CGG : Accounting Treatment of Convertible Bonds and Notice of an Extraordinary General Meeting Nov 16th 2005
October 17 2005 - 1:00AM
PR Newswire (US)
PARIS, October 17 /PRNewswire-FirstCall/ -- - Implementation of the
IASB Policy Related to the IFRS Accounting Treatment of Convertible
Bonds Denominated in a Foreign Currency - Notice of an
Extraordinary General Meeting on November 16th 2005 Following the
confirmation of the IASB (International Accounting Standards Board)
policy published on 30 September 2005 in relation to the accounting
treatment under the IFRS regime for convertible bonds denominated
in a foreign currency, the CGG Group is required to change the
accounting treatment of its 7.75% USD 85 million convertible bonds
due 2012, issued on 4 November 2004. This change in accounting
treatment has an impact on the Group consolidated accounts dated
31/12/04 and 30/06/05 published under IFRS. It had been presented
by the Group both in principle and in terms of the estimated
potential consequences on the accounts, in the notes to the IFRS
consolidated accounts on 30/06/05 published on 8 September 2005
(note 1: Accounting Principles, Rules, et Method - Point 11). The
effects of this new accounting treatment are: - in relation to the
balance sheet, the reclassification under > of the component of
the convertible bonds originally recorded in shareholders' equity
for an amount of 10 MEUR, and the classification in each reporting
period under > of the present value of the share option
contained in the convertible bonds, - in relation to the profit and
loss account, from one statement to the next, the recording of the
variation of the present value of the share option contained in the
convertible bonds. Taking into account at the same time the
increase in the CGG share price over this period and the
strengthening of the US dollar against the euro, the value of the
share option contained in the convertible bonds has increased very
substantially over the period to approximately 34MEUR on 31/12/04,
approximately 49MEUR on 31/03/05, approximately 49MEUR on 30/06/05
and approximately 72MEUR on 30/09/05. The accounting of these
amounts as liabilities under > requires the Group from that time
to recognize in its profit and loss accounts additional financial
expenses of approximately 24MEUR for fiscal year 2004, of
approximately 15MEUR for the period of three months ending
31/03/05, of approximately 15MEUR for the period of six months
ending 30/06/05, and of approximately 38MEUR for the period of nine
months ending 30/09/05. These accounting adjustments, due solely to
the application of the IASB policy as confirmed on September 30th
2005, have no effect on the Group operating income, or on cash
flows. The Board of Directors of CGG has decided to call an
Extraordinary General Meeting of its shareholders on 16 November
2005 for the purposes of approving a change to the terms and
conditions of its 7.75% USD 85 million convertible bonds due 2012,
issued on 4 November 2004. The proposed change consists of granting
to the bondholders the right to a cash payment upon immediate
conversion of the bonds. This right shall be exercisable during a
period of two calendar days following notification thereof from the
Group. The proposed change will have been submitted for prior
approval at a general meeting of the bondholders held on 2 November
2005. The early conversion of all or part of these convertible
bonds would permit the CGG Group to immediately strengthen its
equity position and reduce its future financial charges. If 100% of
the convertible bonds were converted, the cash payment should
amount to USD 13 million, corresponding to less than twice the
total amount of annual interest payments in respect of the bonds.
The Securities will not be registered under the Securities Act and
may not be offered or sold in the United States absent registration
or an applicable exemption from the registration requirements of
the Securities Act. The information included herein contains
certain forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the U.S.
Securities Exchange Act of 1934. These forward-looking statements
reflect numerous assumptions and involve a number of risks and
uncertainties as disclosed by CGG from time to time in its filings
with the Securities and Exchange Commission. Actual results may
vary materially from those disclosed in forward-looking statements.
Contacts : Michel PONTHUS +(33)-1-64-47-37-38 Christophe BARNINI
+(33)-1-64-47-38-11 Email: Internet: http://www.cgg.com/
DATASOURCE: Compagnie Generale de Geophysique (CGG) CONTACT:
Contacts : Michel PONTHUS, +(33)-1-64-47-37-38 Christophe BARNINI,
+(33)-1-64-47-38-11 Email:
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