Veritas and PGS Amend Merger Agreement

Veritas and Petroleum Geo-Services have signed an amendment to the agreement reached on November 26, 2001 to combine the two companies. The amendment provides for various changes to the November 2001 merger agreement, including the following:

  • PGS shareholders will receive 0.38 shares of the new holding company for each PGS share or American Depositary Share and Veritas shareholders will receive one share of such new holding company to accomplish the combination. This exchange ratio will result in Veritas shareholders owning approximately 45% and PGS shareholders owning approximately 55% of the new company;
  • Veritas will be entitled to nominate six of the proposed ten directors of the new company while PGS will be entitled to nominate four directors;
  • David B. Robson, the Chief Executive Officer of Veritas, will be the Chief Executive Officer of the new company and Reidar Michaelsen, the Chairman and Chief Executive Officer of PGS, will be the Chairman of the Board;
  • Matthew D. Fitzgerald, the Chief Financial Officer of Veritas, will be the Chief Financial Officer of the new company; and
  • the transaction is conditioned on Veritas being treated as the acquirer for accounting purposes.

Several conditions to closing have been removed from the merger agreement including those related to PGS employment contracts and oil and gas prices. The closing condition related to Atlantis has been replaced by a right for either party to terminate the transaction during a brief period just prior to the commencement of the PGS exchange offer and the solicitation of proxies from the Veritas shareholders, upon a payment of $7.5 million, if one of the following events does not occur by that time: a) sale of the Atlantis subsidiary for at least $195 million; or b) receipt of a commitment for the placement or sale of equity or equity-linked securities that will yield proceeds to the new company of at least $200 million; or c) sale by PGS of other assets for at least $200 million, or d) a combination of equity commitments or asset sales of at least $200 million. Consequently, if neither party elects to exercise its termination right, the transaction will proceed even though none of the above events have occurred. The transaction remains conditioned upon, among other things, the approval of a majority of Veritas shareholders, listing of the new holding company's shares on the NYSE and customary regulatory approvals, most of which have already been obtained. The transaction also requires 90 percent of PGS shareholders to exchange their shares for the new holding company's shares.

The companies expect the transaction to be completed late in the third quarter or early fourth quarter 2002. The new company also intends to pursue the listing of its shares on the Oslo and Toronto stock exchanges.

Commenting on the transaction Reidar Michaelsen, the Chairman and Chief Executive Officer of PGS, and Dave Robson, Chairman and Chief Executive Officer of Veritas, said, "While completing this transaction has been a challenge, the compelling benefits of a business combination for both companies have led all of the parties concerned to continue to work towards a solution that meets all of the major objectives. This amendment achieves those objectives. With the ongoing consolidation among our customers and the need to continue to make substantial investments in technology, people, equipment and data, this is an opportune time for this combination. We will be uniquely positioned to offer our customers a much broader array of sophisticated 2D, 3D and 4D geophysical data and services in highly prospective areas around the world. The new company will have a talent pool that is unparalleled in the industry and we will have the benefits of diversification with a world class production company that offers greater stability in cash flows throughout the cycles."


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