratings on the senior secured bank facilities are likewise not impacted by changes to the capital structure which are all at a more junior level.

The company is likely to use any bond proceeds not used to redeem the convertible bonds to repay existing debt of the same ranking.

The review will therefore focus on the structural considerations associated with the new capital structure, and should conclude shortly after completion of the transaction.

PRINCIPAL METHODOLOGY

The principal methodology used in this rating was the Global Oilfield Services Rating Methodology published in December 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

CGG ranks among the top three players in the seismic industry. It is listed on both Euronext Paris and the New York Stock Exchange, with a market capitalization of EUR2.1 billion as of 14 April 2014.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Peter Firth
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Chetan Modi
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's assigns (P)Ba3 rating to CGG's new senior notes; placed under review for downgrade
No Related Data.
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