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Republic of France | 1382 | Not Applicable | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
Thierry Le Roux | Thomas N. O’Neill III, Esq. | Larry L. Worden, Esq. | Jeffery B. Floyd, Esq. | |||
Group President and Chief Financial Officer | Linklaters | Vice President, | Vinson & Elkins L.L.P. | |||
Compagnie Générale de Géophysique | 25, rue de Marignan | General Counsel and Secretary | 2300 First City Tower | |||
Tour Maine-Montparnasse | 75008 Paris | Veritas DGC Inc. | 1001 Fannin | |||
33, avenue du Maine | France | 10300 Town Park Drive | Houston, Texas 77002- 6760 | |||
BP 191 | +33 1 56 43 58 82 | Houston, Texas 77072 | (713) 758-2222 | |||
75755 Paris Cedex 15 | (832) 351-8300 | |||||
France +33 1 64 47 45 00 |
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The information contained herein is subject to completion or amendment. No securities may be sold until a registration statement filed with the U.S. Securities and Exchange Commission is effective. This preliminary proxy statement/ prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale is not permitted or would be unlawful. |
Sincerely, | |
Thierry Pilenko | |
Chairman of the Board of Directors and | |
Chief Executive Officer | |
Veritas DGC Inc. |
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1. to consider and vote on the proposal to adopt the Agreement and Plan of Merger, dated as of September 4, 2006 (which we refer to as the merger agreement), by and among Veritas, CGG, Volnay Acquisition Co. I and Volnay Acquisition Co. II, as this agreement may be amended from time to time; and | |
2. to transact any other business that may properly come before the special meeting or any adjournment or postponement of the special meeting. |
By Order of the Board of Directors of | |
Veritas DGC Inc., | |
Larry L. Worden | |
Vice President, General Counsel and Secretary |
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Compagnie Générale de Géophysique Tour Maine – Montparnasse 33, avenue du Maine BP 191 75755 Paris Cedex 15, France +33 1 64 47 45 00 Attention: Investor Relations www.cgg.com | Veritas DGC Inc. 10300 Town Park Drive Houston, Texas 77072 (832) 351-8300 Attention: Investor Relations www.veritasdgc.com |
• | “$” and “U.S. dollar” each refer to the United States dollar; | |
• | “€” and “euro” each refer to the euro, the single currency established for members of the European Economic and Monetary Union since January 1, 1999; and | |
• | “NOK” refers to Norwegian kroner. | |
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Agreement and Plan of Merger | A-1 | |||||||
Opinion of Goldman, Sachs & Co. | B-1 | |||||||
Opinion of Credit Suisse Securities (USA) LLC | C-1 | |||||||
Opinion of Rothschild, Inc. | D-1 | |||||||
Report of Lehman Brothers | E-1 | |||||||
Section 262 of the General Corporation Law of the State of Delaware | F-1 | |||||||
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EX-99.7 |
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Q: | What is the proposed transaction? | |
A: | CGG and Veritas have entered into a merger agreement, pursuant to which Volnay Acquisition Co. I will merge with and into Veritas, with Veritas surviving the merger as a wholly-owned subsidiary of CGG, immediately followed by Veritas merging with and into Volnay Acquisition Co. II, with Volnay Acquisition Co. II surviving the merger and continuing its corporate existence as a wholly-owned subsidiary of CGG (together, these transactions are referred to in this proxy statement/ prospectus as the merger). CGG will be renamed “CGG-Veritas” immediately after the effective time of the merger. | |
Q: | Why are CGG and Veritas proposing the merger? | |
A: | The boards of directors of CGG and Veritas believe that the combination of CGG and Veritas will provide substantial strategic and financial benefits to the shareholders of both companies and will allow shareholders the opportunity to participate in a strong, pure-play seismic company offering a broad range of seismic services and, through Sercel, geophysical equipment, to the industry across all markets. To review the reasons for the merger in greater detail, see “The Merger — Recommendation of the Veritas Board of Directors and Its Reasons for the Merger” and “The Merger — CGG’s Reasons for the Merger.” | |
Q: | Why am I receiving this proxy statement/ prospectus? | |
A: | Veritas stockholders are being asked to adopt the merger agreement. Under the General Corporation Law of the State of Delaware, which governs Veritas, adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of Veritas common stock entitled to vote. Accordingly, if a Veritas stockholder fails to vote, or if a Veritas stockholder abstains, that will have the same effect as a vote against adoption of the merger agreement. Your broker willnot be able to vote shares of Veritas common stock held in “street name” unless you instruct your broker how to vote. | |
This proxy statement/ prospectus contains important information about the proposed merger, the merger agreement and the Veritas special meeting, which you should read carefully before voting. The enclosed voting materials allow you to cause your shares of Veritas common stock to be voted without attending the Veritas special meeting in person. | ||
Your vote is very important. You are encouraged to submit a proxy as soon as possible. | ||
Q: | What is the amount of cash and/or the number of CGG ADSs that I will be entitled to receive for my shares of Veritas common stock? | |
A: | Under the merger agreement, the actual amount of cash or number of CGG ADSs that you will be entitled to receive for each share of Veritas common stock you hold cannot be determined until the effective time of the merger. Those amounts will be determined based on a formula set forth in the merger agreement and described in this proxy statement/ prospectus. The per share consideration will be equal to the aggregate value of all CGG ADSs and cash being issued pursuant to the merger |
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divided by the total number of shares of Veritas common stock outstanding immediately prior to the effective time of the merger. The value of the CGG ADSs for these purposes, or average CGG ADS value, as it is referred to in this proxy statement/ prospectus, will be the average of the closing prices of CGG ADSs on the New York Stock Exchange, referred to as the NYSE, as reported byThe Wall Street Journal during the 20 consecutive trading day period during which the CGG ADSs are traded on the NYSE ending three calendar days before the effective time of the merger or, if such calendar day is not a trading day, then ending on the trading day immediately preceding such calendar day. There are tables on pages 3 and 96 of this proxy statement/ prospectus that set forth the per share cash consideration and the per ADS consideration that would be received by Veritas stockholders based on a range of hypothetical average CGG ADS values. | ||
For a more complete description of what Veritas stockholders will be entitled to receive pursuant to the merger, see “The Merger Agreement — Merger Consideration.” | ||
Q: | If I am a Veritas stockholder, when must I elect the type of merger consideration that I prefer to receive? | |
A: | Holders of Veritas common stock who wish to elect the type of merger consideration they prefer to receive pursuant to the merger should carefully review and follow the instructions set forth in the election form provided to Veritas stockholders. These instructions require that a properly completed and signed election form along with your shares of Veritas common stock be received by the exchange agent by the election deadline, which is 5:00 p.m., New York City time, on January 10, 2007. If a Veritas stockholder does not submit a properly completed and signed election form to the exchange agent by the election deadline, then such stockholder will have no control over the type of merger consideration such stockholder will receive, and, consequently, will receive only cash, only CGG ADSs, or a combination of cash and CGG ADSs pursuant to the merger. | |
For a more complete description of what Veritas stockholders will be entitled to receive pursuant to the merger, see “The Merger Agreement — Merger Consideration.” | ||
Q: | What is a CGG ADS? | |
A: | An American Depositary Share, or ADS, is a security that allows shareholders in the United States to more easily hold and trade interests in foreign-based companies. ADSs are often evidenced by certificates known as American Depositary Receipts, or ADRs. CGG is a French company that issues ordinary shares that are similar in many respects to common stock of a U.S. company. Each CGG ADS representsone-fifth of one CGG ordinary share. CGG ordinary shares are quoted in euros on the Euronext Paris SA, which is the French national stock exchange. CGG ADSs represent certain rights with respect to the underlying CGG ordinary shares. See “Description of the CGG American Depositary Shares.” | |
Q: | Are CGG ADSs publicly traded in the United States? | |
A: | Yes. CGG ADSs are publicly traded in the United States and are listed on the NYSE under the trading symbol “GGY.” | |
Q: | What are the implications of CGG being a “foreign private issuer”? | |
A: | CGG is subject to the reporting requirements under the Exchange Act applicable to foreign private issuers. CGG is required to file its annual report on Form 20-F with the SEC within six months after the end of each fiscal year. In addition, CGG must furnish reports on Form 6-K to the SEC regarding certain information required to be publicly disclosed by CGG in France or filed with Euronext Paris SA, or regarding information distributed or required to be distributed by CGG to its shareholders. CGG is exempt from certain rules under the Exchange Act, including the proxy rules which impose certain disclosure and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. Moreover, CGG is not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act; is not required to file financial statements prepared in accordance with U.S. GAAP (although it is required to reconcile its annual financial statements to U.S. GAAP); and is not required to comply with Regulation FD, which addresses certain restrictions on the selective disclosure of material information. In addition, among other matters, |
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CGG’s officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of CGG ordinary shares. If CGG or the combined company loses its status as a foreign private issuer, it will no longer be exempt from such rules and, among other things, will be required to file periodic reports and financial statements as if it were a company incorporated in the United States. |
The covenants contained in CGG’s outstanding 71/2% senior notes due 2015, referred to as the CGG senior notes, however, require CGG to furnish to the SEC a greater level of financial and non-financial information than the Exchange Act requires of foreign private issuers for so long as such notes remain outstanding. Specifically, CGG’s current practice is to prepare financial statements on a quarterly basis and to furnish them under the Exchange Act on Form 6-K. CGG’s current practice is also to prepare and furnish under the Exchange Act, together with such financial statements, disclosure with respect to its “Operating and Financial Review and Prospects” of the type described in Item 5 of SEC Form 20-F. | ||
Q: | What will happen in the proposed merger to stock options to purchase Veritas common stock and other stock-based awards that have been granted to employees, directors and consultants of Veritas or its affiliates? | |
A: | Each option to purchase shares of Veritas common stock pursuant to any stock option plan, program or arrangement of Veritas (other than the Veritas 1992 Employee Non-Qualified Stock Option Plan) that is outstanding and unexercised immediately prior to the effective time of the merger, whether or not vested, will be cancelled and converted into a right to receive an amount in cash equal to the excess, if any, of the per share cash consideration in the merger over the exercise price per share under such option immediately prior to such cancellation and conversion (less any applicable withholding taxes). Each option to purchase shares of Veritas common stock pursuant to the Veritas 1992 Employee Non-Qualified Stock Option Plan which is outstanding and unexercised as of the effective time of the merger, whether or not vested, will be cancelled and no consideration will be paid in connection with such cancellation. Options that are currently outstanding and unexercised under that plan, however, may be exercised in accordance with their terms prior to the effective time of the merger. | |
All Veritas option plans, the Veritas 2001 Key Employee Restricted Stock Plan and any other plan providing for the issuance, transfer or grant of any capital stock of Veritas or any interest in respect of any capital stock of Veritas will be terminated as of the effective time of the merger. | ||
Q: | What will happen to Veritas’ convertible bonds in the merger? | |
A: | Veritas floating rate convertible senior bonds due 2024 (referred to in this proxy statement/ prospectus as the convertible bonds) that are not converted by their holders into Veritas common stock prior to the merger will remain outstanding following the merger. After the effective time of the merger, the convertible bonds will become convertible for the merger consideration that a holder of shares of Veritas common stock that made no election would receive, which will not be determinable until after the election deadline. | |
A holder of the convertible bonds who converts into Veritas common stock prior to the election deadline may elect to receive cash or CGG ADSs or a combination of cash and CGG ADSs in the same manner as other Veritas stockholders, subject to the election procedures and proration mechanisms described in this proxy statement/ prospectus. | ||
A holder of Veritas convertible bonds that wishes to have the right to make an election should tender his convertible bonds for conversion sufficiently in advance of the election deadline (in any event, no later than December 21, 2006) and return a properly completed election form prior to the election deadline of 5:00 p.m. New York City time on January 10, 2007 with respect to the shares of Veritas common stock issued on conversion. | ||
Q: | What conditions are required to be fulfilled to complete the merger? | |
A: | CGG and Veritas are not required to complete the merger unless certain specified conditions are satisfied or waived. These conditions include adoption by Veritas stockholders of the merger agreement, |
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the approval by CGG shareholders of the issuance of CGG ordinary shares underlying the CGG ADSs to be issued pursuant to the merger and related matters, the effectiveness of the Form F-4 registration statement, of which this proxy statement/ prospectus constitutes a part, and of the Form F-6 registration statement, and the approval (visa) of the “note d’information” by the AMF, relating to the CGG ordinary shares underlying the CGG ADSs to be issued in connection with the merger. There can be no assurance that such conditions will be satisfied. For a more complete summary of the conditions that must be satisfied or waived prior to the effective time of the merger, see “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 105. | ||
Q: | How will CGG finance the cash component of the merger? | |
A: | CGG has entered into a senior secured bridge loan facility with Credit Suisse International, as sole and exclusive lead arranger and sole and exclusive bookrunner, of up to $1.6 billion to be made available to CGG for the purposes of, among other things, financing the cash component of the merger consideration. The bridge loan facility may be drawn only in a single borrowing on the date of the merger and is payable in full by a single payment 18 months from the initial funding date, subject to a six-month extension at the sole option of a majority of lenders under the facility. | |
Under the bridge loan facility, CGG-Veritas is required to maintain certain financial covenants and is subject to affirmative and negative covenants that affect its ability, among other things, to borrow money, incur liens, dispose of assets and make acquisitions as further described under “CGG Recent Developments — Bridge Loan Facility” beginning on page 40. In addition, drawing under the bridge loan facility is conditioned upon certain conditions which, if not met and not waived by Credit Suisse International, will result in CGG being unable to draw funds under the bridge loan agreement and having to seek other financing to complete the merger. See “Risk Factors — Risks Related to the Combined Company’s Indebtedness — If CGG is unable to draw funds under the commitment letter, it will have to seek other financing to complete the merger, which could be on terms that are less favorable to CGG.” | ||
Q: | When do CGG and Veritas expect the merger to be completed? | |
A: | CGG and Veritas are working to complete the merger as quickly as practicable. They currently expect the merger to be completed during the first quarter of 2007. However, neither CGG nor Veritas can predict the exact timing of the effective time of the merger because it is subject to certain conditions both within and beyond each of their control. See “The Merger Agreement — Conditions to the Completion of the Merger” beginning on page 105. | |
Q: | Are Veritas stockholders entitled to appraisal rights? | |
A: | If the merger is completed and any holder of Veritas common stock is required to receive cash (other than cash in lieu of fractional CGG ADSs) as consideration pursuant to the merger, holders of shares of Veritas common stock who do not vote in favor of the adoption of the merger agreement will have the right to seek appraisal of the fair value of their shares, but only if they submit a written demand for such an appraisal prior to the vote on adoption of the merger agreement and they comply with the other Delaware law procedures and requirements explained in this proxy statement/ prospectus. See “Appraisal Rights” beginning on page 125. | |
Q: | How does the Veritas board of directors recommend that Veritas stockholders vote? | |
A: | The Veritas board of directors has determined that the execution and delivery of the merger agreement was advisable and the transactions contemplated by the merger agreement are in the best interests of the Veritas stockholders and unanimously recommends that Veritas stockholders vote FOR the proposal to adopt the merger agreement. For a more complete description of the recommendation of the Veritas board of directors, see “The Merger — Recommendation of the Veritas Board of Directors and Its Reasons for the Merger” beginning on page 51. | |
Q: | When and where will the Veritas special meeting be held? | |
A: | The Veritas special meeting will be held on January 9, 2007 at 10:00 a.m., Houston time, at the offices of Veritas DGC, Inc., 10300 Town Park Drive, Houston, Texas 77072. | |
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Q: | Who can attend and vote at the Veritas special meeting? | |
A: | All Veritas stockholders of record as of the close of business on November 18, 2006, the record date for the Veritas special meeting, are entitled to receive notice of and to vote at the Veritas special meeting. | |
Q: | What do I need to do now? | |
A: | After you have carefully read this proxy statement/ prospectus, please respond by completing, signing and dating your proxy card and returning it in the enclosed postage-paid envelope or, if available, by submitting your proxy by telephone or through the Internet as soon as possible so that your shares of Veritas common stock will be represented and voted at the special meeting. | |
Please refer to your proxy card or the information forwarded by your broker or other nominee to see which options are available to you. | ||
The Internet and telephone proxy submission procedures are designed to authenticate stockholders and to allow you to confirm that your instructions have been properly recorded. | ||
The method by which you submit a proxy will in no way limit your right to vote at the Veritas special meeting if you later decide to attend the meeting in person. If your shares of Veritas common stock are held in the name of a broker or other nominee, you must obtain a proxy, executed in your favor, from the holder of record, to be able to vote at our special meeting. | ||
All shares of Veritas common stock entitled to vote and represented by properly completed proxies received prior to the Veritas special meeting, and not revoked, will be voted at the Veritas special meeting as instructed on the proxies.If you do not indicate how your shares of Veritas common stock should be voted on a matter, the shares of Veritas common stock represented by your properly completed proxy will be voted as the Veritas board of directors recommends and therefore FOR the adoption of the merger agreement. | ||
Q: | If I am a Veritas stockholder, should I send in my stock certificates with my proxy card? | |
A: | No. PleaseDO NOT send your Veritas stock certificates with your proxy card. Rather, prior to the election deadline, which is 5:00 p.m., New York City time, on January 10, 2007, you should send your Veritas common stock certificates to the exchange agent, together with your completed, signed election form. If your shares of Veritas common stock are held in “street name” by your broker or other nominee you should follow your broker’s or other nominee’s instructions for making an election with respect to your shares of Veritas common stock. | |
Q: | Can I change my vote after I have delivered my proxy? | |
A: | Yes. You may change your vote at any time before your proxy is voted at the Veritas special meeting. You can do this in any of the three following ways: | |
• by sending a written notice to the Secretary of Veritas in time to be received before the Veritas special meeting stating that you would like to revoke your proxy; | ||
• by completing, signing and dating another proxy card and returning it by mail in time to be received before the Veritas special meeting or, if you submitted your proxy through the Internet or by telephone, by submitting a proxy card at a later date, in which case your later-submitted proxy will be recorded and your earlier proxy revoked; or | ||
• if you are a holder of record, by attending the special meeting and voting in person. Simply attending the Veritas special meeting without voting will not revoke your proxy or change your vote. | ||
If your shares of Veritas common stock are held in an account at a broker or other nominee and you desire to change your vote, you should contact your broker or other nominee. | ||
Q: | What should I do if I receive more than one set of voting materials for the Veritas special meeting? | |
A: | You may receive more than one set of voting materials for the Veritas special meeting, including multiple copies of this proxy statement/ prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares of Veritas common stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares of Veritas common stock. If you are a holder of record and your shares of Veritas common stock are |
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registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive. | ||
Q: | If my shares of Veritas common stock are held in “street name” by my broker or other nominee, will my broker or other nominee vote my shares of Veritas common stock for me? | |
A: | Your broker will NOT vote your shares of Veritas common stock held in “street name” unless you instruct your broker how to vote. Such failure to vote will have the same effect as a vote AGAINST adoption of the merger agreement. You should therefore provide your broker or other nominee with instructions as to how to vote your shares of Veritas common stock. | |
Q: | Who can answer my questions? | |
A: | If you have any questions about the merger or how to submit your proxy, or if you need additional copies of this proxy statement/ prospectus, the enclosed proxy card, voting instructions or the election form, you should contact: |
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Approximate Percentage of | ||||||||||||||||||||
Value of per Share | Merger Consideration | |||||||||||||||||||
Average CGG | Per Share Cash | Per Share CGG | CGG ADS | |||||||||||||||||
ADS Value | Consideration | ADS Consideration | Consideration(1) | In ADSs | In Cash | |||||||||||||||
$30.00 | $71.20 | 2.3734 | $71.20 | 48.03% | 51.97% | |||||||||||||||
$31.00 | $72.34 | 2.3336 | $72.34 | 48.85% | 51.15% | |||||||||||||||
$32.00 | $73.48 | 2.2963 | $73.48 | 49.64% | 50.36% | |||||||||||||||
$33.00 | $74.62 | 2.2613 | $74.62 | 50.41% | 49.59% | |||||||||||||||
$34.00 | $75.76 | 2.2283 | $75.76 | 51.16% | 48.84% | |||||||||||||||
$35.00 | $76.90 | 2.1972 | $76.90 | 51.88% | 48.12% | |||||||||||||||
$36.00 | $78.04 | 2.1678 | $78.04 | 52.59% | 47.41% | |||||||||||||||
$37.00 | $79.18 | 2.1400 | $79.18 | 53.27% | 46.73% | |||||||||||||||
$38.00 | $80.32 | 2.1137 | $80.32 | 53.93% | 46.07% | |||||||||||||||
$39.00 | $81.46 | 2.0888 | $81.46 | 54.58% | 45.42% | |||||||||||||||
$40.00 | $82.60 | 2.0650 | $82.60 | 55.20% | 44.80% | |||||||||||||||
$41.00 | $83.74 | $2.0425 | $83.74 | 55.81% | 44.19% | |||||||||||||||
$42.00 | $84.88 | $2.0210 | $84.88 | 56.41% | 43.59% | |||||||||||||||
$43.00 | $86.02 | $2.0005 | $86.02 | 56.99% | 43.01% | |||||||||||||||
$44.00 | $87.16 | $1.9809 | $87.16 | 57.55% | 42.45% | |||||||||||||||
$45.00 | $88.30 | $1.9623 | $88.30 | 58.10% | 41.90% |
(1) | Based on the CGG ADS value. |
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Opinion of Veritas’ Financial Advisor |
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Opinion of CGG’s Financial Advisors |
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New Corporate Name |
Executive Offices |
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• | up to four directors from Veritas’ current board of directors in addition to Thierry Pilenko, Chairman and CEO of Veritas, will be invited by CGG to serve on the board of directors of the combined company after the effective time of the merger; | |
• | certain executive officers whose employment is terminated under certain circumstances after the effective time of the merger will be entitled to severance benefits; | |
• | certain executive officers and directors hold stock options and other stock-based awards granted under Veritas’ equity compensation plans which in some cases will vest upon adoption of the merger agreement by Veritas stockholders and in other cases will vest if their employment is terminated under certain circumstances after the effective time of the merger; | |
• | in any event, such stock options outstanding at the effective time of the merger will be cancelled and converted into a right to receive an amount in cash equal to the excess, if any, of the per share cash consideration over the exercise price per share under such stock option immediately prior to such cancellation and conversion (less any applicable withholding taxes); | |
• | certain of Veritas’ current executive officers will be offered continued employment with the combined company after the effective time of the merger; and | |
• | directors and officers will be indemnified by the combined company with respect to acts or omissions by them in their capacities as such prior to the effective time of the merger. |
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• | adoption of the merger agreement by Veritas stockholders; | |
• | approval by CGG shareholders of the issuance of CGG ordinary shares underlying the CGG ADSs to be issued pursuant to the merger and certain related items; | |
• | the waiting period (and any extension thereof) applicable to the consummation of the merger under the Hart Scott Rodino Act, referred to as the HSR Act, having expired or been terminated (which occurred on October 25, 2006); | |
• | all required approvals by the European Commission applicable to the merger under applicable competition laws, including the EC Merger Regulation, having been obtained or any applicable waiting period thereunder having been terminated or having expired (although CGG and Veritas do not expect any such approvals by the European Commission will be required); | |
• | the receipt of certain other authorizations, consents, waiting periods and approvals of governmental entities in certain jurisdictions required to be obtained prior to consummation of the merger; | |
• | the effectiveness of the Form F-4 registration statement, of which this proxy statement/ prospectus constitutes a part, and of the Form F-6 registration statement, and no proceedings for such purpose pending before or threatened by the SEC, and the approval (visa) of the“note d’information” by the AMF, relating to the CGG ordinary shares underlying the CGG ADSs to be issued in connection with the merger; | |
• | CGG ADSs issuable to the stockholders of Veritas pursuant to the merger and to the holders of the Veritas convertible debt (and, if required, the underlying CGG ordinary shares) will have been authorized for listing on the NYSE, subject to official notice of issuance, and the AMF and the Euronext Paris SA will have approved the listing of CGG ordinary shares to be issued in connection with the merger; and | |
• | the receipt of notification in writing by the Committee on Foreign Investment in the United States, which is referred to as the CFIUS, to CGG and Veritas that the CFIUS has determined not to investigate the transactions contemplated by the merger agreement (which occurred on November 16, 2006). | |
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• | to solicit, initiate, or knowingly encourage or facilitate the making of any inquiries regarding any other acquisition proposal; or | |
• | subject to certain exceptions, to disclose or provide any non-public information to any third party with respect to any such acquisition proposal, afford access to its properties, books or records to any third party that has made or is considering making such an acquisition proposal, or approve or recommend, or propose to approve or recommend, or enter into any agreement relating to such an acquisition proposal. |
• | the board of directors of the party receiving the acquisition proposal has determined that such acquisition proposal constitutes, or is reasonably likely to result in, a superior proposal; and | |
• | the party receiving such acquisition proposal has complied with the terms of the merger agreement relating to acquisition proposals. |
• | CGG or Veritas, as the case may be, receives a superior proposal; or | |
• | the board of directors determines in good faith that a failure to change its recommendation would reasonably be expected to be inconsistent with its fiduciary duties to CGG shareholders or Veritas stockholders, respectively. |
• | the failure to consummate the merger by April 15, 2007, provided that a party may not terminate upon occurrence of this event if such party’s failure to fulfill its obligations has caused or resulted in the merger not occurring before such time; | |
• | the failure to obtain the necessary Veritas stockholder approval or CGG shareholder approval; | |
• | the existence of a law or regulation prohibiting the merger, or the entry of a final and non-appealable injunction or government order which prohibits or restricts the merger; | |
• | a material breach of the other party’s representations, warranties or covenants that gives rise to a failure of certain conditions to closing (subject to a 45 day cure period, if the breach is capable of being cured); | |
• | if the other party’s board of directors has failed to recommend the merger, or has withdrawn or modified in a manner adverse to the other party its recommendation of the merger, or has recommended or entered into an agreement with a person making an acquisition proposal; or | |
• | by CGG, if CGG is responding to an unsolicited hostile acquisition proposal to acquire at least 40% of the stock or assets of CGG. |
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• | If you exchange Veritas common stock solely for cash in the merger, you generally will recognize capital gain or loss equal to the difference between the amount of cash received and your tax basis in the stock surrendered. | |
• | If you exchange Veritas common stock solely for CGG ADSs in the merger, you will not recognize any gain or loss, except to the extent of the cash you receive in lieu of a fractional CGG ADS. | |
• | If you exchange Veritas common stock for a combination of cash and CGG ADSs in the merger, you generally will recognize gain (but not loss). The gain you recognize generally will equal the lesser of (1) the excess of the sum of the cash and the fair market value of the CGG ADSs received over your tax basis in the Veritas common stock surrendered, or (2) the amount of cash received. | |
• | Your holding period for the CGG ADSs received in the merger generally will include your holding period for the Veritas common stock exchanged in the merger. |
CGG |
Veritas |
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• | as of and for each of the six-month periods ended June 30, 2006 and 2005 in accordance with both IFRS and U.S. GAAP; | |
• | as of and for each of the two years in the period ended December 31, 2005 in accordance with IFRS; and | |
• | as of and for each of the five years in the period ended December 31, 2005 in accordance with U.S. GAAP. |
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As of and for the Six | As of and for the | ||||||||||||||||
Months Ended | Year Ended | ||||||||||||||||
June 30, | December 31, | ||||||||||||||||
2006 | 2005 | 2005 | 2004 | ||||||||||||||
(In € millions except for per share | |||||||||||||||||
and ratio data) | |||||||||||||||||
Amounts in accordance with IFRS: | |||||||||||||||||
Statement of Operations Data: | |||||||||||||||||
Operating revenues | 634.5 | 387.0 | 869.9 | 687.4 | |||||||||||||
Other revenues from ordinary activities | 0.9 | 0.8 | 1.9 | 0.4 | |||||||||||||
Cost of operations | (420.4 | ) | (298.2 | ) | (670.0 | ) | (554.0 | ) | |||||||||
Gross profit | 215.0 | 89.6 | 201.8 | 133.8 | |||||||||||||
Research and development expenses, net | (18.4 | ) | (14.8 | ) | (31.1 | ) | (28.8 | ) | |||||||||
Selling, general and administrative expenses | (60.3 | ) | (41.9 | ) | (91.2 | ) | (78.6 | ) | |||||||||
Other revenues (expenses) | 9.8 | (0.8 | ) | (4.4 | ) | 19.3 | |||||||||||
Operating income | 146.1 | 32.1 | 75.1 | 45.7 | |||||||||||||
Cost of financial debt, net | (13.1 | ) | (19.6 | ) | (42.3 | ) | (27.8 | ) | |||||||||
Derivative and other expenses on convertible bonds | (23.0 | ) | (14.7 | ) | (11.5 | ) | (23.5 | ) | |||||||||
Other financial income (loss) | (6.6 | ) | 0.7 | (14.5 | ) | 0.8 | |||||||||||
Income taxes | (33.0 | ) | (14.8 | ) | (26.6 | ) | (10.9 | ) | |||||||||
Equity in income of affiliates | 5.8 | 6.7 | 13.0 | 10.3 | |||||||||||||
Net income (loss) | 76.2 | (9.6 | ) | (6.8 | ) | (5.4 | ) | ||||||||||
Attributable to minority interests | 0.9 | — | (1.0 | ) | (1.0 | ) | |||||||||||
Attributable to shareholders | 75.3 | (9.6 | ) | (7.8 | ) | (6.4 | ) | ||||||||||
Net income (loss) per share: | |||||||||||||||||
Basic(1) | 4.37 | (0.82 | ) | (0.64 | ) | (0.55 | ) | ||||||||||
Diluted(2) | 4.28 | (0.82 | ) | (0.64 | ) | (0.55 | ) | ||||||||||
Balance sheet: | |||||||||||||||||
Cash and cash equivalents | 206.4 | 113.1 | 112.4 | 130.6 | |||||||||||||
Working capital(3) | 219.8 | 130.2 | 154.1 | 116.4 | |||||||||||||
Property, plant & equipment, net | 484.8 | 232.6 | 480.1 | 204.1 | |||||||||||||
Multi-client surveys | 79.4 | 113.8 | 93.6 | 124.5 | |||||||||||||
Total assets | 1,673.6 | 1,036.1 | 1,565.1 | 971.2 | |||||||||||||
Financial debt(4) | 431.7 | 246.6 | 400.3 | 249.6 | |||||||||||||
Shareholders’ equity | 802.6 | 407.5 | 698.5 | 393.2 | |||||||||||||
Other financial historical data and other ratios: | |||||||||||||||||
ORBDA(5) | 237.6 | 99.6 | 229.5 | 172.8 | |||||||||||||
Capital expenditures (Property, plant & equipment)(6) | 94.5 | 49.7 | 125.1 | 49.8 | |||||||||||||
Capital expenditures for multi-client surveys | 26.5 | 15.0 | 32.0 | 51.1 | |||||||||||||
Net financial debt(7) | 242.5 | 142.3 | 297.2 | 121.8 | |||||||||||||
Financial debt(4)/ “ORBDA”(5) | 1.8 | x | 2.5 | x | 1.7 | x | 1.4 | x | |||||||||
Net indebtedness(7)/ “ORBDA”(5) | 1.0 | x | 1.4 | x | 1.3 | x | 0.7 | x | |||||||||
“ORBDA”(5)/ Net financial expenses | 18.1 | x | 5.1 | x | 5.4 | x | 6.2 | x |
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As of and for the Six | |||||||||||||||||||||||||||||
Months Ended | |||||||||||||||||||||||||||||
June 30, | As of and for the Year Ended December 31, | ||||||||||||||||||||||||||||
2006 | 2005 | 2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||||||||||
(In € millions except for per share and ratio data) | |||||||||||||||||||||||||||||
Amounts in accordance with U.S. GAAP: | |||||||||||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||||||
Operating revenues | 642.0 | 398.8 | 860.8 | 709.5 | 645.6 | 719.0 | 795.0 | ||||||||||||||||||||||
Operating income | 144.2 | 28.5 | 61.9 | 55.0 | 42.7 | 81.9 | 48.6 | ||||||||||||||||||||||
Net income (loss) | 42.6 | 7.3 | 8.3 | (20.2 | ) | 3.1 | 15.1 | 9.3 | |||||||||||||||||||||
Per share amounts: | |||||||||||||||||||||||||||||
Basic common stock holder(1) | 2.47 | 0.62 | 0.69 | (1.73 | ) | 0.27 | 1.29 | 0.80 | |||||||||||||||||||||
Diluted common stock holder(8) | 2.42 | 0.55 | 0.67 | (1.73 | ) | 0.26 | 1.29 | 0.80 | |||||||||||||||||||||
Balance sheet: | |||||||||||||||||||||||||||||
Total assets | 1,677.7 | 1,047.9 | 1,573.8 | 975.8 | 924.2 | 1,036.8 | 1,008.0 | ||||||||||||||||||||||
Financial debt(4) | 438.4 | 254.0 | 416.7 | 266.5 | 232.4 | 307.8 | 279.5 | ||||||||||||||||||||||
Stockholders’ equity | 759.7 | 399.6 | 689.5 | 372.2 | 413.4 | 431.0 | 456.4 | ||||||||||||||||||||||
Operational data (end of period): | |||||||||||||||||||||||||||||
Land teams in operations | 11 | 11 | 11 | 8 | 12 | 14 | 12 | ||||||||||||||||||||||
Operational streamers(9) | 52 | 40 | 46 | 39 | 42 | 42 | 48 | ||||||||||||||||||||||
Data processing centers | 29 | 26 | 27 | 26 | 26 | 26 | 26 |
(1) | Basic per share amounts under IFRS and U.S. GAAP have been calculated on the basis of 17,219,465 issued and outstanding CGG ordinary shares in the six month period ended June 30, 2006, 11,736,024 issued and outstanding CGG ordinary shares in the six month period ended June 30, 2005, 12,095,925 issued and outstanding CGG ordinary shares in 2005 and 11,681,406 issued and outstanding CGG ordinary shares in 2004. Basic per share amounts under U.S. GAAP have been calculated on the basis of 11,680,718 issued and outstanding CGG ordinary shares in 2003 and 2002 and 11,609,393 issued and outstanding CGG ordinary shares in 2001. |
(2) | Diluted per share amount under IFRS has been calculated on the basis of 17,583,926 issued and outstanding CGG ordinary shares in the six month period ended June 30, 2006, 11,736,024 issued and outstanding CGG ordinary shares in the six month period ended June 30, 2005, 12,095,925 issued and outstanding shares in 2005 and 11,681,406 issued and outstanding CGG ordinary shares in 2004. For the six-month period ended June 30, 2005, the effect of convertible bonds was anti-dilutive. |
(3) | Consists of trade accounts and notes receivable, inventories andwork-in-progress, tax assets, other current assets and assets held for sale less trade accounts and notes payable, accrued payroll costs, income tax payable, advance billings to customers, current provisions and other current liabilities. |
(4) | “Financial debt” means total financial debt including current maturities, capital leases and accrued interest but excluding bank overdrafts. |
(5) | A discussion of “ORBDA” (Operating Result Before Depreciation and Amortization, previously denominated “Adjusted EBITDA”), including a reconciliation to net cash provided by operating activities, is found in Item 5 — “Operating and Financial Review and Prospects — Liquidity and Capital Resources” included in the CGG 2005 Form 20-F incorporated herein by reference. |
(6) | “Capital expenditures” is defined as purchases of property, plant and equipment plus equipment acquired under lease. |
The following table presents a reconciliation of capital expenditures to purchases of property, plant and equipment and equipment acquired under capital lease for the periods indicated: |
For the Six Months | For the Year Ended | |||||||||||||||
Ended June 30, | December 31, | |||||||||||||||
2006 | 2005 | 2005 | 2004 | |||||||||||||
(In € millions) | ||||||||||||||||
Purchase of property, plant and equipment | 94.3 | 36.5 | 107.7 | 41.1 | ||||||||||||
Equipment acquired under capital lease | 0.2 | 13.2 | 17.4 | 8.7 | ||||||||||||
Capital expenditures | 94.5 | 49.7 | 125.1 | 49.8 | ||||||||||||
(7) | “Net financial debt” means bank overdrafts, financial debt including current portion (including capital lease debt) net of cash and cash equivalents. |
(8) | Diluted per share amounts under U.S. GAAP have been calculated on the basis of 17,583,926 issued and outstanding CGG ordinary shares in the six month period ended June 30, 2006, 13,325,731 issued and outstanding CGG ordinary shares in the six month period ended June 30, 2005, 12,378,209 issued and outstanding CGG ordinary shares in 2005, 11,681,406 issued and outstanding CGG ordinary shares in 2004, 11,760,630 issued and outstanding CGG ordinary shares in 2003, 11,680,718 issued and outstanding CGG ordinary shares in 2002 and 11,609,393 issued and outstanding CGG ordinary shares in 2001. In 2002 and 2001, the effects of stock options were not dilutive (as a result of applying the treasury stock method). |
(9) | Data includes Exploration Resources ASA’s streamers (from and including December 31, 2005) and excludes streamers of vessels in transit or dry-dock. |
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For the Year Ended July 31, | ||||||||||||||||||||
2006(1) | 2005(2) | 2004(3) | 2003(4) | 2002(5) | ||||||||||||||||
(In $ thousands, except per share amount) | ||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||
Revenues | $ | 822,188 | $ | 634,026 | $ | 564,469 | $ | 501,821 | $ | 452,183 | ||||||||||
Operating income (loss) | 132,879 | 64,241 | 27,770 | (12,112 | ) | (833 | ) | |||||||||||||
Net income (loss) | 82,231 | 83,001 | 5,221 | (59,097 | ) | (24,051 | ) | |||||||||||||
Net income (loss) per common share — basic | 2.33 | 2.45 | 0.16 | (1.77 | ) | (0.74 | ) | |||||||||||||
Net income (loss) per common share — diluted | 2.08 | 2.37 | 0.15 | (1.77 | ) | (0.74 | ) | |||||||||||||
Balance Sheet Data (at period end): | ||||||||||||||||||||
Total assets | $ | 1,158,030 | $ | 966,598 | $ | 776,246 | $ | 790,945 | $ | 781,403 | ||||||||||
Long-term debt (including current maturities) | 155,000 | 155,000 | 155,000 | 194,225 | 140,000 |
(1) | Includes a gain on involuntary conversion of assets of $2.0 million. |
(2) | Includes a gain on involuntary conversion of assets of $9.9 million and a release of deferred tax valuation allowances of $36.9 million. |
(3) | Includes charges of $22.1 million related to a change in multi-client accounting policies and $7.4 million related to debt refinancing. The change in multi-client accounting policies may affect the comparability between periods and is more fully described in Note 1 of the Notes to Consolidated Financial Statements in the Veritas 2006 10-K, which is incorporated by reference into this proxy statement/ prospectus. |
(4) | Includes charges of $39.3 million for goodwill impairment, $4.9 million for impairment of a multi-client survey, $7.6 million loss related to the sale of Veritas’ (RC)2 software operations and $21.0 million related to deferred tax asset valuation allowances. |
(5) | Includes charges of $55.3 million for impairment of multi-client surveys, $14.6 million for costs of a terminated merger and $6.5 million valuation allowance for deferred tax assets. |
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At and for the Six | At and for the | |||||||||||||||
Months Ended | Year Ended | |||||||||||||||
June 30, 2006 | December 31, 2005 | |||||||||||||||
(US$)(1) | (€) | (US$)(1) | (€) | |||||||||||||
(in millions, except per share data) | ||||||||||||||||
IFRS | ||||||||||||||||
Statement of Income Data in accordance with IFRS | ||||||||||||||||
Combined pro forma operating revenues | 1,239.0 | 969.6 | 1,763.4 | 1,489.1 | ||||||||||||
Combined pro forma gross profit | 361.0 | 282.5 | 346.0 | 292.2 | ||||||||||||
Combined pro forma operating income (loss) | 239.2 | 187.1 | 148.9 | 125.7 | ||||||||||||
Combined pro forma net income attributable to shareholders | 81.3 | 63.5 | (38.6 | ) | (32.6 | ) | ||||||||||
Earnings per share — basic | 3.08 | 2.41 | (1.81 | ) | (1.53 | ) | ||||||||||
Earnings per share — diluted | 3.03 | 2.37 | (1.81 | ) | (1.53 | ) | ||||||||||
Balance sheet Data in accordance with IFRS | ||||||||||||||||
Total assets | 5,503.5 | 4,306.7 | 5,125.9 | 4,328.6 | ||||||||||||
Shareholders’ equity — attributable to shareholders | 2,526.2 | 1,976.8 | 2,325.7 | 1,963.9 | ||||||||||||
Cash, cash equivalents and marketable securities | 407.9 | 319.2 | 138.1 | 116.6 | ||||||||||||
Current portion of long-term debt | 46.1 | 36.1 | 183.9 | 155.3 | ||||||||||||
Bonds and Notes issued and long-term debt | 1,990.9 | 1,558.0 | 1,773.2 | 1,497.4 | ||||||||||||
U.S. GAAP | ||||||||||||||||
Statement of Income Data in accordance with U.S. GAAP | ||||||||||||||||
Combined pro forma operating revenues | 1,245.4 | 974.6 | 1,746.0 | 1,474.4 | ||||||||||||
Combined pro forma gross profit | 366.9 | 287.1 | 341.4 | 288.3 | ||||||||||||
Combined pro forma operating income (loss) | 229.8 | 179.8 | 125.3 | 105.8 | ||||||||||||
Combined pro forma net income attributable to shareholders | 34.9 | 27.2 | (17.8 | ) | (15.0 | ) | ||||||||||
Earnings per share — basic | 1.32 | 1.03 | (0.83 | ) | (0.70 | ) | ||||||||||
Earnings per share — diluted | 1.30 | 1.02 | (0.83 | ) | (0.70 | ) | ||||||||||
Balance sheet Data in accordance with U.S. GAAP | ||||||||||||||||
Total assets | 5,536.6 | 4,332.5 | 5,158.5 | 4,356.1 | ||||||||||||
Shareholders’ equity — attributable to shareholders | 2,476.8 | 1,938.2 | 2,320.6 | 1,959.7 | ||||||||||||
Cash, cash equivalents and marketable securities | 407.9 | 319.2 | 138.1 | 116.6 | ||||||||||||
Current portion of long-term debt | 50.0 | 39.1 | 190.3 | 160.7 | ||||||||||||
Bonds and Notes issued and long-term debt | 2,019.1 | 1,580.0 | 1,798.6 | 1,518.8 |
(1) | The period-end rate is the noon buying rate on the last business day of the applicable period. |
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CGG and | |||||||||||||||||||||||||
Veritas | Veritas Pro | CGG and | Veritas | ||||||||||||||||||||||
CGG | CGG | Historical | Forma | Veritas Pro | Pro Forma | ||||||||||||||||||||
Historical | Historical | U.S. | Equivalents | Forma | U.S. | ||||||||||||||||||||
IFRS | U.S. GAAP | GAAP(2)(5) | U.S. GAAP(4) | IFRS(3) | GAAP(3) | ||||||||||||||||||||
(in euros) | |||||||||||||||||||||||||
For the six months ended June 30, 2006 (per share) | |||||||||||||||||||||||||
Income (loss) from continuing operations | |||||||||||||||||||||||||
Basic | 4.37 | 2.47 | 0.86 | 0.46 | 2.41 | 1.03 | |||||||||||||||||||
Diluted | 4.28 | 2.42 | 0.78 | 0.46 | 2.37 | 1.02 | |||||||||||||||||||
Dividends declared | — | — | — | — | — | — | |||||||||||||||||||
Book value at period end(1) | 46.61 | 44.12 | 15.59 | 33.00 | 74.81 | 73.35 | |||||||||||||||||||
For the year ended December 31, 2005 (per share) | |||||||||||||||||||||||||
Income (loss) from continuing operations | |||||||||||||||||||||||||
Basic | (0.64) | 0.69 | 2.45 | (0.32 | ) | (1.53) | (0.70) | ||||||||||||||||||
Diluted | (0.64) | 0.67 | 2.31 | (0.32 | ) | (1.53) | (0.70) | ||||||||||||||||||
Dividends declared | — | — | — | — | — | — | |||||||||||||||||||
Book value at period end(1) | 57.74 | 57.0 | 14.89 | 41.4 | 92.20 | 92.00 |
(1) | Book value per share is calculated by dividing shareholders’ equity by the weighted average number of shares outstanding over the period. |
(2) | Translated at the noon buying rate on June 30, 2006 of $1.2779 per€1.00. |
(3) | The pro forma combined income (loss) from continuing operations per share is calculated by dividing the pro forma income (loss) from continuing operations before non-recurring items by the pro forma weighted average number of shares outstanding over the period. |
(4) | Veritas equivalent pro forma combined per share amounts are calculated by multiplying the pro forma combined per share amounts by an assumed exchange ratio of 2.25, the number of CGG ADSs that would be exchanged for each share of Veritas common stock pursuant to the merger, based on the price per CGG ADS of $33.33, which was the closing price on August 29, 2006, and dividing the result by five, the number of CGG ADSs per CGG ordinary share. |
(5) | Periods used for Veritas historical information consist of the six months ended July 31, 2006 and the twelve months ended January 31, 2006. |
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Veritas | ||||||||||||
Equivalent | ||||||||||||
Veritas | Per Share | |||||||||||
CGG ADSs | Common Stock | Common Stock | ||||||||||
September 1, 2006 | $ | 33.27 | $ | 62.18 | $ | 74.93 | ||||||
November 24, 2006 | $ | 39.73 | $ | 77.44 | $ | 77.49 |
Veritas Common | ||||||||||||||||
CGG ADSs | Stock | |||||||||||||||
Calendar Year | High | Low | High | Low | ||||||||||||
2004 | ||||||||||||||||
First Quarter | $ | 10.10 | $ | 7.85 | $ | 20.70 | $ | 10.60 | ||||||||
Second Quarter | 12.41 | 8.80 | 23.15 | 17.85 | ||||||||||||
Third Quarter | 13.82 | 9.40 | 24.68 | 19.88 | ||||||||||||
Fourth Quarter | 14.03 | 11.38 | 23.64 | 19.89 | ||||||||||||
2005 | ||||||||||||||||
First Quarter | $ | 18.96 | $ | 13.35 | $ | 29.96 | $ | 20.26 | ||||||||
Second Quarter | 17.91 | 15.10 | 31.51 | 24.44 | ||||||||||||
Third Quarter | 20.90 | 16.52 | 37.05 | 27.75 | ||||||||||||
Fourth Quarter | 21.05 | 16.57 | 39.00 | 29.48 | ||||||||||||
2006 | ||||||||||||||||
First Quarter | $ | 29.24 | $ | 18.60 | $ | 46.26 | 38.07 | |||||||||
Second Quarter | 40.50 | 28.35 | 53.90 | 43.81 | ||||||||||||
Third Quarter | 35.65 | 29.25 | 70.07 | 49.39 |
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CGG September 30, | CGG | ||||||||
2006 | June 30, 2006 | ||||||||
(IFRS) | (IFRS) | ||||||||
(unaudited) | (unaudited) | ||||||||
(in€ millions) | (in€ millions) | ||||||||
Short-term debt and current portion of long-term debt | 54.9 | 35.7 | |||||||
– guaranteed | — | — | |||||||
– secured | 30.7 | 31.0 | |||||||
– unguaranteed / unsecured | 24.2 | 4.7 | |||||||
Bonds and other long-term debt | 386.8 | 393.3 | |||||||
– guaranteed | — | — | |||||||
– secured | 124.1 | 134.7 | |||||||
– unguaranteed / unsecured | 262.7 | 258.6 | |||||||
Financial debt, gross (A) | 441.7 | 429.0 | |||||||
– guaranteed | — | — | |||||||
– secured | 154.8 | 165.7 | |||||||
– unguaranteed / unsecured | 286.9 | 263.3 | |||||||
Shareholders’ equity (B) | 850.5 | 802.6 | |||||||
Common stock | 35.0 | 35.0 | |||||||
Additional paid-in capital | 390.7 | 389.5 | |||||||
Accumulated earnings | 317.3 | 314.7 | |||||||
Treasury stock | 2.6 | 2.4 | |||||||
Net income (loss) for the period — attributable to the Group | 119.8 | 75.3 | |||||||
Income and expense recognized directly in equity | 3.6 | 6.4 | |||||||
Cumulative translation adjustment | (18.5 | ) | (20.7 | ) | |||||
TOTAL (A) + (B) | 1,292.2 | 1,231.6 |
CGG September 30, | CGG | |||||||
2006 | June 30, 2006 | |||||||
(IFRS) | (IFRS) | |||||||
(unaudited) | (unaudited) | |||||||
(in€ millions) | (in€ millions) | |||||||
Cash, cash equivalents and marketable securities (A) | 168.7 | 206.4 | ||||||
Cash and cash equivalents | 80.1 | 119.6 | ||||||
Marketable securities | 88.6 | 86.8 | ||||||
Current portion of financial debt (B) | (54.9 | ) | (38.3 | ) | ||||
Bank loans — current portion | (37.5 | ) | (25.9 | ) | ||||
Capital leases — current portion | (9.2 | ) | (9.7 | ) | ||||
Bonds — current portion | — | — | ||||||
Accrued interest | (8.2 | ) | (2.7 | ) | ||||
Financial debt (C) | (386.8 | ) | (393.3 | ) | ||||
Bank loans — long-term portion | (81.9 | ) | (80.5 | ) | ||||
Capital leases — long-term portion | (49.8 | ) | (58.5 | ) | ||||
Bonds — long-term portion | (255.1 | ) | (254.3 | ) | ||||
TOTAL (A) + (B) + (C) | (273.0 | ) | (225.2 | ) |
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Veritas July 31, 2006 | |||||
(US GAAP) (unaudited) | |||||
(in millions of dollars) | |||||
Financial debt, gross (A) | 155.0 | ||||
Financial debt — current portion | 155.0 | ||||
– guaranteed | — | ||||
– secured | — | ||||
– unguaranteed / unsecured | 155.0 | ||||
Financial debt — long-term portion | — | ||||
- guaranteed | — | ||||
- secured | — | ||||
- unguaranteed / unsecured | — | ||||
Shareholders’ equity (B) | 710.5 | ||||
Common stock | 0.4 | ||||
Additional paid-in capital | 492.4 | ||||
Accumulated earnings | 228.3 | ||||
Treasury stock | (23.0 | ) | |||
Minimum pension liability | (9.4 | ) | |||
Cumulative translation adjustment | 21.8 | ||||
TOTAL (A) + (B) | 865.5 |
Veritas July 31, 2006 | ||||
(US GAAP) (unaudited) | ||||
(in millions of dollars) | ||||
Cash, cash equivalents and marketable securities (A)) | 401.9 | |||
Cash and cash equivalents | 401.9 | |||
Marketable securities | — | |||
Financial debt, gross (B) | (155.0 | ) | ||
TOTAL (A) + (B) | 246.9 |
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Period-End | Average | |||||||||||||||
Rate(1) | Rate(2) | High | Low | |||||||||||||
Recent Monthly Data | ||||||||||||||||
November 2006 (through November 24, 2006) | $ | 1.3081 | $ | 1.2821 | $ | 1.3081 | $ | 1.2705 | ||||||||
October 2006 | 1.2773 | 1.2617 | 1.2773 | 1.2502 | ||||||||||||
September 2006 | 1.2687 | 1.2722 | 1.2833 | 1.2648 | ||||||||||||
August 2006 | 1.2793 | 1.2810 | 1.2914 | 1.2735 | ||||||||||||
July 2006 | 1.2764 | 1.2681 | 1.2822 | 1.2529 | ||||||||||||
June 2006 | 1.2779 | 1.2661 | 1.2953 | 1.2522 | ||||||||||||
May 2006 | 1.2833 | 1.2767 | 1.2888 | 1.2607 | ||||||||||||
Interim Period Data | ||||||||||||||||
Six months ended June 30, 2006 | 1.2779 | 1.2399 | 1.2953 | 1.1860 | ||||||||||||
Annual Data (Year Ended December 31,) | ||||||||||||||||
2005 | 1.1842 | 1.2400 | 1.3476 | 1.1667 | ||||||||||||
2004 | 1.3538 | 1.2478 | 1.3625 | 1.1801 | ||||||||||||
2003 | 1.2597 | 1.1411 | 1.2597 | 1.0361 | ||||||||||||
2002 | 1.0485 | 0.9495 | 1.0485 | 0.8594 | ||||||||||||
2001 | 0.8901 | 0.8909 | 0.9535 | 0.8370 |
(1) | The period-end rate is the noon buying rate on the last business day of the applicable period. |
(2) | The average rate for each monthly period was calculated by taking the simple average of the daily noon buying rates, as published by the Federal Reserve Bank of New York. The average rate for each interim period and annual period was calculated by taking the simple average of the noon buying rates on the last business day of each month during the relevant period. |
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Because the market price of CGG ADSs will fluctuate, Veritas stockholders cannot be sure of the value of the merger consideration they will receive. |
• | market reaction to the announcement of the merger and market assessment of its likelihood to be consummated; | |
• | changes in oil and natural gas prices; | |
• | changes in the respective businesses, operations and prospects of CGG and Veritas, including CGG’s and Veritas’ ability to meet earnings estimates; | |
• | governmental or litigation developments or regulatory considerations affecting CGG or Veritas or the industry generally; and | |
• | general business, market or economic conditions. |
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Veritas stockholders may receive a form or combination of consideration different from what they elect. |
If you tender shares of Veritas common stock to make an election, you will not be able to sell those shares unless you revoke your election prior to the election deadline. |
Necessary consents and approvals from government entities may delay or prevent the closing of the merger or have a material adverse effect on CGG-Veritas. |
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Any delay in completing the merger may substantially reduce the benefits expected to be obtained from the merger. |
CGG and Veritas will incur substantial transaction and merger-related costs in connection with the merger. |
The businesses and technologies of CGG and Veritas, as well as other businesses or technologies that the combined company may acquire, may be difficult to integrate, disrupt the combined company’s business, dilute shareholder value or divert management attention. |
• | difficulties in the integration of the operations, technologies, products and personnel of the acquired company; | |
• | diversion of management’s attention away from other business concerns; and | |
• | the assumption of any undisclosed or other potential liabilities of the acquired company. |
The pendency of the merger could materially adversely affect the future business and operations of Veritas or CGG. |
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Directors and executive officers of Veritas may have potential conflicts of interest in recommending that you vote to adopt the merger agreement. |
�� | the continued employment of certain executive officers of Veritas by CGG-Veritas; | |
• | the continued positions of certain directors of Veritas as directors of CGG-Veritas; | |
• | employment agreements with certain executive officers of Veritas, which may require lump sum payments within two years after a change of control of Veritas; | |
• | the accelerated vesting of, and payment in the merger with respect to, certain restricted stock units and stock options and lapse of restrictions on restricted shares for certain directors and executive officers; and | |
• | the indemnification of former Veritas directors and officers by the combined company described under “The Merger — Interests of the Directors and Executive Officers of Veritas in the Merger — Indemnification and Insurance.” |
In certain circumstances, the merger agreement requires payment of a termination fee of $85 million by Veritas to CGG and, under certain circumstances, Veritas must allow CGG three business days to match any alternative acquisition proposal prior to any change in the Veritas board’s recommendation. These terms could affect the decisions of a third party proposing an alternative transaction to the merger. |
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The combined company may fail to realize the anticipated synergies and other benefits expected from the merger, which may materially adversely affect the value of CGG ordinary shares and CGG ADSs after the effective time of the merger. |
Uncertainties associated with the merger may cause a loss of employees and may otherwise materially adversely affect the future business and operations of CGG-Veritas. |
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The trading price of CGG ADSs may be affected by factors different from those affecting the price of shares of Veritas common stock. |
Because some existing holders of CGG ordinary shares are entitled to two votes for every share they hold, the percentage of the voting rights of the combined company that you will own immediately after the effective time of the merger will be less than the percentage of the outstanding share capital of the combined company that you will own. |
CGG is a foreign private issuer under the Exchange Act and the rules and regulations of the SEC and, thus, is exempt from certain rules and requirements under the Exchange Act and is permitted to file less information with the SEC than a company incorporated in the United States or a non-foreign private issuer. |
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The combined company’s results of operations may be significantly affected by currency fluctuations. |
CGG and Veritas have had losses in the past and cannot assure that the combined company will be profitable in the future. |
The combined company will be subject to risks related to its international operations that could harm its business and results of operations. |
• | instability of foreign economies and governments; | |
• | risks of war, terrorism, civil disturbance, seizure, renegotiation or nullification of existing contracts; and |
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• | foreign exchange restrictions, sanctions and other laws and policies affecting taxation, trade and investment. |
CGG-Veritas will invest significant amounts of money in acquiring and processing seismic data for multi-client surveys and for its data library without knowing precisely how much of the data it will be able to sell or when and at what price it will be able to sell the data. |
• | may not fully recover the costs of acquiring and processing the data through future sales. The amounts of these data sales are uncertain and depend on a variety of factors, many of which are beyond its control. In addition, the timing of these sales is unpredictable and sales can vary greatly from period to period. Technological or regulatory changes or other developments could also materially adversely affect the value of the data; | |
• | value of its multi-client data could be significantly adversely affected if any material adverse change occurred in the general prospects for oil and gas exploration, development and production activities in the areas where it acquires multi-client data; and | |
• | reduction in the market value of such data will require the combined company to write down its recorded value, which could have a significant material adverse effect on its results of operations. |
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CGG-Veritas’ working capital needs are difficult to forecast and may vary significantly, which could result in additional financing requirements that it may not be able to meet on satisfactory terms, or at all. |
Technological changes and new products and services are frequently introduced in the market, and the combined company’s technology could be rendered obsolete by these introductions or it may not be able to develop and produce new and enhanced products on a cost-effective and timely basis. |
The combined company will depend on proprietary technology and will be exposed to risks associated with the misappropriation or infringement of that technology. |
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The combined company will rely on significant customers, so the loss of a single customer or a few customers could have a material adverse effect on its operating revenues and business. |
The nature of the combined company’s business will subject it to significant ongoing operating risks for which it may not have adequate insurance or for which it may not be able to procure adequate insurance on economical terms, if at all. |
Compliance with internal controls procedures and evaluations and attestation requirements will require significant efforts and resources and may result in the identification of significant deficiencies or material weaknesses of CGG. |
The combined company will depend on capital expenditures by the oil and gas industry, and reductions in such expenditures in the future may have a material adverse effect on its business. |
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• | demand for oil, natural gas and natural gas liquids; | |
• | worldwide political, military and economic conditions, including political developments in the Middle East, economic growth levels and the ability of OPEC to set and maintain production levels and prices for oil; | |
• | levels of oil and gas production; | |
• | the price and availability of alternative fuels; | |
• | policies of governments regarding the exploration for and production and development of oil and gas reserves in their territories; and | |
• | global weather conditions. |
The combined company will be subject to intense competition, which could limit its ability to maintain or increase its market share or to maintain its prices at profitable levels. |
CGG-Veritas will have high levels of fixed costs that will be incurred regardless of its level of business activity. |
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The land and marine seismic acquisition revenues of CGG-Veritas may vary significantly during the year. |
The combined company’s business will be subject to governmental regulation, which may materially adversely affect its future operations. |
CGG-Veritas’ substantial debt after the effective time of the merger could materially adversely affect its financial health and prevent it from fulfilling its obligations. |
• | increase its vulnerability to general adverse economic and industry conditions; | |
• | require it to dedicate a substantial portion of its cash flow from operations to payments on its indebtedness, thereby reducing the availability of its cash flow to fund working capital, capital expenditures and other general corporate purposes; | |
• | limit its flexibility in planning for, or reacting to, changes in its businesses and the industries in which it will operate; |
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• | place it at a competitive disadvantage compared to its competitors that have less debt; and | |
• | limit, along with the financial and other restrictive covenants of its indebtedness, among other things, its ability to borrow additional funds. |
CGG’s and Veritas’ debt agreements contain restrictive covenants that may limit the ability ofCGG-Veritas to respond to changes in market conditions or pursue business opportunities. |
• | incur or guarantee additional indebtedness or issue preferred shares; | |
• | pay dividends or make other distributions; | |
• | purchase equity interests or redeem subordinated indebtedness early; | |
• | create or incur certain liens; | |
• | enter into transactions with affiliates; | |
• | issue or sell capital stock of subsidiaries; | |
• | engage in sale-and-leaseback transactions; and | |
• | sell assets or merge or consolidate with another company. |
If CGG-Veritas is unable to comply with the restrictions and covenants in the indentures and debt agreements governing CGG’s and Veritas’ notes and other debt, there could be a default under the terms of these indentures and agreements, which could result in an acceleration of payment of funds that CGG and Veritas have borrowed. |
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If CGG is unable to draw funds under its bridge loan facility, it will have to seek other financing to complete the merger, which financing may not be available or may be on less favorable terms. |
CGG-Veritas must repay its borrowings under the bridge loan facility within 18 to 24 months after the effective time of the merger, and replacement financing may not be available or may be on unfavorable terms to CGG-Veritas. |
Rating agencies could downgrade their corporate or debt ratings for CGG or Veritas before the effective time of the merger or CGG-Veritas after the effective time of the merger. Such downgrades could have a material adverse effect on the cost of financing. |
CGG-Veritas and its subsidiaries may incur substantially more debt. |
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To service its indebtedness, the combined company will require a significant amount of cash, and its ability to generate cash will depend on many factors beyond its control. |
CGG-Veritas’ results of operation could be materially adversely affected by changes in interest rates. |
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• | the ability to consummate the merger; | |
• | the ability to draw on the bridge loan facility; | |
• | the ability to finance operations on acceptable terms; | |
• | difficulties and delays in obtaining regulatory approvals for the merger; | |
• | difficulties and delays in achieving synergies and cost savings; | |
• | potential difficulties in meeting conditions set forth in the merger agreement; | |
• | changes in international economic and political conditions, and in particular in oil and gas prices; | |
• | exposure to the credit risk of customers; | |
• | the social, political and economic risks of the global operations of CGG and Veritas; | |
• | the costs and risks associated with pension and post-retirement benefit obligations; | |
• | the complexity of products sold; | |
• | changes to existing regulations or technical standards; | |
• | existing and future litigation; | |
• | difficulties and costs in protecting intellectual property rights and exposure to infringement claims by others; and | |
• | compliance with environmental, health and safety laws. |
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• | financing the cash component of the merger consideration, | |
• | repaying certain existing debt of Veritas, and | |
• | paying the fees and expenses incurred in connection with the foregoing. |
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• | minimum operating results before interest and depreciation (ORBDA) to total net interest costs; | |
• | maximum total net debt to ORBDA; and | |
• | minimum ORBDA minus capital expenditure to total net interest costs. | |
• | consummation of the merger substantially simultaneously with the closing of the bridge loan facility in accordance with applicable law and on the terms described in the merger agreement, with no material term or condition of the merger agreement having been waived or amended in any respect that is adverse to the interests of the lenders under the bridge loan facility without the consent of Credit Suisse International; | |
• | there not having occurred any event, change or condition since July 31, 2005 that, individually or in the aggregate, has had, or could reasonably be expected to have a material adverse effect on Veritas and its subsidiaries; | |
• | the provision of certain of CGG’s and Veritas’ audited and unaudited consolidated financial statements; and | |
• | the execution and/or delivery of definitive financing documentation. | |
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• | to consider and vote on the proposal to adopt the merger agreement; and | |
• | to transact any other business as may properly come before the Veritas special meeting or any adjournment or postponement of the Veritas special meeting. |
• | Internet. You may submit a proxy over the Internet by going to the website listed on your proxy card. Once at the website, follow the instructions to submit a proxy. | |
• | Telephone. You may submit a proxy using the toll-free number listed on your proxy card.Easy-to-follow voice prompts will help you and confirm that your submission instructions have been followed. | |
• | Mail. You may submit a proxy by signing, dating and returning your proxy card in the pre-addressed postage-paid envelope provided. |
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Financial Considerations |
• | the financial terms of the transaction, including: |
• | an implied purchase price per share of Veritas common stock of $74.93 per share based on the closing price of CGG’s ADSs on August 29, 2006, which represented an implied premium of 34.7% over Veritas’30-day average closing price of $56.69 for the period ended August 29, 2006; | |
• | the ability of the Veritas stockholders to elect to receive cash or ADS consideration, subject to proration, thereby giving the stockholders of Veritas the opportunity to choose between participation in the combined company or liquidity; and |
• | the significant cash portion of the merger consideration that helps protect against significant diminution in the value of the transaction as a result of any diminution in the value of CGG ADSs between signing and closing; | |
• | the expected pre-tax synergies that could result from the merger; | |
• | that following discussions with other potential acquirors, the offer made by CGG was determined to be the highest and best acquisition proposal; and |
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• | the financial analysis and opinion of Goldman Sachs, Veritas’ financial advisor, that, as of September 4, 2006, and based upon and subject to the factors and assumptions set forth in its opinion, the per share ADS consideration and the per share cash consideration to be received by holders of Veritas common stock, taken in the aggregate, pursuant to the merger agreement was fair from a financial point of view to such holders. |
Strategic Considerations |
• | its expectation that the combined company would be a leading provider of seismic technologies and services, with: |
• | complementary, recent vintage, well-positioned seismic data libraries; | |
• | a large marine seismic fleet with a balanced distribution of fully owned and chartered vessels; | |
• | strong local relationships in differentiated land seismic markets; | |
• | some of the best personnel in the seismic industry; and | |
• | a deep and broad range of expertise and technology in the processing and imaging sector; |
• | that the combined company is expected to be the largest “pure-play” seismic company in the world; and | |
• | its expectation that the larger size of the combined company would enable it to: |
• | take advantage of economies of scale and worldwide capacity as well as greater financial strengths; | |
• | benefit from a larger customer base and increased geographic presence; | |
• | offer a broad variety of technology and services solutions to its customers; and | |
• | offer customers greater breadth of staff expertise. |
Other Transaction Considerations |
• | the terms of the merger agreement and the structure of the transaction, including the conditions to each company’s obligations to complete the merger; | |
• | the absence of any financing condition and the fact that CGG has represented in the merger agreement that it will have sufficient funds available (through existing sources of financing and the signed commitment letter from Credit Suisse International) to consummate the merger and the other transactions contemplated by the merger agreement; | |
• | the ability of Veritas and CGG to complete the merger, including their ability to obtain the necessary regulatory approvals and their obligations to attempt to obtain those approvals; | |
• | the information governing CGG’s and Veritas’ respective businesses and financial results, including the results of Veritas’ due diligence investigation of CGG; | |
• | the fact that the merger agreement imposes limitations on the ability of CGG to solicit offers for the acquisition of CGG as well as the possibility that CGG could be required to pay a termination fee of $85.0 million in certain circumstances; |
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• | that the terms of the merger agreement, including the termination fee, would not preclude a proposal for an alternative transaction involving Veritas; | |
• | the ability under the merger agreement of Veritas under certain circumstances to provide non-public information to, and engage in discussions with, third parties that propose an alternative transaction; and | |
• | the terms of the merger agreement permit the board of directors of Veritas to change or withdraw its recommendation of the merger to Veritas’ stockholders if, among other reasons, the board of directors determines in good faith that an unsolicited offer is an acquisition proposal that is superior for Veritas’ stockholders from a financial point of view. |
Risks |
• | the significant risks and expenses inherent in combining and successfully integrating two companies, especially since the businesses currently reside in different national jurisdictions; | |
• | the size of the premium represented by the merger consideration relative to the pre-announcement value of Veritas’ common stock might be reduced or eliminated by a decline in value of CGG’s ADSs through the time the merger is consummated; | |
• | the potential downward pressure on the value of the Veritas common stock prior to the consummation of the merger and on the value of the CGG ADSs after consummation of the merger due to U.S. shareholders selling their shares because they are either prohibited from or otherwise desire not to hold securities of a foreign issuer; | |
• | as of June 30, 2006, on a pro forma basis to reflect the merger and CGG’s borrowings under the bridge loan facility to finance the cash component of the merger consideration and assuming the bridge loan facility is fully drawn, the combined company’s total financial debt, total assets and stockholders’ equity would have been€1,611 million,€4,307 million and€1,977 million, respectively, under IFRS. | |
• | stockholders of Veritas who receive stock pursuant to the merger would receive ADSs issued by a foreign company instead of common stock of a domestic company; | |
• | because some existing holders of CGG ordinary shares may be entitled to two votes for every share they hold if they held such shares for at least two years, the percentage of the voting rights of Veritas stockholders in the combined company following the merger could be less than the percentage of the outstanding share capital of the combined company received by Veritas stockholders pursuant to the merger; | |
• | the risk that the expected synergies and other benefits of the merger might not be fully achieved or may not be achieved within the timeframes expected; | |
• | the possibility that regulatory or governmental authorities might seek to impose conditions on or otherwise prevent or delay the merger (and that the merger ultimately may not be completed as a result of material burdensome conditions imposed by regulatory authorities or otherwise); | |
• | certain of Veritas’ directors and officers may have interests in the merger as individuals that are in addition to, or that may be different from, the interests of the Veritas stockholders (see “ — Interests of the Directors and Executive Officers of Veritas in the Merger”); | |
• | the terms of the merger agreement that create a strong commitment on the part of Veritas to complete the merger; | |
• | the limitations on Veritas’ ability to solicit other offers as well as the possibility that it could be required to pay an $85.0 million termination fee in certain circumstances; |
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• | the fees and expenses associated with completing the merger; | |
• | the risk that either the Veritas stockholders or the CGG shareholders may fail to approve the merger; | |
• | the possibility that Veritas would be required to pay to CGG a $20.0 million fee as a reasonable estimate of CGG’s expenses if the Veritas stockholders do not approve the merger; | |
• | the risk that the merger may not be completed and the possible adverse implications for investor relations, management credibility and employee morale under such circumstances; | |
• | the risk that a significant number of Veritas stockholders that receive CGG ADSs as merger consideration may cease to hold such CGG ADSs for so long as the combined company remains a foreign private issuer or a company whose executive offices are not in the United States and that is not incorporated in the United States; | |
• | the fact that, for U.S. federal income tax purposes, the cash portion of the merger consideration would be taxable to Veritas’ stockholders; | |
• | the risk that the merger might not be completed, the potential impact of the restrictions under the merger agreement on Veritas’ ability to take certain actions during the period prior to the closing of the merger (which may delay or prevent Veritas from undertaking business opportunities that may arise pending completion of the merger), the potential for diversion of management and employee attention and for increased employee attrition during that period and the potential effect of these on Veritas’ business and relations with customers and service providers; and | |
• | the risks of the type and nature described above under “Risk Factors.” |
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Strategic Considerations |
• | the combination of CGG and Veritas will take place in a strong business environment. Decreasing reserves of oil and gas companies have been coupled with growing energy consumption sustained by long-term demand, particularly in China and India. This environment has created a need to accelerate the pace of exploration in new areas, to revisit existing exploration areas with new technologies and to optimize reservoir management to maximize recovery rates. Seismic technology plays a key role in this process and CGG-Veritas, with its combined technology and worldwide geographic fit, is expected to be well positioned to compete to lead and meet the industry’s needs; | |
• | the combination of CGG and Veritas will create a strong global pure-play seismic company, offering a broad range of seismic services, and, through Sercel, geophysical equipment to the industry across all markets. The business, geographic and client complementarities of CGG and Veritas are expected to respond to the growing demand for seismic imaging and reservoir solutions. CGG-Veritas is expected to be well positioned to provide an improved technological advanced product offering in seismic services as most oil and gas companies attempt to replace diminishing reserves in a more complex exploration environment, to strengthen long-term relationships with a broad range of clients and to improve financial performance through business cycles; | |
• | the combination of CGG and Veritas will bring together two companies with strong technological foundations in the geophysical services and equipment market. Both CGG and Veritas have a long tradition in providing seismic services both onshore and offshore. In particular, Veritas’ strong offshore positions will effectively complete the repositioning to offshore that CGG has been implementing during the last few years. Both companies already use a broad range of Sercel technologies for their data acquisition activities, thereby providing a homogeneous equipment base for the combinedCGG-Veritas. In addition, Veritas’ strong focus on North America fits well with CGG’s international presence. Combining the two customer bases is expected to provide a good balance between national oil companies (a strong position of CGG), major oil and gas operators (a strong position of both CGG and Veritas) andU.S.-based operators, both majors and independent (a strong position of Veritas). The combined technology and know-how of the two companies will strengthen research and development capabilities to best serve the CGG-Veritas client base with a broader range of technologies that CGG-Veritas will be able to deliver more rapidly to the market; | |
• | the addition of Veritas’ fleet of seven vessels will create a combined seismic services business operating the world’s leading seismic fleet of 20 vessels, including 14 high capacity 3D vessels. Capacity in the combined fleet is well balanced between large (more than 10 streamers), medium (six to eight streamers) and smaller sizes, with all vessels equipped with Sercel’s solid or fluid streamers. The combined fleet will provide highly flexible fleet management potential with a balanced distribution of fully owned, chartered, new built and significantly depreciated capacity. Additionally, most of the vessels in the combined fleet have been recently equipped with relatively new technology which will provideCGG-Veritas with a fleet that can be managed without significant investments in the near term; | |
• | multi-client services will benefit from two complementary, recent vintage, well-positioned seismic data libraries. For example, offshore, the Veritas library will bring to CGG complementary data in the Gulf of Mexico, with Veritas data library being positioned in the Western and Central Gulf while CGG’s data library is in the Central and Eastern Gulf. Data merging from the CGG and Veritas libraries will provide potential for cross imaging enhancement and value creation. Onshore, Veritas’ land library offers additional potential in North America. All these benefits take place in a market where a global library portfolio is increasingly attractive to clients; | |
• | CGG’s and Veritas’ respective offerings for land acquisition services represent strong geographical and technological complementarities for high-end positioning and further development of local |
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partnerships. Veritas’ strong presence in the western hemisphere, in particular North America, complements CGG’s main geographic footprint in the eastern hemisphere and its strong focus on the Middle East. In addition, CGG’s and Veritas’ technological complementarities will enhance CGG-Veritas’ land offering, ranging from exploration seismic to field seismic monitoring; | ||
• | CGG’s and Veritas’ respective positions in data processing and imaging as well as the skills and reputation of their experts and geoscientists, will allow CGG-Veritas to create the industry reference in this segment, with particular strengths in advanced technologies such as depth imaging, 4D processing and reservoir characterization as well as a close link with clients through dedicated centers; | |
• | the merger will not affect Sercel’s open technology approach. Sercel will pursue its strategy of maintaining leading edge technology, offering new generations of differentiating products and focusing on key markets; and | |
• | with a combined workforce of approximately 7,000 staff operating worldwide, including Sercel,CGG-Veritas will, through continued innovation, be an industry leader in seismic technology, services and equipment with a broad base of customers including independent, international and national oil companies. |
Financial Considerations |
• | the merger is expected to result in pre-tax cost and expense savings of approximately $65 million per year. Two-thirds of the estimated synergies are anticipated to be achieved within the first year following the merger, with the full synergies expected the year after. CGG expects the synergies to arise from various areas, such as having one public company (CGG-Veritas) instead of two once Veritas common stock is deregistered with the SEC and delisted from the NYSE, the redeployment of support resources towards operations, the rationalization of premises, better utilization of vessels with less transit time between regions and additional revenue potential through the combined multi-client libraries. Implementation costs are estimated at approximately $20 million in non-recurring expenses (approximately 30% of cost synergies), with 80% occurring in the first year following the merger and 20% in the second year; | |
• | in light of perspectives in the seismic market that lead CGG-Veritas to anticipate strong cash flow in the medium-term, CGG believes that it is appropriate and consistent with both the optimization of shareholder value and the maintenance of a strong balance sheet structure to leverage the acquisition with up to $1.5 billion of additional debt; and | |
• | the merger is expected to have a positive impact on 2008 earnings per share of CGG-Veritas, and a broadly neutral impact on 2007 cash earnings per share of CGG-Veritas (cash earnings meaning earnings adjusted to exclude, with related tax impact, all merger integration costs, additional depreciation and amortization of assets resulting from the proration of the purchase price, and other non-recurring items as described in the unaudited pro forma condensed combined financial information and related notes included elsewhere in this proxy statement/ prospectus). |
Other Transaction Considerations |
• | the information concerning CGG’s and Veritas’ respective businesses and financial results, including the results of CGG’s due diligence investigation of Veritas; | |
• | CGG’s management’s assessment that it can, working with Veritas managers and employees, effectively and efficiently integrate the Veritas businesses with the corresponding CGG businesses; |
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• | the fact that the board of directors of CGG-Veritas will include representation of former CGG and Veritas stockholders including Thierry Pilenko, currently chairman and CEO of Veritas, who will be proposed for appointment as one of the combined company’s new directors; | |
• | the fact that the executive offices of CGG-Veritas will be located in France; | |
• | the fact that CGG employees will have the opportunity to work across a larger company and benefit from the better competitive position of the combined company; | |
• | the separate opinions of CGG’s financial advisors, Credit Suisse and Rothschild, to the CGG board of directors as to the fairness, from a financial point of view and as of the date of such opinions, to CGG of the aggregate consideration to be paid by CGG in the merger, as more fully described below under “— Opinions of CGG’s Financial Advisors and attached as Annex C and D, respectively; | |
• | the terms of the merger agreement that create a strong commitment on the part of Veritas to complete the merger; and | |
• | the fact that CGG can terminate the merger agreement in the event of antitrust or other governmental proceedings to require CGG and/or Veritas to materially divest or limit their respective operations. |
Risks |
• | the risks of integrating the operations of two businesses the size of Veritas and CGG, including the risks that integration costs may be greater, and synergy benefits lower, than anticipated by CGG’s or Veritas’ management; | |
• | the risk that the value of CGG-Veritas ordinary shares and CGG-Veritas ADSs following completion of the merger may be adversely affected if CGG-Veritas fails to realize the anticipated cost savings, revenue enhancements and other benefits expected from the merger, or if there are delays in the integration process; | |
• | the risk that the current strong seismic cycle might be shorter than currently anticipated by the overall industry; | |
• | the risk that regulatory agencies may not approve the merger or may impose terms and conditions on their approvals that adversely affect the future financial results of CGG-Veritas; | |
• | the terms of the merger agreement that create a strong commitment on the part of CGG to complete the merger; | |
• | the fact that CGG’s obligation to consummate the merger is not conditioned upon the receipt of financing; | |
• | the risk that the merger might not be completed and the possible adverse implications for investor relations, management credibility and employee morale under such circumstances; and | |
• | the risks of the type and nature described above under “Risk Factors.” |
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Preliminary Information |
• | share price; | |
• | trading multiples for comparable listed companies; | |
• | multiples in comparable transactions; and | |
• | discounted future cash flows. | |
Financial Analysis of the Merger Consideration |
Share Prices |
Implied | ||||||||||||||||||||
Veritas | Merger | Implied | ||||||||||||||||||
CGG ADS | Share | Consideration | Exchange | Premium/ | ||||||||||||||||
Price | Price | Value | Ratio | (Discount) | ||||||||||||||||
(US$) | (US$) | (US$) | ||||||||||||||||||
September 1, 2006(1) | 33.27 | 62.18 | 74.93 | 2.2521 | 20.5 | % | ||||||||||||||
August 29, 2006 | 33.33 | 56.16 | 75.00 | 2.2501 | 33.5 | % | ||||||||||||||
1-month average(2)(3) | 34.10 | 55.73 | 75.88 | 2.2249 | 36.1 | % | ||||||||||||||
2-month average(2)(3) | 33.58 | 53.83 | 75.28 | 2.2420 | 39.8 | % | ||||||||||||||
3-month average(2)(3) | 34.30 | 50.97 | 76.10 | 2.2188 | 49.3 | % | ||||||||||||||
6-month average(2)(3) | 33.34 | 49.33 | 75.00 | 2.2499 | 52.1 | % | ||||||||||||||
9-month average(2)(3) | 30.71 | 46.62 | 72.01 | 2.3449 | 54.5 | % | ||||||||||||||
12-month average(2)(3) | 26.28 | 44.05 | 66.96 | 2.5478 | 52.0 | % | ||||||||||||||
12-month high(3) | 40.50 | 57.27 | 83.17 | 2.0536 | 45.2 | % | ||||||||||||||
12-month low(3) | 16.57 | 29.48 | 55.89 | 3.3730 | 89.6 | % |
(1) | Closing price on the last NYSE trading day before the announcement of the merger. |
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(2) | Volume-weighted average over the period. |
(3) | Period ended August 29, 2006. |
Comparable Listed Companies |
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Implied | ||||||||||||
Merger | ||||||||||||
CGG ADS | Consideration | Premium/ | ||||||||||
Price | Value | (Discount) | ||||||||||
(US$) | (US$) | |||||||||||
September 1, 2006(1) | 33.27 | 74.93 | 24.0 | % | ||||||||
August 9, 2006 | 33.33 | 75.00 | 24.2 | % | ||||||||
1-month average(2)(3) | 34.10 | 75.88 | 25.6 | % |
(1) | Closing price on the last NYSE trading day before the announcement of the merger. |
(2) | Volume-weighted average over the period. |
(3) | Period ended August 29, 2006. |
Comparable Transactions |
Date of Announcement | Acquiror | Target | ||
April 20, 2006 | Schlumberger Ltd. | Western Geco | ||
November 15, 2004 | Sìem Offshore Inc. | Subsea 7, Inc. | ||
August 12, 2004 | National-Oilwell, Inc. | Varco International, Inc. | ||
February 20, 2002 | BJ Services Company | DSCA, Inc. | ||
July 1, 2001 | Technip SA | Coflexip SA |
Implied | ||||||||||||
Merger | ||||||||||||
CGG ADS | Consideration | Premium/ | ||||||||||
Price | Value | (Discount) | ||||||||||
(US$) | (US$) | |||||||||||
September 1, 2006(1) | 33.27 | 74.93 | 4.4 | % | ||||||||
August 9, 2006 | 33.33 | 75.00 | 4.5 | % | ||||||||
1-month average(2)(3) | 34.10 | 75.88 | 5.7 | % |
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(1) | Closing price on the last NYSE trading day before the announcement of the merger. |
(2) | Volume-weighted average over the period. |
(3) | Period ended August 29, 2006. |
Discounted Future Cash Flows |
Implied | ||||||||||||||||
Merger | Premium/(Discount) | |||||||||||||||
CGG ADS | Consideration | |||||||||||||||
Price | Value | Before Synergies | After Synergies | |||||||||||||
(US$) | (US$) | |||||||||||||||
September 1, 2006(1) | 33.27 | 74.93 | (3.6)% - 24.9% | (13.9)% - 9.8% | ||||||||||||
August 29, 2006 | 33.33 | 75.00 | (3.5)% - 25.1% | (13.8)% - 9.9% | ||||||||||||
1-month average(2)(3) | 34.10 | 75.88 | (2.4)% - 26.5% | (12.8)% - 11.2% |
(1) | Closing price on the last NYSE trading day before the announcement of the merger. |
(2) | Volume-weighted average over the period. |
(3) | Period ended August 29, 2006. |
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Summary of Financial Analysis of the Offer |
Method | Premium/(Discount) | |||
Share prices | 20.5% - 36.1% | |||
September 1, 2006(1) | 20.5% | |||
August 29, 2006 | 33.5% | |||
1-month average as of August 29, 2006 | 36.1% | |||
Comparable listed companies | 24.0% - 25.6% | |||
Comparable transactions | 4.4% - 5.7% | |||
Discounted free future cash flows before taking synergies into account | (3.6)% - 26.5% | |||
Discounted free future cash flows after taking synergies into account | (13.9)% - 11.2% |
(1) | Closing price on the last NYSE trading day before the announcement of the merger. |
Criteria not Taken into Consideration |
• | Book value of net assets; | |
• | Adjusted net assets; and | |
• | Analysts’ target price. | |
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• | the merger agreement; | |
• | annual reports to stockholders and annual reports on Form 10-K of Veritas for the five fiscal years ended July 31, 2005; | |
• | annual reports to shareholders and annual reports on Form 20-F of CGG for the five years ended December 31, 2005; | |
• | certain interim reports to stockholders and quarterly reports on Form 10-Q of Veritas; | |
• | certain interim reports to shareholders of CGG; | |
• | certain other communications from Veritas and CGG to their respective shareholders; and | |
• | certain internal financial analyses and forecasts for Veritas prepared by its management and certain internal financial analyses and forecasts for CGG prepared by its management, as reviewed and approved by the management of Veritas for use by Goldman Sachs in connection with its opinion, including certain cost savings and operating synergies projected by the management of CGG to result from the merger, as reviewed and approved by the management of Veritas for use by Goldman Sachs in connection with its opinion. |
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• | CGG; | |
• | Petroleum Geo-Services ASA; | |
• | Schlumberger Limited; and | |
• | TGS-NOPEC Geophysical Company ASA. |
• | price as a multiple of estimated earnings per share, or EPS, for 2006 and 2007; | |
• | price as a multiple of estimated cash flow per share for 2006 and 2007; and | |
• | price as a multiple of estimated adjusted cash flow per share for 2006 and 2007. |
Selected Companies | Veritas | |||||||||||||||||||||||||||
As of | As of | As of | At | |||||||||||||||||||||||||
Price as a Multiple of | Range | Mean | Median | 09/01(1) | 08/29(1) | 08/29-IBES(2) | $74.93(1) | |||||||||||||||||||||
2006E EPS | 13.5x- 21.4 | x | 16.4 | x | 15.4 | x | 24.0 | x | 21.7 | x | 23.4 | x | 29.0 | x | ||||||||||||||
2007E EPS | 9.0x-16.7 | x | 12.8 | x | 12.8 | x | 23.5 | x | 21.2 | x | 19.7 | x | 28.3 | x | ||||||||||||||
2006E Cash Flow per Share | 7.2x-14.7 | x | 9.2 | x | 7.4 | x | 6.0 | x | 5.4 | x | 5.9 | x | 7.2 | x | ||||||||||||||
2007E Cash Flow per Share | 5.8x-11.8 | x | 7.6 | x | 6.4 | x | N/A | N/A | 4.9 | x | N/A | |||||||||||||||||
2006E Adjusted Cash Flow per Share(3) | 9.2x-15.2 | x | 11.8 | x | 11.4 | x | 16.0 | x | 14.4 | x | 15.3 | x | 19.3 | x | ||||||||||||||
2007E Adjusted Cash Flow per Share(3) | 7.7x-12.0 | x | 9.6 | x | 9.4 | x | N/A | N/A | 13.4 | x | N/A |
(1) | Multiples based on calendarized IBES estimates. |
(2) | Multiples based on IBES fiscal year estimates. |
(3) | Adjusted cash flow per share excludes add-back of amortization of multi-client libraries. Multi-client amortization per Wall Street Research. |
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• | enterprise value, which is the market value of common equity (based on fully diluted shares outstanding) plus the book value of debt, plus preferred interest, plus minority interest, less cash, as a multiple of estimated earnings before interest, taxes, depreciation and amortization, or EBITDA, for 2006 and 2007; and | |
• | enterprise value as a multiple of estimated adjusted EBITDA for 2006 and 2007. |
Selected Companies | Veritas | |||||||||||||||||||||||||
As of | As of | As of | At | |||||||||||||||||||||||
Enterprise Value as a Multiple of: | Range | Mean | Median | 09/01(1) | 08/29(1) | 08/29-IBES(2) | $74.93(1) | |||||||||||||||||||
2006E EBITDA | 5.7x-11.8x | 7.4 | x | 6.1 | x | 5.2 | x | 4.6 | x | 5.1 | x | 6.4x | ||||||||||||||
2007E EBITDA | 4.6x- 9.6x | 6.2 | x | 5.4 | x | 4.7 | x | 4.2 | x | 4.0 | x | 5.8x | ||||||||||||||
2006E Adjusted EBITDA(3) | 7.5x-12.1x | 8.9 | x | 7.9 | x | 10.7 | x | 9.4 | x | 10.6 | x | 13.2x | ||||||||||||||
2007E Adjusted EBITDA(3) | 5.6x- 9.8x | 7.4 | x | 7.1 | x | 10.4 | x | 9.2 | x | 8.2 | x | 12.9x |
(1) | Multiples based on calendarized IBES estimates. |
(2) | Multiples based on IBES fiscal year estimates. |
(3) | Adjusted EBITDA excludes add-back of amortization of multi-client libraries. Multi-client amortization per Wall Street Research. |
Illustrative Per Share | ||||
Value Indications | ||||
Veritas | $ | 58.50 - $73.21 |
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Illustrative Per Share | ||||
Value Indications | ||||
Veritas | $ | 53.89 - $68.75 |
• | a premium of 20.5% based on the closing price on September 1, 2006 of $62.18 per share; | |
• | a premium of 33.4% based on the closing price on August 29, 2006 of $56.16 per share; | |
• | a premium of 20.5% based on the latest fifty-two-week high market closing price as of September 1, 2006 of $62.18 per share; | |
• | a premium of 154.2% based on the latest fifty-two-week low market closing price as of September 1, 2006 of $29.48 per share; | |
• | a premium of 28.4% based on the latest one-week average market price as of September 1, 2006 of $58.37 per share; | |
• | a premium of 33.2% based on the latest one-month average market price as of September 1, 2006 of $56.25 per share; | |
• | a premium of 42.9% based on the latest three-month average market price as of September 1, 2006 of $52.45 per share; | |
• | a premium of 51.1% based on the latest six-month average market price as of September 1, 2006 of $49.58 per share; | |
• | a premium of 73.5% based on the latest one-year average market price as of September 1, 2006 of $43.18 per share; | |
• | a premium of 167.5% based on the latest three-year average market price as of September 1, 2006 of $28.01 per share; and | |
• | a premium of 20.5% based on the all time high closing price of $62.18 per share on September 1, 2006. |
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Opinion of Credit Suisse |
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Veritas Financial Analyses |
Discounted Cash Flow Analysis. |
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Implied Per Share Equity Reference Ranges for Veritas | ||||||||||
Implied Per Share Value of the Aggregate | ||||||||||
Without Cost Savings | With Cost Saving | Consideration Payable | ||||||||
and Synergies | and Synergies | in the Merger | ||||||||
$ | 59.67 - $77.39 | $ | 68.00 - $86.74 | $ | 74.93 |
Selected Public Company Analysis. |
• | Petroleum Geo-Services ASA | |
• | Input/ Output, Inc. | |
• | TGS-NOPEC Geophysical Company ASA |
Implied Per Share Equity | Implied Per Share Value of the Aggregate | |||||
Reference Range for Veritas | Consideration Payable in the Merger | |||||
$ | 52.92 - $64.33 | $ | 74.93 |
Selected Transactions Analysis. |
Acquiror | Target | |
• Schlumberger N.V. | • Baker Hughes Incorporated (WesternGeco) | |
• SEACOR Holdings Inc. | • Seabulk International, Inc. | |
• National-Oilwell, Inc. | • Varco International, Inc. | |
• BJ Services Company | • Great Lakes Chemical Corporation/ OSCA, Inc. | |
• Veritas | • Petroleum Geo-Services ASA | |
• Technip SA | • Coflexip SA | |
• Tuboscope Inc. | • Varco International, Inc. | |
• Schlumberger N.V. | • Camco International, Inc. | |
• Baker Hughes Incorporated | • Western Atlas Inc. | |
• EVI, Inc. | • Weatherford Enterra, Inc. | |
• Halliburton Company | • Dresser Industries, Inc. |
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Implied Per Share Equity | Implied Per Share Value of the Aggregate | |||||
Reference Range for Veritas | Consideration Payable in the Merger | |||||
$ | 57.49 - $68.90 | $ | 74.93 |
CGG Financial Analyses |
Discounted Cash Flow Analysis. |
Implied Per Share Reference | Per Share Closing Price of CGG | |||||
Range for CGG ADSs | ADSs on September 1, 2006 | |||||
$ | 32.96 - $44.19 | $ | 33.27 |
Selected Public Company Analysis. |
Implied Per Share Reference | Per Share Closing Price of CGG | |||||
Range for CGG ADSs | ADSs on September 1, 2006 | |||||
$ | 32.10 - $38.75 | $ | 33.27 |
Selected Transactions Analysis. |
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Implied Per Share Reference | Per Share Closing Price of CGG | |||||
Range for CGG ADSs | ADSs on September 1, 2006 | |||||
$ | 42.63 - $54.27 | $ | 33.27 |
Miscellaneous |
Opinion of Rothschild Inc. |
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• | reviewed the financial terms and conditions of the draft of the merger agreement dated September 3, 2006; | |
• | reviewed certain publicly available business and financial information relating to CGG and Veritas that Rothschild deemed to be relevant; | |
• | reviewed certain unaudited financial statements relating to each of CGG and Veritas and certain other financial and operating data, including financial forecasts, concerning their respective businesses provided to or discussed with Rothschild by management; | |
• | held discussions with management of each of CGG and Veritas regarding the past and current operations and financial condition and prospects of the respective companies; | |
• | reviewed the reported price and trading activity for the shares of Veritas common stock; | |
• | compared certain financial performance information for each of CGG and Veritas with similar information for certain publicly traded companies that Rothschild deemed to be relevant; | |
• | reviewed, to the extent publicly available, the financial terms of certain transactions that Rothschild deemed to be relevant; and | |
• | considered such other factors and information as Rothschild deemed appropriate. |
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Summary of Rothschild’s Financial Analyses |
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Comparable Companies Analysis |
• | Petroleum Geo-Services ASA | |
• | TGS NOPEC Geophysical Company ASA | |
• | Seitel | |
• | Fugro |
Reference Range of | Assumed Total Consideration | |||||||
Implied Values per Share | per Share in Merger | |||||||
EV/ EBITDA | $49.44 to $68.83 (excluding Fugro | ) | $ | 74.93 | ||||
EV/ EBITDA after MCA | $43.43 to $66.06 | $ | 74.93 | |||||
EV/ EBIT | $40.60 to $72.83 | $ | 74.93 |
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Selected Precedent Transactions Analysis |
Date Announced | Acquiror | Target | ||
April 20, 2006 | Schlumberger Ltd. | WesternGeco | ||
March 16, 2005 | SEACOR Holdings Inc. | Seabulk International, Inc. | ||
August 29, 2005 | Compagnie Générale de Géophysique | Exploration Resources ASA | ||
November 15, 2004 | Siem Offshore Inc. | Subsea 7 Inc. | ||
September 1, 2004 | Compagnie Générale de Géophysique | Petroleum Geo-Services (Seismic Business) | ||
August 12, 2004 | National-Oilwell, Inc. | Varco International, Inc. | ||
February 20, 2002 | BJ Services Company | OSCA Inc. | ||
November 26, 2001 | Veritas DGC Inc. | Petroleum Geo-Services ASA | ||
July 1, 2001 | Technip SA | Coflexip SA |
Discounted Cash Flow Analysis |
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Miscellaneous |
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Board of Directors |
Employment Agreements |
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Continuing Employment with CGG |
Stock Options |
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Estimated Value | ||||||||||||||||||
Options | Options Vested as | Options Unvested as | Received for Options | |||||||||||||||
Name | Title | Outstanding | of 10/31/2006 | of 10/31/2006 | Upon Merger | |||||||||||||
Loren K. Carroll | Director | 21,000 | 21,000 | 0 | $ | 1,307,550 | ||||||||||||
Clayton P. Cormier | Director | 16,000 | 16,000 | 0 | 753,213 | |||||||||||||
James R. Gibbs | Director | 36,250 | 36,250 | 0 | 2,002,488 | |||||||||||||
Jan Rask | Director | 37,500 | 37,500 | 0 | 2,162,366 | |||||||||||||
Yoram Shoham | Director | 16,000 | 11,000 | 5,000 | 780,600 | |||||||||||||
David F. Work | Director | 16,000 | 13,500 | 2,500 | 853,206 | |||||||||||||
Terence K. Young | Director | 16,000 | 11,000 | 5,000 | 785,700 | |||||||||||||
Thierry Pilenko | Director, Chairman and Chief Executive Officer | 157,500 | 92,500 | 65,000 | 9,093,450 | |||||||||||||
Timothy L. Wells | President and Chief Operating Officer | 72,505 | 52,996 | 19,509 | 3,941,207 | |||||||||||||
Mark E. Baldwin | Executive Vice President, Chief Financial Officer and Treasurer | 15,000 | 5,000 | 10,000 | 682,500 | |||||||||||||
Dennis S. Baldwin | Vice President, Corporate Controller | 5,000 | 1,666 | 3,334 | 227,500 | |||||||||||||
Larry L. Worden | Vice President, General Counsel and Secretary | 33,282 | 25,348 | 7,934 | 1,841,762 | |||||||||||||
Vincent M. Thielen | Vice President, Business Development | 20,291 | 13,857 | 6,434 | 1,153,857 |
Restricted Stock |
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Shares of | Estimated Value of | |||||||||
Name | Title | Restricted Stock Held | Restricted Shares | |||||||
Thierry Pilenko | Director, Chairman and CEO | 16,953 | $ | 1,312,840 | ||||||
Timothy L. Wells | President and Chief Operating Officer | 11,041 | 855,015 | |||||||
Mark E. Baldwin | Executive Vice President, Chief Financial Officer and Treasurer | 10,947 | 847,736 | |||||||
Larry L. Worden | Vice President, General Counsel and Secretary | 3,278 | 253,848 | |||||||
Dennis S. Baldwin | Vice President, Controller | 3,927 | 304,107 | |||||||
Vincent M. Thielen | Vice President, Business Development | 2,260 | 175,014 |
LTIP Shares |
Deferred Share Units |
Deferred Compensation Plans |
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Indemnification and Insurance |
Antitrust Approvals |
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Other Regulatory Procedures |
Exon-Florio/ CFIUS |
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General |
• | an individual citizen or resident of the United States; | |
• | a corporation or other entity taxable as a corporation created in or organized under the laws of the United States or any political subdivision thereof; | |
• | an estate the income of which is subject to U.S. federal income tax without regard to its source; or | |
• | a trust if a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of the substantial decisions of such trust. |
• | a foreign person or entity; | |
• | a tax-exempt organization, financial institution, mutual fund, dealer or broker in securities or insurance company; | |
• | a trader who elects to mark its securities to market for U.S. federal income tax purposes; | |
• | a person who holds shares of Veritas common stock as part of an integrated investment such as a straddle, hedge, constructive sale, conversion transaction or other risk reduction transaction; | |
• | a person who holds shares of Veritas common stock in an individual retirement or other tax-deferred account; | |
• | a person whose functional currency is not the U.S. dollar; | |
• | an individual who received shares of Veritas common stock, or who acquires CGG ADSs or CGG ordinary shares, pursuant to the exercise of employee stock options or otherwise as compensation or in connection with the performance of services; | |
• | a partnership or other flow-through entity (including an S corporation or a limited liability company treated as a partnership for U.S. federal income tax purposes) and persons who hold an interest in such entities; or | |
• | a person subject to the alternative minimum tax. |
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Certain U.S. Federal Income Tax Consequences of the Merger |
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• | If you exchange all of your shares of Veritas common stock solely for shares of CGG ADSs in the merger, you will not recognize any gain or loss (except with respect to cash received in lieu of a fractional share of a CGG ADS, as discussed below). | |
• | If you exchange your shares of Veritas common stock solely for cash in the merger, you generally will recognize capital gain or loss equal to the difference between the amount of cash received and your tax basis in the shares of Veritas common stock. If, however, you own, or are treated as owning, CGG ADSs after the merger, the amount of cash you receive might be treated as a dividend (discussed below). | |
• | If you exchange your shares of Veritas common stock for a combination of CGG ADSs and cash, you generally will recognize capital gain (but not loss) in the merger. Any such gain recognized will equal the lesser of (1) the excess, if any, of (a) the sum of the amount of cash (excluding any cash received instead of a fractional share) and the fair market value of the CGG ADSs you receive in the merger over (b) your adjusted tax basis in the shares of Veritas common stock you exchanged and (2) the amount of cash you receive in the merger (excluding cash received instead of a fractional share, as discussed below). For this purpose, you must calculate gain or loss separately for each identifiable block (that is, stock acquired at the same time for the same price) of shares of Veritas common stock you exchange. | |
• | The aggregate tax basis of any CGG ADSs you receive in exchange for your shares of Veritas common stock in the merger (before reduction for the basis in any fractional share of CGG ADSs for which you receive cash) will be the same as the aggregate tax basis of your shares of Veritas common stock, decreased by the amount of cash you receive in the merger (excluding any cash received in lieu of a fractional share) and increased by the amount of gain or dividend income you recognize in the merger (excluding any gain recognized as a result of cash received in lieu of a fractional share). | |
• | The holding period of any CGG ADSs you receive in the merger generally will include the holding period of the shares of Veritas common stock you exchanged for such CGG ADSs. | |
• | If you have differing bases or holding periods in respect to your shares of shares of Veritas common stock, you should consult your tax advisor prior to the exchange with regard to identifying the bases or holding periods of the particular CGG ADSs received in the merger. | |
• | Because CGG will not issue any fractional CGG ADSs in the merger, if you exchange shares of Veritas common stock in the merger and would otherwise have received a fraction of a CGG ADS, you will receive cash. Any cash you receive in lieu of a fractional CGG ADS should be treated as received in exchange of that interest for cash. The amount of any capital gain or loss attributable to the deemed sale will be equal to the amount of cash received with respect to the fractional interest less the ratable portion of the tax basis of the shares of Veritas common stock surrendered that is allocated to the fractional interest. |
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• | If you are an individual, any gain you recognize generally will be subject to U.S. federal income tax at a maximum 15% rate if your holding period in the shares of Veritas common stock is more than one year on the date of completion of the merger. The deductibility of capital losses is subject to limitations. | |
• | If, after the merger, you own, or are treated as owning, CGG ADSs, it is possible that your gain recognized in the merger will be treated as a dividend rather than as capital gain. In general, the treatment of such gain will depend upon whether and to what extent the exchange reduces your deemed percentage stock ownership of CGG, which is determined by treating you as if you first exchanged all of your shares of Veritas common stock solely for CGG ADSs and then CGG immediately redeemed a portion of the CGG ADSs in exchange for the cash you actually receive. Gain recognized in the deemed redemption generally will be treated as capital gain if the deemed redemption is (1) “substantially disproportionate” with respect to you (that is, in general, if your deemed percentage stock ownership in CGG was reduced in the deemed redemption by at least 20%) or (2) “not essentially equivalent to a dividend,” which requires a “meaningful reduction” in your deemed stock ownership of CGG. In applying the above tests, you will, under the constructive ownership rules, be deemed to own not only stock that you actually own, but also stock that is owned by certain related persons and entities or that you or such persons or entities have the right to acquire pursuant to an option. The IRS has ruled that a stockholder in a publicly held corporation whose relative stock interest is minimal and who exercises no control with respect to corporate affairs is generally considered to have a “meaningful reduction” if that stockholder has any reduction in its percentage stock ownership under the above analysis. Thus, any stockholder in this situation generally should recognize capital gain. These rules are complex and dependent upon the specific factual circumstances particular to each holder. You should consult your tax advisor as to the application of these rules to your particular facts. |
U.S. Information Reporting and Backup Withholding |
Certain U.S. Federal Income Tax Consequences of Holding CGG ADSs |
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Certain French Income Tax Consequences of the Merger |
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• | an effective registration statement under the Securities Act covering the resale of those shares; | |
• | an exemption under paragraph (d) of Rule 145 under the Securities Act; or | |
• | any other applicable exemption under the Securities Act. |
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• | The “aggregate consideration” is the dollar amount of the sum of: |
• | the product of (1) the aggregate number of CGG ADSs that CGG will issue pursuant to the merger (which is generally the product of 2.2501 and 50.664% of the “total common stock amount”) and (2) the “average CGG ADS value” (referred to in the merger agreement as the “final parent depository share price”), and | |
• | the aggregate amount of cash CGG will pay pursuant to the merger (which is generally the product of (1) 49.336% of the total common stock amount and (2) $75.00). This aggregate amount of cash is referred to as the “total cash amount.” |
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• | The “average CGG ADS value” is the average of the per share closing prices of CGG ADSs on the NYSE as reported inThe Wall Street Journalduring the 20 consecutive trading day period during which the CGG ADSs are traded on the NYSE ending on the third calendar day immediately prior to the effective time of the merger (or, if such calendar day is not a trading day, ending on the trading day immediately preceding such calendar day). This 20 consecutive trading day period is referred to as the “valuation period.” | |
• | The “total common stock amount” is the total number of shares of Veritas common stock outstanding immediately prior to the effective time of the merger; provided that, for purposes of determining the aggregate consideration, the total common stock amount will not exceed the sum of 35,985,254 (the number of shares of Veritas common stock outstanding on July 31, 2006, a cut-off date used in the merger agreement for purposes of this determination) and the number of shares of Veritas common stock permitted to be issued by Veritas prior to the merger under the terms of the merger agreement, including through the issuance of stock options or through the conversion of the Veritas convertible bonds. |
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Approximate Percentage | ||||||||||||||||||||||
Value of per Share | of Merger Consideration | |||||||||||||||||||||
Average CGG | Per Share Cash | Per Share ADS | ADS | |||||||||||||||||||
ADS Value | Consideration | Consideration | Consideration(1) | In ADSs | In Cash | |||||||||||||||||
$ | 30.00 | $ | 71.20 | 2.3734 | $ | 71.20 | 48.03% | 51.97% | ||||||||||||||
$ | 30.50 | $ | 71.77 | 2.3532 | $ | 71.77 | 48.44% | 51.56% | ||||||||||||||
$ | 31.00 | $ | 72.34 | 2.3336 | $ | 72.34 | 48.85% | 51.15% | ||||||||||||||
$ | 31.50 | $ | 72.91 | 2.3147 | $ | 72.91 | 49.25% | 50.75% | ||||||||||||||
$ | 32.00 | $ | 73.48 | 2.2963 | $ | 73.48 | 49.64% | 50.36% | ||||||||||||||
$ | 32.50 | $ | 74.05 | 2.2785 | $ | 74.05 | 50.03% | 49.97% | ||||||||||||||
$ | 33.00 | $ | 74.62 | 2.2613 | $ | 74.62 | 50.41% | 49.59% | ||||||||||||||
$ | 33.50 | $ | 75.19 | 2.2445 | $ | 75.19 | 50.79% | 49.21% | ||||||||||||||
$ | 34.00 | $ | 75.76 | 2.2283 | $ | 75.76 | 51.16% | 48.84% | ||||||||||||||
$ | 34.50 | $ | 76.33 | 2.2125 | $ | 76.33 | 51.52% | 48.48% | ||||||||||||||
$ | 35.00 | $ | 76.90 | 2.1972 | $ | 76.90 | 51.88% | 48.12% | ||||||||||||||
$ | 35.50 | $ | 77.47 | 2.1823 | $ | 77.47 | 52.24% | 47.76% | ||||||||||||||
$ | 36.00 | $ | 78.04 | 2.1678 | $ | 78.04 | 52.59% | 47.41% | ||||||||||||||
$ | 36.50 | $ | 78.61 | 2.1537 | $ | 78.61 | 52.93% | 47.07% | ||||||||||||||
$ | 37.00 | $ | 79.18 | 2.1400 | $ | 79.18 | 53.27% | 46.73% | ||||||||||||||
$ | 37.50 | $ | 79.75 | 2.1267 | $ | 79.75 | 53.60% | 46.40% | ||||||||||||||
$ | 38.00 | $ | 80.32 | 2.1137 | $ | 80.32 | 53.93% | 46.07% | ||||||||||||||
$ | 38.50 | $ | 80.89 | 2.1011 | $ | 80.89 | 54.26% | 45.74% | ||||||||||||||
$ | 39.00 | $ | 81.46 | 2.0888 | $ | 81.46 | 54.58% | 45.42% | ||||||||||||||
$ | 39.50 | $ | 82.03 | 2.0767 | $ | 82.03 | 54.89% | 45.11% | ||||||||||||||
$ | 40.00 | $ | 82.60 | 2.0650 | $ | 82.60 | 55.20% | 44.80% | ||||||||||||||
$ | 41.00 | $ | 83.74 | 2.0425 | $ | 83.74 | 55.81% | 44.19% | ||||||||||||||
$ | 41.50 | $ | 84.31 | 2.0316 | $ | 84.31 | 56.11% | 43.89% | ||||||||||||||
$ | 42.00 | $ | 84.88 | 2.0210 | $ | 84.88 | 56.41% | 43.59% | ||||||||||||||
$ | 42.50 | $ | 85.45 | 2.0106 | $ | 85.45 | 56.70% | 43.30% | ||||||||||||||
$ | 43.00 | $ | 86.02 | 2.0005 | $ | 86.02 | 56.99% | 43.01% | ||||||||||||||
$ | 43.50 | $ | 86.59 | 1.9906 | $ | 86.59 | 57.27% | 42.73% | ||||||||||||||
$ | 44.00 | $ | 87.16 | 1.9809 | $ | 87.16 | 57.55% | 42.45% | ||||||||||||||
$ | 44.50 | $ | 87.73 | 1.9715 | $ | 87.73 | 57.82% | 42.18% | ||||||||||||||
$ | 45.00 | $ | 88.30 | 1.9623 | $ | 88.30 | 58.10% | 41.90% |
(1) | Based on the hypothetical average CGG ADS values. |
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Appraisal Rights |
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Exchange Procedures |
Distributions with Respect to Unexchanged Veritas Common Stock |
Fractional Shares |
Termination of Exchange Fund |
Lost Stock Certificates |
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Withholding |
Adjustments to Prevent Dilution |
Election Procedure |
• | a cash election with respect to all the shares he or she would receive approximately $7,405 in cash; | |
• | an ADS election with respect to all the shares he or she would receive 227 CGG ADSs (and cash in lieu of 0.85 of a fractional CGG ADS); and | |
• | a cash election with respect to some of the shares and an ADS election with respect to some of the shares, he or she would receive approximately $74.05 for each cash election share and 2.2785 CGG ADSs for each ADS election share. Assuming 50 cash election shares and 50 ADS election shares, |
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the Veritas stockholder would receive approximately $3,702.50 in cash, 113 CGG ADSs and cash in lieu of 0.925 of a fractional CGG ADS. |
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Proration |
• | all ADS election shares and no election shares will be converted into the right to receive the per share ADS consideration; | |
• | the exchange agent will then select from among the cash election shares, by a pro rata selection process, a sufficient number of cash election shares and switch them to ADS election shares such that the aggregate cash amount that will be paid pursuant to the merger equals as closely as practicable the total cash amount; | |
• | all cash election shares selected by the exchange agent through the pro rata selection process described above will be converted into the right to receive the per share ADS consideration; and | |
• | the cash election shares that have not been selected by the exchange agent to be converted into the per share ADS consideration will be converted into the right to receive the per share cash consideration. |
• | all cash election shares will be converted into the right to receive the per share cash consideration; | |
• | the exchange agent will then select from among the no election shares and then, if necessary, from among the ADS election shares, in each case by a pro rata selection process, a sufficient number of ADS election shares and switch them to cash election shares such that the aggregate cash amount that will be paid pursuant to the merger equals as closely as practicable the total cash amount; | |
• | all no election and ADS election shares selected by the exchange agent through the pro rata selection process described above will be converted into the right to receive the per share cash consideration; and | |
• | the ADS election shares and any no election shares that have not been selected by the exchange agent to be converted into the per share cash consideration will be converted into the right to receive the per share ADS consideration. |
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Dividends and Distributions |
Treatment of Stock Options |
Treatment of Convertible Bonds |
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Appointment of Directors |
• | corporate existence, good standing and qualification to conduct business; | |
• | capitalization, including ownership of subsidiary capital stock and the absence of restrictions or encumbrances with respect to capital stock of any subsidiary; | |
• | corporate power and authorization to enter into and carry out the obligations of the merger agreement and the enforceability of the merger agreement; |
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• | absence of any conflict or violation of organizational documents, third party agreements or law or regulation as a result of entering into and carrying out the obligations of the merger agreement; | |
• | governmental, third party and regulatory approvals or consents required to complete the merger; | |
• | filings and reports with the SEC and financial information; | |
• | absence of certain changes, events or circumstances; | |
• | absence of undisclosed liabilities; | |
• | accuracy of the information supplied for inclusion in this proxy statement/ prospectus; | |
• | employee benefit plans and ERISA; | |
• | litigation, government orders, judgments and decrees; | |
• | compliance with laws; | |
• | intellectual property; | |
• | material contracts; | |
• | tax matters; | |
• | property and operating equipment; | |
• | transactions with affiliates; | |
• | derivative and hedging transactions; | |
• | disclosure controls and procedures; | |
• | investment company status; | |
• | OFAC; | |
• | recommendations of merger by boards of directors; | |
• | required vote by stockholders; | |
• | fees payable to brokers in connection with the merger; and | |
• | no other representations or warranties. |
• | environmental matters; | |
• | insurance; | |
• | labor and employment matters; | |
• | the merger will not result in the grant of any rights to any person under Veritas’ rights agreement; and | |
• | opinion of financial advisor. |
• | a commitment letter for financing will be obtained; | |
• | ownership of company common stock; and | |
• | takeover statutes. |
• | any change in laws of general applicability or interpretations these laws by courts or governmental entities; |
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• | changes attributable to or resulting from changes in general industry conditions or general economic conditions, except to the extent that any of these changes affects CGG or Veritas to a greater extent than other companies that are similarly situated in the industry; | |
• | changes and effects attributable to the announcement or pendency of the merger agreement or the transactions contemplated, by the merger agreement; | |
• | the failure of such party to meet internal or analysts’ expectations or projections; and | |
• | compliance by CGG and Veritas with the terms of the merger agreement or the merger or the other transactions contemplated by the merger agreement. |
Conditions to Each Party’s Obligations |
• | adoption by Veritas stockholders of the merger agreement; | |
• | approval by CGG shareholders of the issuance of CGG ordinary shares pursuant to the merger, and the election of the Veritas directors to the board of directors of CGG; | |
• | absence of any statute, rule, order, decree or regulation, and of any action taken by any court or other governmental entity which temporarily, preliminarily or permanently restrains, precludes, enjoins or otherwise prohibits the consummation of the merger or makes the merger illegal; | |
• | the waiting period (and any extension thereof) applicable to the consummation of the merger under the HSR Act will have expired or been terminated (which occurred on October 25, 2006); | |
• | all required approvals by the European Commission applicable to the merger under applicable competition laws, including the EC Merger Regulation, will have been obtained or any applicable waiting period thereunder will have been terminated or will have expired (although CGG and Veritas do not expect any such approvals by the European Commission will be required); | |
• | the receipt of all consents, authorizations, waiting periods and approvals of all governmental entities in certain jurisdictions required to be obtained prior to consummation of the merger; | |
• | effectiveness of the F-4 registration statement, of which this proxy statement/ prospectus constitutes a part, and of the F-6 registration statement, and absence of any stop order or proceedings for such purpose pending before or threatened by the SEC, and the approval (visa) of the“note d’information” by the AMF relating to the CGG ordinary shares to be issued at the effective time of the merger; and | |
• | CGG ADSs (and, if required, the underlying shares of CGG ordinary shares) issuable to the stockholders of Veritas pursuant to the merger and to the holders of the Veritas convertible debt will have been authorized for listing on the NYSE, subject to official notice of issuance, and the AMF and the Euronext Paris SA will have approved the listing of CGG ordinary shares to be issued at the effective time of the merger. |
Additional Conditions to Veritas’ Obligations |
• | accuracy of CGG’s, Volnay Acquisition Co. I’s and Volnay Acquisition Co. II’s representations and warranties contained in the merger agreement both at and as of the date of the merger agreement and at and as of the closing date of the merger, as if made at and as of the closing date of the merger (except to the extent expressly made as of an earlier date, in which case as of such date), except where, in the case of all representations and warranties, the failure to be accurate |
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individually or in the aggregate has not had, and would not be reasonably likely to have or result in, a material adverse effect on CGG other than CGG’s representations and warranties related to its capitalization, corporate power and authority, and the validity of the merger agreement, which must be accurate at and as of the closing date in all respects; | ||
• | the performance in all material respects by CGG, Volnay Acquisition Co. I and Volnay Acquisition Co. II of their respective obligations contained in the merger agreement; | |
• | absence of any suit, action or proceeding by any court or other governmental entity seeking to restrain, preclude, enjoin or prohibit the merger or any of the other transactions contemplated by the merger agreement; | |
• | the receipt by Veritas of an opinion of its counsel, dated as of the closing date of the merger, to the effect that the merger will be treated as a reorganization under Section 368(a) of the Internal Revenue Code and that each transfer of Veritas common stock to CGG will not be subject to Section 367(a)(1) of the Internal Revenue Code; and | |
• | CGG will have deposited in the exchange fund cash and CGG ADSs in an amount sufficient to permit payment of the aggregate merger consideration. |
Additional Conditions to CGG’s, Volnay Acquisition Co. I’s and Volnay Acquisition Co. II’s Obligations |
• | accuracy of Veritas’ representations and warranties contained in the merger agreement both at and as of the date of the merger agreement and at and as of the closing date of the merger, as if made at and as of the closing date of the merger (except to the extent expressly made as of an earlier date, in which case as of such date), except where, in the case of all representations and warranties, the failure to be accurate individually or in the aggregate has not had, and would not be reasonably likely to have or result in, a material adverse effect on Veritas other than Veritas’ representations and warranties related to its capitalization, corporate power and authority, and the validity of the merger agreement, which must be accurate at and as of the closing date in all respects; | |
• | the performance in all material respects by Veritas of its obligations contained in the merger agreement; | |
• | absence of any suit, action or proceeding by any court or other governmental entity seeking to (1) restrain, preclude, enjoin or prohibit the merger or any of the other transactions contemplated by the merger agreement, or (2) prohibit or limit in any respect the ownership or operation of any of the parties to the merger agreement or any of their respective affiliates of any portion of the business or assets of Veritas and its subsidiaries, or to require any person to dispose of or hold separate any portion of the business or assets of Veritas and its subsidiaries, as a result of the merger or any of the other transactions contemplated by the merger agreement, in any case which would constitute a burdensome condition; | |
• | the receipt by CGG of an opinion of its counsel, dated the closing date of the merger, to the effect that the merger will be treated as a reorganization under Section 368(a) of the Internal Revenue Code; | |
• | each of the competition and governmental approvals in certain jurisdictions has been obtained without the imposition of any burdensome conditions or restrictions; and | |
• | at or prior to the effective time of the merger, the CFIUS will have notified CGG in writing that it has determined not to investigate the transactions contemplated by the merger agreement (which occurred on November 16, 2006). | |
Operations of Veritas |
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• | conduct the business of Veritas and its subsidiaries only in the ordinary course substantially consistent with past practice; | |
• | use its reasonable best efforts to preserve intact its business organization and goodwill and the business organization and goodwill of its subsidiaries; and | |
• | use its reasonable best efforts to keep available the services of its current officers and key employees and preserve and maintain existing relations with key customers, suppliers, officers, employees and creditors. |
• | enter into any new line of business, incur or commit to any capital expenditures, or any obligations or liabilities in connection with any capital expenditures other than capital expenditures and obligations or liabilities incurred or committed to in an amount not greater in the aggregate than, and during the same time period set forth in, Veritas’ current capital budget reviewed by the board of directors of Veritas which has been furnished to CGG, other than capital expenditures to repair lost or damaged property or equipment in the ordinary course of business substantially consistent with past practice (though Veritas may prepare and provide to CGG a revised capital budget that the parties agree to negotiate in good faith to approve if the closing has not occurred by January 15, 2007); | |
• | amend its certificate of incorporation or bylaws or similar organizational documents; | |
• | declare, set aside or pay any dividend or other distribution, whether payable in cash, stock or any other property or right, with respect to its capital stock; |
• | except that Veritas may permit any direct or indirect wholly-owned subsidiary to do any of the following: |
• | issue its common stock pursuant to the Veritas convertible debt, stock options, employee stock purchase plan, deferred share units or LTIP plan; | |
• | issue capital stock or other equity interests to Veritas or any other wholly-owned subsidiary of Veritas; | |
• | issue LTIP shares pursuant to LTIP awards made prior to the date of the merger agreement; | |
• | issuances pursuant to the Veritas rights agreement; and | |
• | if the merger has not been consummated on or prior to December 31, 2006, Veritas may grant options to employees in such amounts, and on such terms and conditions, as shall be reasonably acceptable to CGG; |
• | redeem, purchase or otherwise acquire any of its own capital stock, unless such repurchases, redemptions or acquisitions are required under the terms of its capital stock, other outstanding securities, its benefit plans or employment agreements; | |
• | except for normal increases in the ordinary course of business consistent with past practice (or, with respect to employees, in connection with promotions on a basis consistent with past practice), grant any increase in the compensation or benefits payable or to become payable by Veritas or any of its |
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subsidiaries to any former or current director, officer or employee of Veritas or any of its subsidiaries: |
• | except as required to comply with applicable law or any agreement in existence on the date of the merger agreement or as provided in the merger agreement, adopt, enter into, amend or otherwise increase, or accelerate the payment or vesting of the amounts, benefits or rights payable or accrued or to become payable or accrued under, any Veritas benefit plan (other than amendments to minimize liability for any additional taxes that may be imposed under Section 409A of the Internal Revenue Code in the absence of such amendment and other than entry into employment agreements with new hires in the ordinary course of business consistent with past practice); |
• | enter into employment agreements or, except in accordance with existing contracts or agreements, grant any severance or termination pay to any officer, director or employee of Veritas or any of its subsidiaries (other than grants to new hires in the ordinary course consistent with past practice); | |
• | change its methods of accounting in effect as of July 31, 2005, except in accordance with changes in U.S. GAAP as concurred to by Veritas independent auditors or as disclosed in the specified Veritas SEC disclosure; | |
• | acquire any business organization, division or business by merger, consolidation, purchase of an equity interest or assets, or by any other manner, or acquire any assets (other than in the ordinary course of business substantially consistent with past practice); | |
• | sell, lease, exchange, transfer or otherwise dispose of, or agree to sell, lease, exchange, transfer or otherwise dispose of, any material assets except for (1) the licensing of data or commercial software in the ordinary course of business substantially consistent with past practice, (2) any sale, lease or disposition pursuant to agreements existing on the date of the merger agreement and entered into in the ordinary course of business or disclosed in Veritas’ disclosure letter, (3) sales of surplus or obsolete equipment in the ordinary course of business substantially consistent with past practice or (4) any sale, lease or disposition in an arms length transaction, for not materially less than fair market value and not in excess of $1.0 million individually or $25.0 million in the aggregate; | |
• | mortgage, pledge, hypothecate, grant any security interest in, or otherwise subject any of its assets to any liens, subject to limited exceptions; | |
• | pay, discharge or satisfy any material claims (including claims of stockholders), liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) where such payment, discharge or satisfaction would require any material payment except for the payment, discharge or satisfaction of liabilities or obligations in accordance with the terms of agreements in effect on the date of the merger agreement or entered into after the date of the merger agreement in the ordinary course of business substantially consistent with past practice, and except for any payments, discharges or settlements relating to any litigation that do not exceed $1.0 million individually or $10.0 million in the aggregate; | |
• | engage in any transaction with (except pursuant to agreements in effect at the time of the merger agreement), or enter into any agreement, arrangement, or understanding with, directly or indirectly, any of Veritas’ affiliates (not including any employees of Veritas or any of its subsidiaries, other than the directors and executive officers thereof); | |
• | change any tax method of accounting, make or change any material tax election, amend any tax return in any material respect or settle or compromise any material tax liability, other than as required by law or in the ordinary course of business substantially consistent with past practice; | |
• | take any action that would reasonably be expected to result in (1) any of the conditions to the merger not being satisfied or (2) a material adverse effect on Veritas; |
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• | adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Veritas or any of its subsidiaries (other than the merger) or any agreement relating to an acquisition proposal (except certain confidentiality agreements); | |
• | incur or assume any long-term debt or incur or assume any short-term indebtedness, except for short-term indebtedness in the ordinary course of business substantially consistent with past practice and in no event exceeding $10.0 million in the aggregate; | |
• | modify the terms of any material indebtedness or other liability to increase Veritas’ obligations with respect to such indebtedness; | |
• | assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person (other than a wholly-owned subsidiary of Veritas), except in the ordinary course of business substantially consistent with past practice and in no event exceeding $10.0 million in the aggregate; | |
• | make any loans, advances or capital contributions to, or investments in, any other person (other than to wholly-owned subsidiaries of Veritas, or by wholly-owned subsidiaries to Veritas, or customary loans or advances to employees in accordance with past practice and short-term investments of cash substantially consistent with past cash management practices; | |
• | enter into any material commitment or transaction, except in the ordinary course of business substantially consistent with past practice and in no event exceeding $5.0 million in the aggregate; | |
• | enter into any agreement, understanding or commitment that materially limits Veritas’, the combined company’s or any of each of Veritas’ or the combined company’s subsidiaries’ ability to compete in or conduct any business or line of business, including geographic limitations on Veritas’ or any of its subsidiaries’ activities; | |
• | terminate any material contract to which it is a party or waive or assign any of its rights or claims in a manner that is materially adverse to Veritas, except in the ordinary course of business consistent with past practice; | |
• | enter into any material joint venture, partnership or other similar arrangement or materially amend or modify in an adverse manner the terms of (or waive any material rights under) any existing material joint venture, partnership or other similar arrangement (other than any such action between its wholly-owned subsidiaries); or | |
• | enter into an agreement, contract, commitment or arrangement to take any of the prohibited actions described above. |
Operations of CGG |
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• | declare, set aside or pay any extraordinary, special or other dividend or distribution, whether payable in cash, stock or any other property or right, with respect to its capital stock or other equity interests (except for wholly-owned subsidiaries of CGG); | |
• | issue, grant, sell, transfer or distribute to any employee of CGG or any of its subsidiaries any options, warrants, calls, commitments or rights of any kind to acquire any CGG ordinary shares, other than in the ordinary course of business substantially consistent with past practices; | |
• | redeem, purchase or otherwise acquire directly or indirectly any of CGG’s capital stock, except for repurchases, redemptions or acquisitions (1) required by the terms of CGG’s capital stock or any securities outstanding on the date of the merger agreement, (2) contemplated by any CGG plan existing on the date of the merger agreement or (3) pursuant to arrangements described in CGG’s disclosure letter; | |
• | change its methods of accounting in effect at December 31, 2005, except in accordance with changes in IFRS or applicable law as concurred to by CGG’s independent auditors; | |
• | amend its articles of association or by-laws in a manner that adversely affects the terms of the CGG ordinary shares; | |
• | adopt or enter into a plan of complete or partial liquidation or dissolution; | |
• | take any action that would reasonably be expected to result in (1) any of the conditions to the merger not being satisfied or (2) a material adverse effect on CGG; | |
• | make any material change to any tax method of accounting, make or change any material tax election, amend any material return or settle or compromise any material tax liability, except where such action would not have a material effect on the tax position of CGG and its subsidiaries taken as a whole; and | |
• | enter into an agreement, contract, commitment or arrangement to do any of the foregoing. |
Access to Information and Properties |
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• | cooperate with CGG in conducting any such investigation; | |
• | allow CGG reasonable access to Veritas’ and its subsidiaries’ respective businesses, real property and assets; | |
• | grant full permission to conduct any such investigation; | |
• | provide to CGG all plans, soil or surface or ground water tests or reports, any environmental investigation results, reports or assessments previously or contemporaneously conducted or prepared by or on behalf of Veritas, its subsidiaries, or any of their predecessors, that are in the possession of Veritas or any of its subsidiaries or are reasonably available to them from any agent, consultant, contractor or other third party service provider; and | |
• | provide all information relating to environmental matters regarding Veritas’ and its subsidiaries’ respective businesses, real property and assets that are in their possession of or reasonably available to them. |
Further Action; Reasonable Best Efforts |
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Disclosure Documents |
Stockholders’ Meetings |
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Notification of Certain Matters |
Directors’ and Officers’ Insurance and Indemnification |
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Publicity |
Financing |
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Stock Exchange Listing |
Employee Benefits |
Appointment of Directors |
Rights Agreement |
Certain Tax Matters |
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Supplemental Indenture |
Veritas Employee Share Purchase Plan (ESPP) |
Section 16 Matters |
Affiliates Letter |
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Volnay Acquisition Co. I and II |
• | directly or indirectly initiate, solicit or knowingly encourage or facilitate (including by way of furnishing non-public information) any inquiries regarding or the making of any proposal that constitutes, or may reasonably be expected to lead to, any acquisition proposal (as defined below); | |
• | participate or engage in any discussions or negotiations with, or disclose any non-public information relating to itself or any of its subsidiaries, or afford access to its properties, books or records to any person that has made or that it knows or has reason to believe is contemplating making an acquisition proposal; or | |
• | accept an acquisition proposal or enter into any agreement (other than a confidentiality agreement in certain circumstances that contains specified terms) that (1) provides for, constitutes or relates to any acquisition proposal or (2) requires or causes either Veritas or CGG to respectively abandon, terminate or fail to consummate the merger or the other transactions contemplated by the merger agreement. |
• | the acquisition proposal was not solicited, initiated, knowingly encouraged or facilitated by that party, its subsidiaries, or any of its officers or directors, investment bankers, attorneys, accountants, financial advisors, agents or other representatives after the date of the merger agreement; | |
• | the board of directors of the party that received the acquisition proposal determines in good faith, after consultation with its financial advisors, that such acquisition proposal constitutes or is reasonably likely to result in a superior proposal (as defined below); | |
• | the board of directors of the party that received the acquisition proposal determines in good faith, after consultation with its outside legal counsel, that the failure to participate in such negotiations or discussions or to furnish such information or data to such third party would be reasonably expected to be inconsistent with the fiduciary duties under applicable law of such party’s board of directors; and | |
• | the person making the acquisition proposal has entered into a confidentiality agreement on specified terms with the party that received the acquisition proposal. |
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Veritas’ Ability to Make an Adverse Recommendation Change in Response to a Superior Proposal |
• | three business days before making such adverse recommendation change, Veritas provides written notice to CGG (a “notice of superior proposal”) that: |
• | advises CGG that the board of directors of Veritas or any of its committees has received a superior proposal with respect to Veritas, | |
• | specifies the material terms and conditions of the superior proposal, and | |
• | identifies the person or group making such superior proposal; and |
• | in the event that CGG proposes any alternative transaction during such three business day period, the board of directors of Veritas determines in good faith, (1) after consultation with its financial advisors and outside legal counsel, that such alternative transaction is not at least as favorable to Veritas and its stockholders from a financial point of view as the superior proposal, taking into account all financial, legal and regulatory terms and conditions of the alternative transaction proposed by CGG and (2) after consultation with its outside legal counsel, that its failure to make an adverse recommendation change would be reasonably expected to be inconsistent with its fiduciary duties under applicable law. |
• | advise CGG in writing of the receipt of any acquisition proposal or any request for information received from any person that has made or that Veritas reasonably believes may be contemplating an acquisition proposal, or any inquiry, discussions or negotiations with respect to any acquisition proposal, the material terms and conditions of any request, acquisition proposal, inquiry, discussions or negotiations, and the identity of the person or group making any request or acquisition proposal or with whom any discussions or negotiations are taking place; | |
• | provide CGG any non-public information concerning Veritas provided to any other person or group in connection with any acquisition proposal that was not previously provided to CGG and copies of any written materials received from that person or group; | |
• | keep CGG fully informed of the status of any acquisition proposals (including any material changes to any terms and conditions); and | |
• | not release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which Veritas is a party. |
Veritas’ Ability to Make an Adverse Recommendation Change other than in Response to a Superior Proposal |
• | provides written notice to CGG (a “notice of change”) that: |
• | advises CGG that the board of directors of Veritas is contemplating making an adverse recommendation change, and |
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• | specifies the material facts and information constituting the basis for such contemplated determination; and |
• | determines in good faith: |
• | after consultation with its outside legal counsel, that the failure to make an adverse recommendation change would be reasonably expected to be inconsistent with its fiduciary duties to the stockholders of Veritas, and | |
• | that the reasons for making the adverse recommendation change are independent of any pending acquisition proposal; |
• | provided, however, that: |
• | the board of directors of Veritas may not make such an adverse recommendation change until the third business day after receipt by CGG of a notice of change, and | |
• | during the three business day period, Veritas will, at the request of CGG, negotiate in good faith with respect to any changes to the merger agreement which would allow the board of directors of Veritas to not make the adverse recommendation change consistent with its fiduciary duties. |
CGG’s Ability to Make an Adverse Recommendation Change in Response to a Superior Proposal |
• | three business days before making such adverse recommendation change, CGG provides a notice of superior proposal to Veritas that: |
• | advises Veritas that the board of directors of CGG or any of its committees has received a superior proposal with respect to CGG, | |
• | specifies the material terms and conditions of the superior proposal, and | |
• | identifies the person or group making such superior proposal; and |
• | in the event that Veritas proposes any alternative transaction, during such three business day period, the board of directors of CGG determines in good faith, (1) after consultation with its financial advisors and outside legal counsel, that such alternative transaction is not at least as favorable to CGG and its shareholders from a financial point of view as the superior proposal, taking into account all financial, legal and regulatory terms and conditions of the alternative transaction proposed by Veritas and (2) after consultation with its outside legal counsel, that its failure to make an adverse recommendation change would be reasonably expected to be inconsistent with its fiduciary duties under applicable law. |
• | advise Veritas in writing of the receipt of any acquisition proposal or any request for information received from any person that has made or that Veritas reasonably believes may be contemplating an acquisition proposal, or any inquiry, discussions or negotiations with respect to any acquisition proposal, the material terms and conditions of any request, acquisition proposal, inquiry, discussions or negotiations, and the identity of the person or group making any request or acquisition proposal or with whom any discussions or negotiations are taking place; | |
• | provide Veritas any non-public information concerning CGG provided to any other person or group in connection with any acquisition proposal that was not previously provided to Veritas and copies of any written materials received from that person or group; |
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• | keep Veritas fully informed of the status of any acquisition proposals (including any material changes to any terms and conditions); and | |
• | not release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which CGG is a party. |
CGG’s Ability to Make an Adverse Recommendation Change Other Than in Response to a Superior Proposal |
• | provides a notice of change to Veritas that: |
• | advises Veritas that the board of directors of CGG is contemplating making an adverse recommendation change, and | |
• | specifies the material facts and information constituting the basis for such contemplated determination; and |
• | determines in good faith: |
• | after consultation with its outside legal counsel that the failure to make an adverse recommendation change would be reasonably expected to be inconsistent with its fiduciary duties to the shareholders of CGG, and | |
• | that the reasons for making the adverse recommendation change are independent of any pending acquisition proposal; |
• | provided, however, that: |
• | the board of directors of CGG may not make such an adverse recommendation change until the third business day after receipt of a notice of change by Veritas, and | |
• | during the three business day period, CGG will, at the request of Veritas, negotiate in good faith with respect to any changes to the merger agreement which would allow the board of directors of CGG to not make the adverse recommendation change consistent with its fiduciary duties. |
• | direct or indirect acquisition or purchase of a business or assets that generates or constitutes 15% or more of the net revenues, net income or the assets (based on fair market value) of such party and its subsidiaries, taken as a whole; | |
• | direct or indirect acquisition or purchase of 15% or more of any class of equity securities or capital stock of such party or any of its subsidiaries whose business generates or constitutes 15% or more of the net revenues, net income or assets of such party and its subsidiaries, taken as a whole; or | |
• | merger, consolidation, restructuring, transfer of assets or other business combination, sale of shares of capital stock, tender offer, exchange offer, recapitalization, stock repurchase program or other similar transaction that if consummated would result in any person beneficially owning 15% or more of any class of equity securities of such party or any of its subsidiaries whose business generates or constitutes 15% or more of the net revenues, net income or assets of such party and its subsidiaries, taken as a whole, other than the transactions contemplated by the merger agreement. |
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• | any bona fide written acquisition proposal that was not initiated, solicited, facilitated or knowingly encouraged by such party or any of its subsidiaries or any of their respective representatives, made by a third party to purchase all of the outstanding equity securities or capital stock of such party or all of the businesses and assets of such party and its subsidiaries pursuant to a tender offer, exchange offer, merger or asset purchase; and | |
• | the terms of the offer are superior to such party and its stockholders (in their capacity as stockholders) from a financial point of view as compared to the transactions contemplated by the merger agreement and to any alternative transaction or changes to the terms of the merger agreement proposed by any other party to the merger agreement as determined in good faith by a majority of the board of directors of such party (after the board of directors of such party consults with its financial advisors and takes into account all financial, legal and regulatory matters, including the terms and conditions of the acquisition proposal and the merger agreement, including any changes to the terms of the merger agreement offered by any other party to the merger agreement in response to the superior proposal, as well as any conditions to and expected timing of consummation, and any risks of non-consummation, of the acquisition proposal). |
• | withdraw (or amend or modify in a manner adverse to the other party) its approval, recommendation or declaration of advisability of the merger agreement, the merger or the other transactions contemplated by the merger agreement; or | |
• | recommend, adopt or approve any acquisition proposal. |
General |
• | by mutual written consent of CGG and Veritas; | |
• | by either CGG or Veritas: |
• | if the merger is not completed on or before April 15, 2007, unless the failure of the party seeking to terminate the merger agreement to fulfill any material obligation under the merger agreement has been the cause of, or resulted in the failure of the merger to have been completed on or before this date, | |
• | if any court or other governmental entity having jurisdiction over any party to the merger agreement will have issued a statute, rule, order, decree or regulation or taken any other action (which CGG and Veritas will use their reasonable best efforts to lift), in each case permanently restraining, enjoining or otherwise prohibiting the consummation of the merger or making the merger illegal and such statute, rule, order, decree, regulation or other action has become final and nonappealable, provided that the right to terminate the merger agreement pursuant to this provision may not be exercised by a party whose failure to fulfill any material obligations under the merger agreement has been the cause of or resulted in such action or who is then in material breach of its obligation to use reasonable best efforts to complete the merger, | |
• | if the Veritas stockholders fail to adopt the merger agreement by the requisite vote. This right to terminate is not available to Veritas if it has (i) breached any of its obligations relating to non-solicitation of alternative transactions described above and an acquisition proposal with respect to |
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Veritas has been publicly proposed or any person has announced its intention to make an acquisition proposal or such intention has otherwise become known generally to Veritas’ stockholders or (ii) breached any of its obligations relating to completing this proxy statement/ prospectus and convening a Veritas stockholders’ meeting as described above under “— Further Action; Reasonable Best Efforts” | ||
• | if there has been a breach of or failure to perform in any material respect any of the representations, warranties, covenants or agreements set forth in the merger agreement on the part of Veritas on the one hand, or CGG, Volnay I or Volnay II, on the other hand, which would give rise to the failure of the condition to closing related to accuracy of the representations and warranties and performance of the covenants in the merger agreement and which is incapable of being cured or has not been cured within 45 days following receipt by the breaching party of written notice of such breach from the terminating party, or | |
• | if the CGG shareholders fail to approve the issuance of CGG shares pursuant to the merger, provided that this right to terminate is not available to CGG if it has (i) breached any of its obligations relating to non-solicitation of alternative transactions described above and an acquisition proposal with respect to CGG has been publicly proposed or any person has announced its intention to make an acquisition proposal or such intention has otherwise become known generally to CGG’s shareholders or (ii) breached any of its obligations relating to completing this proxy statement/ prospectus and convening a shareholders’ meeting described above under “— Further Action; Reasonable Best Efforts;” |
• | by CGG if, prior to obtaining the required vote of the Veritas stockholders adopting the merger agreement: |
• | Veritas or its board of directors has entered into an agreement with respect to an acquisition proposal (other than a permissible confidentiality agreement) or approved or recommended, or, in the case of a committee, proposed to the Veritas board of directors to approve or recommend, an acquisition proposal (as defined above under “— No Solicitation of Alternative Transactions”), | |
• | Veritas or its board of directors or any committee thereof has resolved to do any of the foregoing, or | |
• | an adverse recommendation change has occurred with respect to Veritas (whether or not in response to a superior proposal) or the Veritas board of directors or any committee thereof has resolved to make such an adverse recommendation change; |
• | by CGG, upon written notice to Veritas, if CGG takes any action to defeat or otherwise seek to forestall an unsolicited hostile acquisition proposal to acquire not less than 40% of CGG, which action would result in a breach or violation of any of CGG’s material obligations under the merger agreement and any of the conditions to the merger not being satisfied, except that CGG will not be permitted to terminate the merger agreement if, prior to the time such unsolicited hostile acquisition proposal was made, CGG was in breach of any of its obligations relating to non-solicitation of alternative transactions under the merger agreement; or | |
• | by Veritas if, prior to obtaining the required vote of the CGG shareholders approving the issuance of the CGG shares pursuant to the merger: |
• | CGG or its board of directors has entered into an agreement with respect to an acquisition proposal (other than a permissible confidentiality agreement) or, approved or recommended, or, in the case of a committee, proposed to the CGG board of directors to approve or recommend, an acquisition proposal, | |
• | CGG or its board of directors or any of its committees has resolved to do any of the foregoing, or |
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• | an adverse recommendation change has occurred with respect to CGG (whether or not in response to a superior proposal) or the CGG board of directors or any committee thereof has resolved to make such an adverse recommendation change. |
Termination Fees and Expenses |
• | the merger agreement is terminated by CGG due to Veritas entering into an agreement with respect to any acquisition proposal (other than certain confidentiality agreements) or an adverse recommendation change by Veritas; or | |
• | the merger agreement is terminated by either CGG or Veritas for failure to close the merger on or before April 15, 2007 or because the Veritas stockholders failed to adopt the merger agreement by the required vote, and |
• | an acquisition proposal with respect to Veritas has been publicly proposed by any person (other than by CGG or any of its respective affiliates) or any person publicly has announced its intention (whether or not conditional) to make such acquisition proposal or such intention has otherwise become known to Veritas’ stockholders generally, and | |
• | within 12 months after termination of the merger agreement, Veritas or any of its subsidiaries enters into any definitive agreement providing for an acquisition proposal. |
• | the merger agreement is terminated by Veritas due to CGG entering into an agreement with respect to any acquisition proposal (other than certain confidentiality agreements) or an adverse recommendation change by CGG; | |
• | the merger agreement is terminated by either CGG or Veritas for failure to close the merger on or before April 15, 2007 or because the CGG shareholders failed to approve the issuance of the CGG ordinary shares underlying the CGG ADSs, and |
• | an acquisition proposal with respect to CGG has been publicly proposed by any person (other than by Veritas or any of its respective affiliates) or any person publicly has announced its intention (whether or not conditional) to make such acquisition proposal or such intention has otherwise become known to CGG’s shareholders generally, and | |
• | within 12 months after termination of the merger agreement, CGG or any of its subsidiaries enters into any definitive agreement providing for an acquisition proposal; or |
• | CGG takes any action to defeat or otherwise seek to forestall an unsolicited hostile acquisition proposal with respect to CGG, which would result in a breach or violation of any of CGG’s material obligations under the merger agreement and any of the conditions to the merger not being satisfied and thereafter CGG or Veritas terminates the merger agreement, then, upon such termination by CGG or Veritas, as Veritas’ sole and exclusive remedy, CGG will pay to Veritas $85 million as liquidated damages, and no other fees, expenses or damages will be payable by CGG in respect thereof. |
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Effect of Termination |
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• | based on the closing price of CGG ADSs on August 29, 2006, each outstanding share of Veritas common stock will be converted into the right to receive either (i) 2.25 CGG ADSs (with respect to 50.664% of Veritas’ total common stock) or (ii) U.S.$75.00 in cash (with respect to 49.336% of Veritas’ total common stock); | |
• | the cash consideration to be paid by CGG will be financed by a U.S.$1.6 billion bridge credit facility which will be drawn in an amount of U.S.$1.5 billion at the effective time of the merger, which facility is fully committed by a bank at an interest rate of LIBOR plus 3.75% and with corresponding borrowing fees of 1.25% and an18-month maturity; | |
• | each employee option to purchase shares of Veritas common stock pursuant to any stock option plan, program or arrangement of Veritas outstanding at the time of the merger, whether or not vested, will be cancelled and converted into the right to receive, for each share of Veritas common stock subject to such option, an amount in cash equal to the excess, if any of U.S.$75.00 over the exercise price per share under such option (less any applicable withholding taxes); and | |
• | Veritas floating rate convertible bonds due 2024 are assumed to be converted at the merger date and the corresponding new outstanding shares of Veritas issued pursuant to the conversion will be included in the shares of common stock of Veritas subject to the merger. |
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Historical CGG | Combined Pro Forma | |||||||||||||||
IFRS at | Historical Veritas | Pro Forma | Balance Sheet at | |||||||||||||
December 31, | U.S. GAAP at | Adjustments at | December 31, 2005 | |||||||||||||
2005 | January 31, 2006 | December 31, 2005 | IFRS | |||||||||||||
Note 1 | Note 1 | Notes 2, 3 and 4 | ||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
(In millions of euros except per share data) | ||||||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents | 112.4 | 223.4 | (219.2 | ) | 116.6 | |||||||||||
Current assets, net | 492.1 | 217.9 | (18.4 | ) | 691.6 | |||||||||||
Total current assets | 604.5 | 441.3 | (237.6 | ) | 808.2 | |||||||||||
Intangible assets, net | 136.3 | 248.1 | 232.7 | 617.1 | ||||||||||||
Goodwill | 252.9 | — | 1,894.6 | 2,147.5 | ||||||||||||
Other non-current assets, net | 571.4 | 172.0 | 12.4 | 755.8 | ||||||||||||
Total non-current assets | 960.6 | 420.1 | 2,139.7 | 3,520.4 | ||||||||||||
TOTAL ASSETS | 1,565.1 | 861.4 | 1,902.1 | 4,328.6 | ||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Bank overdrafts | 9.3 | — | — | 9.3 | ||||||||||||
Current portion of financial debt | 157.9 | 132.0 | (134.6 | ) | 155.3 | |||||||||||
Current liabilities | 338.0 | 139.9 | (9.8 | ) | 468.1 | |||||||||||
Total current liabilities | 505.2 | 271.9 | (144.4 | ) | 632.7 | |||||||||||
Financial debt | 242.4 | — | 1,255.0 | 1,497.4 | ||||||||||||
Derivative on convertible bonds | 11.3 | — | — | 11.3 | ||||||||||||
Other non-current liabilities | 96.0 | 34.6 | 81.0 | 211.6 | ||||||||||||
Total non-current liabilities | 349.7 | 34.6 | 1,336.0 | 1,720.3 | ||||||||||||
Total shareholders’ equity | 698.5 | 554.9 | 710.5 | 1,963.9 | ||||||||||||
Minority interests | 11.7 | — | — | 11.7 | ||||||||||||
Total shareholders’ equity and minority interests | 710.2 | 554.9 | 710.5 | 1,975.6 | ||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 1,565.1 | 861.4 | 1,902.1 | 4,328.6 | ||||||||||||
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Pro Forma | Pro Forma | |||||||||||||||||||||||||||
Pro Forma | Purchase | Pro Forma | Adjustments to | |||||||||||||||||||||||||
Consistency | Allocation | Other | Balance Sheet at | |||||||||||||||||||||||||
Ref. | Adjustments | Ref. | Adjustments | Ref. | Adjustments | December 31, 2005 | ||||||||||||||||||||||
Note 2 | Note 3 | Note 4 | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||||
(In millions of euros) | ||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Cash and cash equivalents | — | 3.2.5 | (219.2 | ) | — | (219.2 | ) | |||||||||||||||||||||
Current assets, net | 2.3, 2.4, 2.6 | (10.3 | ) | (8.1 | ) | (18.4 | ) | |||||||||||||||||||||
Total current assets | (10.3 | ) | (219.2 | ) | (8.1 | ) | (237.6 | ) | ||||||||||||||||||||
Intangible assets, net | 2.3, 2.8 | 9.8 | 3.2.1 | 222.9 | — | 232.7 | ||||||||||||||||||||||
Goodwill | — | 3.2.1 | 1,894.6 | — | 1,894.6 | |||||||||||||||||||||||
Other non-current assets, net | 2.3, 2.4, 2.6 | (7.0 | ) | 3.2.1 | 19.4 | 12.4 | ||||||||||||||||||||||
Total non-current assets | 2.8 | 2,136.9 | — | 2,139.7 | ||||||||||||||||||||||||
TOTAL ASSETS | (7.5 | ) | 1,917.7 | (8.1 | ) | 1,902.1 | ||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||
Current portion of financial debt | 2.3 | (3.2 | ) | 3.1 | (131.4 | ) | — | (134.6 | ) | |||||||||||||||||||
Current liabilities | 2.3, 2.6 | (1.2 | ) | (0.5 | ) | (8.1 | ) | (9.8 | ) | |||||||||||||||||||
Total current liabilities | (4.4 | ) | (131.9 | ) | (8.1 | ) | (144.4 | ) | ||||||||||||||||||||
Financial debt | — | 3.2.3 | 1,255.0 | — | 1,255.0 | |||||||||||||||||||||||
Other non-current liabilities | 2.3, 2.5, 2.8 | 2.2 | 3.2.1 | 78.8 | — | 81.0 | ||||||||||||||||||||||
Total non-current liabilities | 2.2 | 1,333.8 | — | 1,336.0 | ||||||||||||||||||||||||
Total shareholders’ equity | (5.3 | ) | 715.8 | — | 710.5 | |||||||||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | (7.5 | ) | 1,917.7 | (8.1 | ) | 1,902.1 | ||||||||||||||||||||||
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Historical | ||||||||||||||||||||
Exploration | ||||||||||||||||||||
Resources and | Historical | |||||||||||||||||||
Historical | Related Pro | Veritas | ||||||||||||||||||
CGG | Forma | 12 Months | ||||||||||||||||||
12 Months | Adjustments | Ended | Pro Forma | Combined Pro Forma | ||||||||||||||||
Ended | 8 Months | January | Adjustments Veritas | Income Statement | ||||||||||||||||
December | Ended August | 31, 2006 | 12 Months Ended | 12 Months Ended | ||||||||||||||||
31, 2005 | 31, 2005 | U.S. | December 31, 2005 | December 31, 2005 | ||||||||||||||||
IFRS | IFRS | GAAP | IFRS | IFRS | ||||||||||||||||
Note 1 | Note 1 | Note 1 | Notes 2, 3 and 4 | |||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
(In millions of euros except per share data) | ||||||||||||||||||||
Operating revenues | 869.9 | 68.7 | 579.6 | (29.1 | ) | 1,489.1 | ||||||||||||||
Other income from ordinary activities | 1.9 | — | — | — | 1.9 | |||||||||||||||
Total income from ordinary activities | 871.8 | 68.7 | 579.6 | (29.1 | ) | 1,491.0 | ||||||||||||||
Cost of operations | (670.0 | ) | (69.7 | ) | (453.2 | ) | (5.9 | ) | (1,198.8 | ) | ||||||||||
Gross profit | 201.8 | (1.0 | ) | 126.4 | (35.0 | ) | 292.2 | |||||||||||||
Research and development expenses — net | (31.1 | ) | — | (16.5 | ) | 5.0 | (42.6 | ) | ||||||||||||
Selling, general and administrative expenses | (91.2 | ) | (5.8 | ) | (30.0 | ) | (2.4 | ) | (129.4 | ) | ||||||||||
Other revenues (expenses) — net | (4.4 | ) | — | 9.9 | 5.5 | |||||||||||||||
Operating income | 75.1 | (6.8 | ) | 79.9 | (22.5 | ) | 125.7 | |||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | (56.8 | ) | (11.3 | ) | 12.8 | (127.1 | ) | (182.4 | ) | |||||||||||
Variance on derivative of convertible bonds | (11.5 | ) | — | — | — | (11.5 | ) | |||||||||||||
Income (loss) of consolidated companies before income taxes | 6.8 | (18.1 | ) | 92.7 | (149.6 | ) | (68.2 | ) | ||||||||||||
Income taxes | (26.6 | ) | 3.9 | (6.1 | ) | 52.4 | 23.6 | |||||||||||||
Net Income (loss) of consolidated companies | (19.8 | ) | (14.2 | ) | 86.6 | (97.2 | ) | (44.6 | ) | |||||||||||
Equity in income of affiliates | 13.0 | — | — | — | 13.0 | |||||||||||||||
Net income (loss) | (6.8 | ) | (14.2 | ) | 86.6 | (97.2 | ) | (31.6 | ) | |||||||||||
Attributable to: | ||||||||||||||||||||
— shareholders | (7.8 | ) | (14.2 | ) | 86.6 | (97.2 | ) | (32.6 | ) | |||||||||||
— minority interests | 1.0 | — | — | — | 1.0 | |||||||||||||||
Weighted average number of outstanding shares | 12,095,925 | 9,204,094 | 21,300,019 | |||||||||||||||||
Weighted average number of potential shares | 12,095,925 | 9,204,094 | 21,300,019 | |||||||||||||||||
Earnings per share: | ||||||||||||||||||||
— basic | (0.64 | ) | (1.53 | ) | ||||||||||||||||
— diluted | (0.64 | ) | (1.53 | ) | ||||||||||||||||
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Pro Forma | ||||||||||||||||||||||||||||
Adjustments to | ||||||||||||||||||||||||||||
Pro Forma | Income Statement | |||||||||||||||||||||||||||
Pro Forma | Purchase | Pro Forma | 12 Months Ended | |||||||||||||||||||||||||
Adjustments | Allocation | Other | December 31, 2005 | |||||||||||||||||||||||||
Ref. | Under IFRS | Ref. | Adjustments | Ref. | Adjustments | IFRS | ||||||||||||||||||||||
Note 2 | Note 3 | Note 4 | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||||
(In millions of euros) | ||||||||||||||||||||||||||||
Operating revenues | 2.6 | 3.1 | 2.7 | (2.4 | ) | (29.8 | ) | (29.1 | ) | |||||||||||||||||||
Other income from ordinary activities | — | — | — | — | ||||||||||||||||||||||||
Total income from ordinary activities | 3.1 | (2.4 | ) | (29.8 | ) | (29.1 | ) | |||||||||||||||||||||
Cost of operations | 2.1, 2.4, 2.5, 2.6 | 7.1 | 3.3.1, 3.3.4 | (32.0 | ) | 19.0 | (5.9 | ) | ||||||||||||||||||||
Gross profit | 10.2 | (34.4 | ) | (10.8 | ) | (35.0 | ) | |||||||||||||||||||||
Research and development expenses — net | 2.8 | 5.0 | — | — | 5.0 | |||||||||||||||||||||||
Selling, general and administrative expenses | — | 3.3.1, 3.3.4 | (2.4 | ) | — | (2.4 | ) | |||||||||||||||||||||
Other revenues (expenses) — net | 2.2, 2.6 | 9.9 | — | — | 9.9 | |||||||||||||||||||||||
Operating income | 25.1 | (36.8 | ) | (10.8 | ) | (22.5 | ) | |||||||||||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | 2.2 | (9.6 | ) | 3.3.2, 3.3.3 | (117.5 | ) | — | (127.1 | ) | |||||||||||||||||||
Income (loss) of consolidated companies before income taxes | 15.5 | (154.3 | ) | (10.8 | ) | (149.6 | ) | |||||||||||||||||||||
Income taxes | (5.4 | ) | 3.3.5 | 54.0 | 3.8 | 52.4 | ||||||||||||||||||||||
Net income (loss) | 10.1 | (100.3 | ) | (7.0 | ) | (97.2 | ) | |||||||||||||||||||||
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Historical CGG | Historical Veritas | Pro Forma | Combined Pro Forma | |||||||||||||
IFRS at June 30, | U.S. GAAP at | Adjustments at | Balance Sheet at | |||||||||||||
2006 | July 31, 2006 | June 30, 2006 | June 30, 2006 IFRS | |||||||||||||
Note 1 | Note 1 | Notes 2, 3 and 4 | ||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
(In millions of euros) | ||||||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents | 206.4 | 316.1 | (203.3 | ) | 319.2 | |||||||||||
Current assets, net | 531.6 | 200.0 | (10.9 | ) | 720.7 | |||||||||||
Total current assets | 738.0 | 516.1 | (214.2 | ) | 1,039.9 | |||||||||||
Intangible assets, net | 122.2 | 233.3 | 212.7 | 568.2 | ||||||||||||
Goodwill | 238.5 | — | 1,714.9 | 1,953.4 | ||||||||||||
Other non-current assets, net | 574.9 | 161.5 | 8.8 | 745.2 | ||||||||||||
Total non-current assets | 935.6 | 394.8 | 1,936.4 | 3,266.8 | ||||||||||||
TOTAL ASSETS | 1,673.6 | 910.9 | 1,722.2 | 4,306.7 | ||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Bank overdrafts | 17.2 | — | — | 17.2 | ||||||||||||
Current portion of financial debt | 38.3 | 122.7 | (124.9 | ) | 36.1 | |||||||||||
Current liabilities | 311.8 | 202.1 | (6.4 | ) | 507.5 | |||||||||||
Total current liabilities | 367.3 | 324.8 | (131.3 | ) | 560.8 | |||||||||||
Financial debt | 393.4 | — | 1,164.6 | 1,558.0 | ||||||||||||
Other non-current liabilities | 87.4 | 27.2 | 73.6 | 188.2 | ||||||||||||
Total non-current liabilities | 480.8 | 27.2 | 1,238.2 | 1,746.2 | ||||||||||||
Total shareholders’ equity | 802.6 | 558.9 | 615.3 | 1,976.8 | ||||||||||||
Minority interests | 22.9 | — | — | 22.9 | ||||||||||||
Total shareholders’ equity and minority interests | 825.5 | 558.9 | 615.3 | 1,999.7 | ||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 1,673.6 | 910.9 | 1,722.2 | 4,306.7 | ||||||||||||
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Pro Forma | Pro Forma | |||||||||||||||||||||||||||
Pro Forma | Purchase | Pro Forma | Adjustments to | |||||||||||||||||||||||||
Consistency | Allocation | Other | Balance Sheet | |||||||||||||||||||||||||
Ref. | Adjustments | Ref. | Adjustments | Ref. | Adjustments | at June 30, 2006 | ||||||||||||||||||||||
Note 2 | Note 3 | Note 4 | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||||
(In millions of euros) | ||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Cash and cash equivalents | 3.2.5 | (203.3 | ) | (203.3 | ) | |||||||||||||||||||||||
Current assets, net | 2.3, 2.4, 2.6 | (8.8 | ) | — | (2.1 | ) | (10.9 | ) | ||||||||||||||||||||
Total current assets | (8.8 | ) | (203.3 | ) | (2.1 | ) | (214.2 | ) | ||||||||||||||||||||
Intangible assets, net | 2.3, 2.8 | 5.8 | 3.2.1 | 206.9 | — | 212.7 | ||||||||||||||||||||||
Goodwill | — | 3.2.1 | 1,714.9 | — | 1,714.9 | |||||||||||||||||||||||
Other non-current assets, net | 2.3, 2.4, 2.6 | (9.3 | ) | 3.2.1 | 18.1 | 8.8 | ||||||||||||||||||||||
Total non-current assets | (3.5 | ) | 1,939.9 | — | 1,936.4 | |||||||||||||||||||||||
TOTAL ASSETS | (12.3 | ) | 1,736.6 | (2.1 | ) | 1,722.2 | ||||||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||
Current portion of financial debt | 2.3 | (3.0 | ) | 3.1 | (121.9 | ) | (124.9 | ) | ||||||||||||||||||||
Current liabilities | 2.3, 2.6 | (4.1 | ) | (0.2 | ) | (2.1 | ) | (6.4 | ) | |||||||||||||||||||
Total current liabilities | (7.1 | ) | (122.1 | ) | (2.1 | ) | (131.3 | ) | ||||||||||||||||||||
Financial debt | — | 3.2.3 | 1,164.6 | — | 1,164.6 | |||||||||||||||||||||||
Other non-current liabilities | 2.3, 2.5, 2.8 | 0.4 | 3.2.1 | 73.2 | — | 73.6 | ||||||||||||||||||||||
Total non-current liabilities | 0.4 | 1,237.8 | — | 1,238.2 | ||||||||||||||||||||||||
Total shareholders’ equity | (5.6 | ) | 620.9 | — | 615.3 | |||||||||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | (12.3 | ) | 1,736.6 | (2.1 | ) | 1,722.2 | ||||||||||||||||||||||
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Historical | ||||||||||||||||
Veritas | ||||||||||||||||
6 Months | Pro Forma | Combined Pro | ||||||||||||||
Historical CGG | Ended | Adjustments | Forma Statement of | |||||||||||||
6 months ended | July 31, 2006 | 6 Months Ended | Income Ended | |||||||||||||
June 30, 2006 IFRS | U.S. GAAP | June 30, 2006 IFRS | June 30, 2006 IFRS | |||||||||||||
Note 1 | Note 1 | Notes 2, 3 and 4 | ||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
(In millions of euros except per share data) | ||||||||||||||||
Operating revenues | 634.5 | 339.1 | (4.0 | ) | 969.6 | |||||||||||
Other income from ordinary activities | 0.9 | — | — | 0.9 | ||||||||||||
Total income from ordinary activities | 635.4 | 339.1 | (4.0 | ) | 970.5 | |||||||||||
Cost of operations | (420.4 | ) | (260.5 | ) | (7.1 | ) | (688.0 | ) | ||||||||
Gross profit | 215.0 | 78.6 | (11.1 | ) | 282.5 | |||||||||||
Research and development expenses — net | (18.4 | ) | (10.0 | ) | 3.0 | (25.4 | ) | |||||||||
Selling, general and administrative expenses | (60.3 | ) | (18.6 | ) | (0.7 | ) | (79.6 | ) | ||||||||
Other revenues (expenses) — net | 9.8 | — | (0.2 | ) | 9.6 | |||||||||||
Operating income | 146.1 | 50.0 | (9.0 | ) | 187.1 | |||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | (19.7 | ) | 2.2 | (58.7 | ) | (76.2 | ) | |||||||||
Derivative of convertible bonds and related costs | (23.0 | ) | — | — | (23.0 | ) | ||||||||||
Income (loss) of consolidated companies before income taxes | 103.4 | 52.2 | (67.7 | ) | 87.9 | |||||||||||
Income taxes | (33.0 | ) | (20.0 | ) | 23.7 | (29.3 | ) | |||||||||
Net Income (loss) of consolidated companies | 70.4 | 32.2 | (44.0 | ) | 58.6 | |||||||||||
Equity in income of affiliates | 5.8 | — | — | 5.8 | ||||||||||||
Net income (loss) | 76.2 | 32.2 | (44.0 | ) | 64.4 | |||||||||||
Attributable to: | ||||||||||||||||
— shareholders | 75.3 | 32.2 | (44.0 | ) | 63.5 | |||||||||||
— minority interests | 0.9 | — | — | 0.9 | ||||||||||||
Weighted average number of outstanding shares | 17,219,465 | 9,204,094 | 26,423,559 | |||||||||||||
Weighted average number of potential shares | 17,583,926 | 9,204,094 | 26,788,020 | |||||||||||||
Earnings per share: | ||||||||||||||||
— basic | 4.37 | 2.41 | ||||||||||||||
— diluted | 4.28 | 2.37 | ||||||||||||||
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Pro Forma | ||||||||||||||||||||||||||||
Adjustments | ||||||||||||||||||||||||||||
to Statement | ||||||||||||||||||||||||||||
of Income | ||||||||||||||||||||||||||||
Pro Forma | 6 Months | |||||||||||||||||||||||||||
Pro Forma | Purchase | Pro Forma | Ended | |||||||||||||||||||||||||
Adjustments | Allocation | Other | June 30, 2006 | |||||||||||||||||||||||||
Ref. | Under IFRS | Ref. | Adjustments | Ref. | Adjustments | IFRS | ||||||||||||||||||||||
Note 2 | Note 3 | Note 4 | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||||
(In millions of euros) | ||||||||||||||||||||||||||||
Operating revenues | 2.6 | 2.7 | 2.7 | (0.2 | ) | (6.5 | ) | (4.0 | ) | |||||||||||||||||||
Other income from ordinary activities | — | — | — | — | ||||||||||||||||||||||||
Total income from ordinary activities | 2.7 | (0.2 | ) | (6.5 | ) | (4.0 | ) | |||||||||||||||||||||
Cost of operations | 2.1, 2.4, 2.5, 2.6 | 4.8 | 3.3.1, 3.3.4 | (15.8 | ) | 3.9 | (7.1 | ) | ||||||||||||||||||||
Gross profit | 7.5 | (16.0 | ) | (2.6 | ) | (11.1 | ) | |||||||||||||||||||||
Research and development expenses — net | 2.8 | 3.0 | — | — | 3.0 | |||||||||||||||||||||||
Selling, general and administrative expenses | 3.3.1, 3.3.4 | (0.7 | ) | — | (0.7 | ) | ||||||||||||||||||||||
Other revenues (expenses) — net | 2.6 | (0.2 | ) | — | — | (0.2 | ) | |||||||||||||||||||||
Operating income | 10.3 | (16.7 | ) | (2.6 | ) | (9.0 | ) | |||||||||||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | — | 3.3.2, 3.3.3 | (58.7 | ) | (58.7 | ) | ||||||||||||||||||||||
Income (loss) of consolidated companies before income taxes | 10.3 | (75.4 | ) | (2.6 | ) | (67.7 | ) | |||||||||||||||||||||
Income taxes | (3.6 | ) | 3.3.5 | 26.4 | 0.9 | 23.7 | ||||||||||||||||||||||
Net income (loss) | 6.7 | (49.0 | ) | (1.7 | ) | (44.0 | ) | |||||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||||||
— shareholders | 6.7 | (49.0 | ) | (1.7 | ) | (44.0 | ) | |||||||||||||||||||||
— minority interests | — | — | — | — |
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Combined | ||||||||||||||||
Historical | Historical | Pro Forma | ||||||||||||||
CGG | Veritas | Pro Forma | Balance Sheet at | |||||||||||||
U.S. GAAP at | U.S. GAAP at | Adjustments at | December 31, | |||||||||||||
December 31, | January 31, | December 31, | 2005 | |||||||||||||
2005 | 2006 | 2005 | U.S. GAAP | |||||||||||||
Note 1 | Note 1 | Notes 2, 3 and 4 | ||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||
(In millions of euros) | ||||||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents | 112.4 | 223.4 | (219.2 | ) | 116.6 | |||||||||||
Current assets, net | 496.1 | 217.9 | 8.5 | 722.5 | ||||||||||||
Total current assets | 608.5 | 441.3 | (210.7 | ) | 839.1 | |||||||||||
Intangible assets, net | 107.0 | 248.1 | 223.0 | 578.1 | ||||||||||||
Goodwill | 255.4 | — | 1,889.1 | 2,144.5 | ||||||||||||
Other non-current assets, net | 602.9 | 172.0 | 19.5 | 794.4 | ||||||||||||
Total non-current assets | 965.3 | 420.1 | 2,131.6 | 3,517.0 | ||||||||||||
TOTAL ASSETS | 1,573.8 | 861.4 | 1,920.9 | 4,356.1 | ||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Bank overdrafts | 9.3 | — | — | 9.3 | ||||||||||||
Current portion of financial debt | 160.1 | 132.0 | (131.4 | ) | 160.7 | |||||||||||
Current liabilities | 340.5 | 139.9 | (8.5 | ) | 471.9 | |||||||||||
Total current liabilities | 509.9 | 271.9 | (139.9 | ) | 641.9 | |||||||||||
Financial debt | 247.3 | — | 1,271.5 | 1,518.8 | ||||||||||||
Derivative on convertible bonds | 11.3 | — | — | 11.3 | ||||||||||||
Other non-current liabilities | 104.1 | 34.6 | 74.0 | 212.7 | ||||||||||||
Total non-current liabilities | 362.7 | 34.6 | 1,345.5 | 1,742.8 | ||||||||||||
Total shareholders’ equity | 689.5 | 554.9 | 715.3 | 1,959.7 | ||||||||||||
Minority interests | 11.7 | — | — | 11.7 | ||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 1,573.8 | 861.4 | 1,920.9 | 4,356.1 | ||||||||||||
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Pro Forma | ||||||||||||||||||||
Adjustments to | ||||||||||||||||||||
Pro Forma | Balance Sheet | |||||||||||||||||||
Purchase | Pro Forma | at | ||||||||||||||||||
Allocation | Other | December 31, | ||||||||||||||||||
Ref. | Adjustments | Ref. | Adjustments | 2005 | ||||||||||||||||
Note 3 | Note 4 | |||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
(In millions of euros) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | 3.2.5 | (219.2 | ) | (219.2 | ) | |||||||||||||||
Current assets, net | 3.2.3 | 16.6 | (8.1 | ) | 8.5 | |||||||||||||||
Total current assets | (202.6 | ) | (8.1 | ) | (210.7 | ) | ||||||||||||||
Intangible assets, net | 3.2.1 | 223.0 | — | 223.0 | ||||||||||||||||
Goodwill | 3.2.1 | 1,889.1 | — | 1,889.1 | ||||||||||||||||
Other non-current assets, net | 3.2.1 | 19.5 | — | 19.5 | ||||||||||||||||
Total non-current assets | 2,131.6 | — | 2,131.6 | |||||||||||||||||
TOTAL ASSETS | 1,929.0 | (8.1 | ) | 1,920.9 | ||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Current portion of financial debt | 3.1 | (131.4 | ) | — | (131.4 | ) | ||||||||||||||
Current liabilities | 3.2 | (0.4 | ) | (8.1 | ) | (8.5 | ) | |||||||||||||
Total current liabilities | (131.8 | ) | (8.1 | ) | (139.9 | ) | ||||||||||||||
Financial debt | 3.2.3 | 1,271.5 | — | 1,271.5 | ||||||||||||||||
Other non-current liabilities | 3.2.1 | 74.0 | — | 74.0 | ||||||||||||||||
Total non-current liabilities | 1,345.5 | — | 1,345.5 | |||||||||||||||||
Total shareholders’ equity | 715.3 | — | 715.3 | |||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 1,929.0 | (8.1 | ) | 1,920.9 | ||||||||||||||||
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Historical | ||||||||||||||||||||
Exploration | ||||||||||||||||||||
Resources and | Combined | |||||||||||||||||||
Related Pro | Pro Forma | Pro Forma | ||||||||||||||||||
Historical | Forma | Historical | Adjustments | Income | ||||||||||||||||
CGG | Adjustments | Veritas | Veritas | Statement | ||||||||||||||||
12 Months | 8 Months | 12 Months | 12 Months | 12 Months | ||||||||||||||||
Ended | Ended | Ended | Ended | Ended | ||||||||||||||||
December | August 31, | January 31, | December 31, | December 31, | ||||||||||||||||
31, 2005 | 2005 | 2006 | 2005 | 2005 | ||||||||||||||||
U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | ||||||||||||||||
Note 1 | Note 1 | Note 1 | Notes 2, 3 and 4 | |||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||
(In millions of euros except per share data) | ||||||||||||||||||||
Operating revenues | 860.8 | 63.8 | 579.6 | (29.8 | ) | 1,474.4 | ||||||||||||||
Cost of operations | (665.4 | ) | (68.8 | ) | (453.2 | ) | 1.3 | (1,186.1 | ) | |||||||||||
Gross profit | 195.4 | (5.0 | ) | 126.4 | (28.5 | ) | 288.3 | |||||||||||||
Research and development expenses — net | (39.3 | ) | — | (16.5 | ) | — | (55.8 | ) | ||||||||||||
Selling, general and administrative expenses | (92.7 | ) | (8.4 | ) | (30.0 | ) | (3.7 | ) | (134.8 | ) | ||||||||||
Other revenues (expenses) — net | (1.5 | ) | — | 9.6 | 8.1 | |||||||||||||||
Operating income | 61.9 | (13.4 | ) | 79.9 | (22.6 | ) | 105.8 | |||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | (31.9 | ) | (4.6 | ) | 12.8 | (127.1 | ) | (150.8 | ) | |||||||||||
Variance on derivative of convertible bonds | (11.5 | ) | — | — | — | (11.5 | ) | |||||||||||||
Equity in income of affiliates | 13.0 | — | — | — | 13.0 | |||||||||||||||
Income (loss) of consolidated | ||||||||||||||||||||
companies before income taxes and minority interests | 31.5 | (18.0 | ) | 92.7 | (149.7 | ) | (43.5 | ) | ||||||||||||
Income taxes | (22.2 | ) | 5.2 | (6.1 | ) | 52.4 | 29.3 | |||||||||||||
Minority interests | (1.0 | ) | 0.2 | — | — | (0.8 | ) | |||||||||||||
Net income (loss) | 8.3 | (12.6 | ) | 86.6 | (97.3 | ) | (15.0 | ) | ||||||||||||
Weighted average number of outstanding shares | 12,095,925 | 9,204,094 | 21,300,019 | |||||||||||||||||
Weighted average number of potential shares | 12,357,779 | 9,204,094 | 21,561,873 | |||||||||||||||||
Earnings per share: | ||||||||||||||||||||
— basic | 0.69 | (0.70 | ) | |||||||||||||||||
— diluted | 0.67 | (0.70 | ) | |||||||||||||||||
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Pro Forma | ||||||||||||||||||||||||||||
Adjustments | ||||||||||||||||||||||||||||
to Income | ||||||||||||||||||||||||||||
Statement | ||||||||||||||||||||||||||||
Pro Forma | 12 Months | |||||||||||||||||||||||||||
Consistency | Pro Forma | Ended | ||||||||||||||||||||||||||
Adjustments | Purchase | Pro Forma | December 31, | |||||||||||||||||||||||||
Under | Allocation | Other | 2005 | |||||||||||||||||||||||||
Ref. | U.S. GAAP | Ref. | Adjustments | Ref. | Adjustments | U.S. GAAP | ||||||||||||||||||||||
Note 2 | Note 3 | Note 4 | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||||
(In millions of euros) | ||||||||||||||||||||||||||||
Operating revenues | (29.8 | ) | (29.8 | ) | ||||||||||||||||||||||||
Cost of operations | 2.1 | 12.8 | 3.3.1 | (30.5 | ) | 19.0 | 1.3 | |||||||||||||||||||||
Gross profit | 12.8 | (30.5 | ) | (10.8 | ) | (28.5 | ) | |||||||||||||||||||||
Selling, general and administrative expenses | — | 3.3.1 | (3.7 | ) | — | (3.7 | ) | |||||||||||||||||||||
Other revenues (expenses) — net | 2.2 | 9.6 | — | — | 9.6 | |||||||||||||||||||||||
Operating income | 22.4 | (34.2 | ) | (10.8 | ) | (22.6 | ) | |||||||||||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | 2.2 | (9.6 | ) | 3.3.2, 3.3.3 | (117.5 | ) | — | (127.1 | ) | |||||||||||||||||||
Income (loss) of consolidated companies before income taxes and minority interests | 12.8 | (151.7 | ) | (10.8 | ) | (149.7 | ) | |||||||||||||||||||||
Income taxes | (4.5 | ) | 3.3.5 | 53.1 | 3.8 | 52.4 | ||||||||||||||||||||||
Net income (loss) | 8.3 | (98.6 | ) | (7.0 | ) | (97.3 | ) | |||||||||||||||||||||
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Combined | ||||||||||||||||
Historical CGG | Historical Veritas | Pro Forma | Pro Forma Balance | |||||||||||||
U.S. GAAP at | U.S. GAAP at | Adjustments at | Sheet at June 30, | |||||||||||||
June 30, 2006 | July 31, 2006 | June 30, 2006 Notes | 2006 U.S. GAAP | |||||||||||||
Note 1 | Note 1 | Notes 2, 3 and 4 | ||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
(In millions of euros) | ||||||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents | 206.4 | 316.1 | (203.3 | ) | 319.2 | |||||||||||
Current assets, net | 531.6 | 200.0 | 13.2 | 744.8 | ||||||||||||
Total current assets | 738.0 | 516.1 | (190.1 | ) | 1,064.0 | |||||||||||
Intangible assets, net | 90.7 | 233.3 | 206.9 | 530.9 | ||||||||||||
Goodwill | 251.8 | — | 1,709.2 | 1,961.0 | ||||||||||||
Other non-current assets, net | 597.2 | 161.5 | 18.1 | 776.6 | ||||||||||||
Total non-current assets | 939.7 | 394.8 | 1,934.1 | 3,268.5 | ||||||||||||
TOTAL ASSETS | 1,677.7 | 910.9 | 1,743.9 | 4,332.5 | ||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Bank overdrafts | 17.2 | — | — | 17.2 | ||||||||||||
Current portion of financial debt | 38.3 | 122.7 | (121.9 | ) | 39.1 | |||||||||||
Current liabilities | 339.8 | 202.1 | (2.3 | ) | 539.6 | |||||||||||
Total current liabilities | 395.3 | 324.8 | (124.2 | ) | 595.9 | |||||||||||
Financial debt | 400.1 | — | 1,179.9 | 1,580.0 | ||||||||||||
Other non-current liabilities | 99.7 | 27.2 | 68.6 | 195.5 | ||||||||||||
Total non-current liabilities | 499.8 | 27.2 | 1,248.5 | 1,775.5 | ||||||||||||
Total shareholders’ equity | 759.7 | 558.9 | 619.6 | 1,938.2 | ||||||||||||
Minority interests | 22.9 | — | — | 22.9 | ||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 1,677.7 | 910.9 | 1,743.9 | 4,332.5 | ||||||||||||
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Pro Forma | Pro Forma | |||||||||||||||||||
Purchase | Adjustments to | |||||||||||||||||||
Allocation | Pro Forma Other | Balance Sheet | ||||||||||||||||||
Ref. | Adjustments | Ref. | Adjustments | at June 30, 2006 | ||||||||||||||||
Note 3 | Note 4 | |||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||||
(In millions of euros) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Cash and cash equivalents | 3.2.5 | (203.3 | ) | — | (203.3 | ) | ||||||||||||||
Current assets, net | 3.2.3 | 15.3 | (2.1 | ) | 13.2 | |||||||||||||||
Total current assets | (188.0 | ) | (2.1 | ) | (190.1 | ) | ||||||||||||||
Intangible assets, net | 3.2.1 | 206.9 | — | 206.9 | ||||||||||||||||
Goodwill | 3.2.1 | 1,709.1 | — | 1,709.1 | ||||||||||||||||
Other non-current assets, net | 3.2.1 | 18.1 | — | 18.1 | ||||||||||||||||
Total non-current assets | 1,934.1 | — | 1,934.1 | |||||||||||||||||
TOTAL ASSETS | 1,746.1 | (2.1 | ) | 1,743.9 | ||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Current portion of financial debt | 3.1 | (121.9 | ) | — | (121.9 | ) | ||||||||||||||
Current liabilities | 3.2 | (0.2 | ) | (2.1 | ) | (2.3 | ) | |||||||||||||
Total current liabilities | (122.1 | ) | (2.1 | ) | (124.2 | ) | ||||||||||||||
Financial debt | 3.2.3 | 1,179.9 | — | 1,179.9 | ||||||||||||||||
Other non-current liabilities | 3.2.1 | 68.6 | — | 68.6 | ||||||||||||||||
Total non-current liabilities | 1,248.5 | — | 1,248.5 | |||||||||||||||||
Total shareholders’ equity | 619.6 | 619.6 | ||||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 1,746.1 | (2.1 | ) | 1,743.9 | ||||||||||||||||
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Pro Forma | Combined | |||||||||||||||
Historical CGG | Historical Veritas | Adjustments | Pro Forma | |||||||||||||
6 Months Ended | 6 Months Ended | 6 Months Ended | Statement of Income | |||||||||||||
June 30, 2006 | July 31, 2006 | June 30, 2006 | Ended June 30, | |||||||||||||
U.S. GAAP | U.S. GAAP | U.S. GAAP | 2006 U.S. GAAP | |||||||||||||
Note 1 | Note 1 | Notes 2, 3 and 4 | ||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
(In millions of euros except per share data) | ||||||||||||||||
Operating revenues | 642.0 | 339.1 | (6.5 | ) | 974.6 | |||||||||||
Cost of operations | (420.9 | ) | (260.5 | ) | (6.1 | ) | (687.5 | ) | ||||||||
Gross profit | 221.1 | 78.6 | (12.6 | ) | 287.1 | |||||||||||
Research and development expenses — net | (23.7 | ) | (10.0 | ) | — | (33.7 | ) | |||||||||
Selling, general and administrative expenses | (60.6 | ) | (18.6 | ) | (1.8 | ) | (81.0 | ) | ||||||||
Other revenues (expenses) — net | 7.4 | — | — | 7.4 | ||||||||||||
Operating income | 144.2 | 50.0 | (14.4 | ) | 179.8 | |||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | (53.7 | ) | 2.2 | (58.8 | ) | (110.3 | ) | |||||||||
Derivative of convertible bonds and related costs | (23.0 | ) | — | — | (23.0 | ) | ||||||||||
Equity in income of affiliates | 5.8 | — | — | 5.8 | ||||||||||||
Income (loss) of consolidated companies before income taxes and minority interests | 73.3 | 52.2 | (73.2 | ) | 52.3 | |||||||||||
Income taxes | (29.8 | ) | (20.0 | ) | 25.7 | (24.1 | ) | |||||||||
Minority interests | (0.9 | ) | — | — | (0.9 | ) | ||||||||||
Net income (loss) | 42.6 | 32.2 | (47.5 | ) | 27.3 | |||||||||||
Weighted average number of outstanding shares | 17,219,465 | 9,204,094 | 26,423,559 | |||||||||||||
Weighted average number of potential shares | 17,583,926 | 9,204,094 | 26,788,020 | |||||||||||||
Earnings per share: | ||||||||||||||||
— basic | 2.47 | 1.03 | ||||||||||||||
— diluted | 2.42 | 1.02 | ||||||||||||||
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Pro Forma | ||||||||||||||||||||||||||||
Adjustments | ||||||||||||||||||||||||||||
to Statement | ||||||||||||||||||||||||||||
Pro Forma | of Income | |||||||||||||||||||||||||||
Consistency | Pro Forma | 6 Months | ||||||||||||||||||||||||||
Adjustments | Purchase | Pro Forma | Ended | |||||||||||||||||||||||||
Under | Allocation | Other | June 30, 2006 | |||||||||||||||||||||||||
Ref. | U.S. GAAP | Ref. | Adjustments | Ref. | Adjustments | U.S. GAAP | ||||||||||||||||||||||
Note 2 | Note 3 | Note 4 | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||||
(In millions of euros) | ||||||||||||||||||||||||||||
Operating revenues | — | — | (6.5 | ) | (6.5 | ) | ||||||||||||||||||||||
Cost of operations | 2.1 | 5.6 | 3.3.1 | (15.6 | ) | 3.9 | (6.1 | ) | ||||||||||||||||||||
Gross profit | 5.6 | (15.6 | ) | (2.6 | ) | (12.6 | ) | |||||||||||||||||||||
Selling, general and administrative expenses | — | 3.3.1 | (1.8 | ) | — | (1.8 | ) | |||||||||||||||||||||
Operating income | 5.6 | (17.4 | ) | (2.6 | ) | (14.4 | ) | |||||||||||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | — | 3.3.2, 3.3.3 | (58.8 | ) | — | (58.8 | ) | |||||||||||||||||||||
Income (loss) of consolidated companies before income taxes and minority interests | 5.6 | (76.2 | ) | (2.6 | ) | (73.2 | ) | |||||||||||||||||||||
Income taxes | (2.0 | ) | 3.3.5 | 26.8 | 0.9 | 25.7 | ||||||||||||||||||||||
Net income (loss) | 3.6 | (49.4 | ) | (1.7 | ) | (47.5 | ) |
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Description of transaction |
Basis of presentation |
Historical financial statements and currency translation |
146
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147
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Historical | Historical | Historical | Historical | |||||||||||||||||
Veritas | Veritas | Veritas | Veritas | |||||||||||||||||
12 Months | 6 Months | 6 Months | Historical Veritas | 12 Months | ||||||||||||||||
Ended | Ended | Ended | 12 Months Ended | Ended | ||||||||||||||||
July 31, | January 31, | January 31, | January 31, | January 31, | ||||||||||||||||
2005 | 2005 | 2006 | 2006 | 2006 | ||||||||||||||||
U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | ||||||||||||||||
(In millions of | (In millions of | (In millions of | (In millions of | (in millions of | ||||||||||||||||
U.S. dollars) | U.S. dollars) | U.S. dollars) | U.S. dollars) | euros) | ||||||||||||||||
(A) | (B) | (C) | (A) - (B) + (C) | (unaudited) | ||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | ||||||||||||||||||
Operating revenues | 634.0 | 321.8 | 407.5 | 719.7 | 579.6 | |||||||||||||||
Cost of operations | (519.0 | ) | (260.9 | ) | (304.6 | ) | (562.7 | ) | (453.2 | ) | ||||||||||
Gross profit | 115.0 | 60.9 | 102.9 | 157.0 | 126.4 | |||||||||||||||
Research and development expenses — net | (18.9 | ) | (9.1 | ) | (10.7 | ) | (20.5 | ) | (16.5 | ) | ||||||||||
Selling, general and administrative expenses | (31.9 | ) | (15.0 | ) | (20.4 | ) | (37.3 | ) | (30.0 | ) | ||||||||||
Operating income | 64.2 | 36.8 | 71.8 | 99.2 | 79.9 | |||||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | 12.0 | (0.1 | ) | 3.8 | 15.9 | 12.8 | ||||||||||||||
Income of consolidated companies before income taxes and minority interests | 76.2 | 36.7 | 75.6 | 115.1 | 92.7 | |||||||||||||||
Income taxes | 6.8 | (18.4 | ) | (32.8 | ) | (7.6 | ) | (6.1 | ) | |||||||||||
Net income | 83.0 | 18.3 | 42.8 | 107.5 | 86.6 | |||||||||||||||
Net income (loss) | 83.0 | 18.3 | 42.8 | 107.5 | 86.6 | |||||||||||||||
Weighted average number of outstanding shares (in thousands) | 33,843 | 34,393 | ||||||||||||||||||
Weighted average number of potential shares (in thousands) | 35,054 | 36,442 | ||||||||||||||||||
Earning per share: | ||||||||||||||||||||
— basic | 2.45 | 2.52 | ||||||||||||||||||
— diluted | 2.37 | 2.38 | ||||||||||||||||||
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Historical | Historical | Historical | Historical | |||||||||||||
Veritas | Veritas | Veritas | Veritas | |||||||||||||
12 Months | 6 Months | 6 Months | 6 Months | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
July 31, | January 31, | July 31, | July 31, | |||||||||||||
2006 | 2006 | 2006 | 2006 | |||||||||||||
U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | |||||||||||||
(in millions of | (in millions of | (in millions of | (in millions of | |||||||||||||
U.S. dollars) | U.S. dollars) | U.S. dollars) | euros) | |||||||||||||
(A) | (B) | (A) - (B) | (unaudited) | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Operating revenues | 822.2 | 407.5 | 414.7 | 339.1 | ||||||||||||
Cost of operations | (623.2 | ) | (304.6 | ) | (318.6 | ) | (260.5 | ) | ||||||||
Gross profit | 199.0 | 102.9 | 96.1 | 78.6 | ||||||||||||
Research and development expenses — net | (22.9 | ) | (10.7 | ) | (12.2 | ) | (10.0 | ) | ||||||||
Selling, general and administrative expenses | (43.2 | ) | (20.4 | ) | (22.8 | ) | (18.6 | ) | ||||||||
Operating income | 132.9 | 71.8 | 61.1 | 50.0 | ||||||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | 6.5 | 3.8 | 2.7 | 2.2 | ||||||||||||
Income (loss) of consolidated companies before income taxes and minority interests | 139.4 | 75.6 | 63.8 | 52.2 | ||||||||||||
Income taxes | (57.2 | ) | (32.8 | ) | (24.4 | ) | (20.0 | ) | ||||||||
Net income | 82.2 | 42.8 | 39.4 | 32.2 | ||||||||||||
Net income (loss) | 82.2 | 42.8 | 39.4 | 32.2 | ||||||||||||
Weighted average number of outstanding shares (in thousands) | 35,260 | 35,673 | ||||||||||||||
Weighted average number of potential shares (in thousands) | 39,623 | 39,607 | ||||||||||||||
Earning per share: | ||||||||||||||||
— basic | 2.33 | 0.90 | ||||||||||||||
— diluted | 2.08 | 0.81 | ||||||||||||||
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Historical | ||||||||||||||||
Exploration | ||||||||||||||||
Purchase | Other | Resources and | ||||||||||||||
Historical | Accounting | Adjustments | Related | |||||||||||||
Exploration | Exploration | Exploration | Pro forma | |||||||||||||
Resources | Resources | Resources | Adjustments | |||||||||||||
8 Months | 8 Months | 8 Months | 8 Months | |||||||||||||
ended | ended | ended | ended | |||||||||||||
August 31, | August 31, | August 31, | August 31, | |||||||||||||
2005 | 2005 | 2005 | 2005 | |||||||||||||
U.S. GAAP | U.S. GAAP | U.S. GAAP | U.S. GAAP | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
(In millions of euros) | ||||||||||||||||
Operating revenues | 66.3 | (2.5 | ) | 63.8 | ||||||||||||
Cost of operations | (58.7 | ) | (10.0 | ) | (0.1 | ) | (68.8 | ) | ||||||||
Gross profit | 7.6 | (10.0 | ) | (2.6 | ) | (5.0 | ) | |||||||||
Selling, general and administrative expenses | (8.4 | ) | (8.4 | ) | ||||||||||||
Operating income | (0.8 | ) | (10.0 | ) | (2.6 | ) | (13.4 | ) | ||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | 1.1 | — | (5.7 | ) | (4.6 | ) | ||||||||||
Income (loss) of consolidated companies before income taxes and minority interests | 0.3 | (10.0 | ) | (8.3 | ) | (18.0 | ) | |||||||||
Income taxes | (1.2 | ) | 2.8 | 3.6 | 5.2 | |||||||||||
Minority interests | 0.6 | (0.4 | ) | 0.2 | ||||||||||||
Net income (loss) | (0.3 | ) | (7.2 | ) | (5.1 | ) | (12.6 | ) |
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Historical | ||||||||||||||||
Exploration | ||||||||||||||||
Resources | ||||||||||||||||
Purchase | and Related | |||||||||||||||
Historical | Accounting | Pro Forma | ||||||||||||||
Exploration | Exploration | Other Pro | Adjustments | |||||||||||||
Resources | Resources | Forma | 8 Months | |||||||||||||
9 Months | 8 Months | Adjustments | ended | |||||||||||||
IFRS ended | IFRS ended | Exploration | August 31, | |||||||||||||
September 30, | September 30, | Resources (a) | 2005 | |||||||||||||
2005 | 2005 | IFRS | IFRS | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
(In millions of euros) | ||||||||||||||||
Operating revenues | 78.6 | (9.9 | ) | 68.7 | ||||||||||||
Cost of operations | (67.4 | ) | (9.4 | ) | 7.1 | (69.7 | ) | |||||||||
Gross profit | 11.2 | (9.4 | ) | (2.8 | ) | (1.0 | ) | |||||||||
Selling, general and administrative expenses | (6.3 | ) | 0.5 | (5.8 | ) | |||||||||||
Operating income | 4.9 | (9.4 | ) | (2.3 | ) | (6.8 | ) | |||||||||
Interest, other financial income and expense, net, exchange gains and losses, net and others | (2.1 | ) | (9.2 | ) | (11.3 | ) | ||||||||||
Income (loss) of consolidated companies before income taxes | 2.8 | (9.4 | ) | (11.5 | ) | (18.1 | ) | |||||||||
Income taxes | 0.4 | 2.6 | 0.9 | 3.9 | ||||||||||||
Net income (loss) | 3.2 | (6.8 | ) | (10.6 | ) | (14.2 | ) | |||||||||
— attributable to shareholders | 3.8 | (7.5 | ) | (10.5 | ) | (14.2 | ) | |||||||||
— attributable to minority interests | (0.6 | ) | 0.7 | (0.1 | ) | — |
(a) | Adjustments include the deduction of the income statement for the month of September 2005 for Exploration Resources. |
Note 2 — | Adjustments to Veritas historical financial statements to ensure consistency of accounting principles with CGG’s historical financial statements under IFRS and U.S. GAAP |
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2.1. Adjustment on multi-client surveys amortization of Veritas |
• | Gulf of Mexico surveys are amortized on the basis of 66.6% of revenues. Starting at the time of data delivery, a minimum straight-line depreciation scheme is applied on a three-year period, should total accumulated depreciation from the 66.6% of revenues amortization method below this minimum level; | |
• | Rest of the world surveys: same as above except depreciation is 83.3% of revenues and straight-line depreciation is over a five-year period from data delivery; and | |
• | Long-term strategic 2D surveys are amortized on the basis of revenues according to the above area split and straight-line depreciation on a seven-year period from data delivery. |
2.2 Reclassification of specific items in the statement of income of Veritas |
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2.4 Cancellation of deferred charges in Veritas’ financial statements (IFRS) |
2.5 Veritas’ actuarial gain and losses recorded directly in equity (IFRS) |
2.6 Application of proportional method to two Veritas’ subsidiaries (IFRS) |
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2.7 Cancellation of deferred revenues in Veritas’ financial statements (IFRS) |
2.8 Capitalization of development costs (IFRS) |
3.1 Purchase Price Computation and Purchase Price Allocation |
3.1.1 Purchase Price Computation |
Number of Veritas common stock outstanding at July 31, 2006 | 35,985,254 | |||
Number of shares of Veritas common stock to be issued upon the conversion of Veritas’ outstanding Convertible Senior Notes due 2024(1) | 4,383,604 | |||
Number of shares of Veritas common stock reserved for the issuance upon the conversion of Deferred Shares Units | 2,000 | |||
Total number of shares of Veritas common stock at July 31, 2006 | 40,370,858 | |||
Ratio to be applied for shares of Veritas common stock to be exchanged for CGG ADSs | 50.664 | % | ||
Shares of Veritas common stock to be exchanged for CGG ADSs at July 31, 2006 | 20,453,491 | |||
Exchange ratio per Veritas share | 2.25 CGG ADSs | |||
Total number of CGG ADSs to be issued | 46,020,356 | |||
Multiplied by CGG’s average ADS price (in U.S. dollars) for the period beginning two days before and ending two days after the September 5, 2006 (the date the merger was announced), as an estimate of the ADS price at the effective date of the merger | U.S.$ | 32.44 | ||
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in millions | ||||||||
(except share data) | ||||||||
U.S.$ | € | |||||||
Fair value of CGG ADSs issued (A) | 1,493 | 1,174 | ||||||
Total number of Veritas common stock at July 31, 2006 | 40,370,858 | |||||||
Ratio to be applied for shares of Veritas common stock to be exchanged for cash | 49.336 | % | ||||||
Shares of Veritas common stock to be exchanged for cash at July 31, 2006 | 19,917,366 | |||||||
Cash paid per Veritas share | 75 | |||||||
Fair value of compensation paid (B) | 1,494 | 1,175 | ||||||
(in millions of U.S. dollars) | ||||||||
Total consideration given in exchange for Veritas shares(A)+(B) | 2,987 | 2,349 | ||||||
Cash paid in exchange for Veritas outstanding stock options | 65 | 51 | ||||||
Estimated transaction costs(2) | 25 | 19 | ||||||
Estimated purchase price | 3,077 | 2,419 |
(1) | Convertible Senior Notes due 2024 |
1. the closing sale price of Veritas common stock is over 120% of the conversion price, which is currently U.S.$24.03 (with 120% being U.S.$28.84) for 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the fiscal quarter preceding the quarter in which the conversion occurs; | |
2. if Veritas calls the notes for redemption (which may occur at any time after March 20, 2009) and the redemption has not occurred; | |
3. the occurrence of a five consecutive trading day period in which the trading price of the notes was less than 95% of the closing sale price of Veritas common stock on such day multiplied by the conversion ratio; or | |
4. the occurrence of specified corporate transactions. |
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(2) | Direct transaction costs |
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3.1.2 Purchase Price Allocation |
As of July 31, 2006 | ||||||||||||||||
U.S. GAAP | U.S. GAAP | IFRS | IFRS | |||||||||||||
($) | (€) | ($) | (€) | |||||||||||||
(in millions) | ||||||||||||||||
Net book value of net assets acquired at July 31, 2006 | 711 | 559 | 709 | 557 | ||||||||||||
Allocation of purchase price: | ||||||||||||||||
— Acquired technologies and in-process research and development(1) | 39 | 31 | 39 | 31 | ||||||||||||
— Acquired customer relationship(2) | 90 | 71 | 90 | 71 | ||||||||||||
— Reassessment of multi-client library(3) | 74 | 58 | 74 | 58 | ||||||||||||
— Reassessment of property, plant & equipment(4) | 26 | 20 | 26 | 20 | ||||||||||||
— Favorable contracts(5) | 60 | 47 | 60 | 47 | ||||||||||||
— Deferred taxes on the above adjustments(6) | (96 | ) | (76 | ) | (101 | ) | (79 | ) | ||||||||
— Goodwill (residual balance not allocated) | 2,173 | 1,709 | 2,180 | 1,714 | ||||||||||||
Estimated purchase price | 3,077 | 2,419 | 3,077 | 2,419 | ||||||||||||
(1) | Acquired technologies (useful life of 5 years) and in-process research and development |
(2) | Acquired customer relationship (useful life of 20 years) |
(3) | Reassessment of multi-client library (maximum useful life of 5 years) |
(4) | Reassessment of property, plant & equipment |
(5) | Favorable contracts (weighted average remaining life of 6 years) |
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(6) | Deferred taxes on the above adjustments |
(7) | Deferred revenues |
(8) | Pre-acquisition contingencies |
3.2 Pro forma adjustments on the unaudited pro forma combined balance sheet under IFRS and U.S. GAAP |
3.2.1 Allocation of purchase price |
At June 30, | ||||||||||||
At December 31, 2005 | 2006 | |||||||||||
(in U.S.$ millions) | (in€ millions) | (in€ millions) | ||||||||||
Identifiable intangible assets | 263 | 222.9 | 206.9 | |||||||||
Identifiable tangible assets | 26 | 22.0 | 20.4 | |||||||||
Additional goodwill | ||||||||||||
— at December 31, 2005 | 2,229 | 1,889.2 | — | |||||||||
— at June 30, 2006 | 2,173 | — | 1,709.2 | |||||||||
Deferred taxes on the above adjustments | 95 | 80.9 | 75.0 |
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At June 30, | ||||||||||||
At December 31, 2005 | 2006 | |||||||||||
(in U.S.$ millions) | (in€ millions) | (in€ millions) | ||||||||||
Identifiable intangible assets | 263 | 222.9 | 206.9 | |||||||||
Identifiable tangible assets | 26 | 22.0 | 20.4 | |||||||||
Additional goodwill | ||||||||||||
— at December 31, 2005 | 2,235 | 1,894.6 | — | |||||||||
— at June 30, 2006 | 2,180 | — | 1,714.9 | |||||||||
Deferred taxes on the above adjustments | 101 | 85.7 | 79.5 |
3.2.2 Adjustments to shareholders’ equity |
• | to remove the historical balance of Veritas for an amount of U.S.$655 million (€554.8 million) at December 31, 2005 and of U.S.$711 million (€558.9 million) at June 30, 2006; | |
• | to cancel deferred revenues that do not correspond to a performance obligation for an amount of U.S.$9 million before tax and U.S$5 million (€4.7 million at December 31, 2006 and€4.2 million at June 30, 2006); and | |
• | to record the amounts related to the issuance of CGG’s ADSs in the merger for an amount of U.S.$1,493 million (€1,265.4 million at December 31, 2005 and€1,174.2 million at June 30, 2006). |
3.2.3 Financing of the acquisition |
3.2.4 Share-based payment adjustments |
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3.2.5 Net effect of pro forma adjustment on cash |
Cash-out for purchase price as disclosed in 3.1.1 | ||
Compensation paid for Veritas shares | (U.S.$1,494.0 million) | |
Cash paid in exchange for Veritas outstanding stock options | (U.S.$65.0 million) | |
Estimated transaction costs | (U.S.$25.0 million) | |
Cash-out for reimbursement of Convertible Notes due 2024 as disclosed in 3.1.1(1) | (U.S.$155.0 million) | |
Cash-in for financing of the acquisition as disclosed in 3.2.3 | ||
Amount drawn on the U.S.$1,600 million bridge facility | U.S.$1,500.0 million | |
Less issuance costs paid on the bridge loan facility | (U.S.$19.5 million) | |
Total net effect of pro forma adjustments on cash | (U.S.$258.5 million) |
3.3 Pro forma adjustments on the unaudited pro forma combined statement of income under IFRS and U.S. GAAP |
3.3.1 Amortization of tangible and intangible assets at fair value |
3.3.2 Interests costs and amortization of issuance costs related to the financing of the acquisition |
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3.3.3 Interests costs on convertible bonds |
3.3.4 Share-based payment adjustments |
3.3.5 Deferred taxes effect |
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How will you receive dividends and other distributions on the shares? |
• | Cash. The depositary will convert any cash dividend or other cash distribution CGG pays on the ADSs into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. If that is not possible or if any government approval is needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADS registered holders to whom it is possible to do so. It will hold the foreign currency it cannot convert for the account of the ADS registered holders who have not been paid. It will not invest the foreign currency and it will not be liable for any interest. |
Before making a distribution, any withholding taxes, or other governmental charges that must be paid will be deducted. See “The Merger — Certain Material U.S. Federal Income Tax Consequences” beginning on page 86 of this proxy statement/ prospectus. It will distribute only whole U.S. dollars and cents and will round fractional cents to the nearest whole cent.If the |
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exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the distribution. |
• | Shares. The depositary may distribute additional ADSs representing any shares CGG distributes as a dividend or free distribution. The depositary will only distribute whole ADSs. It will sell ADSs which would require it to deliver a fractional ADS and distribute the net proceeds in the same way as it does with cash. If the depositary does not distribute additional ADSs, the outstanding ADSs will also represent the new ADSs. The depositary may sell a portion of the distributed ADSs sufficient to pay its fees and expenses in connection with that distribution. | |
• | Rights to purchase additional ADSs. If CGG offers holders of its securities any rights to subscribe for additional shares or any other rights, the depositary may make these rights available to ADS registered holders. If the depositary decides it is not legal and practical to make the rights available but that it is practical to sell the rights, the depositary will use reasonable efforts to sell the rights and distribute the proceeds in the same way as it does with cash. The depositary will allow rights that are not distributed or sold to lapse.In that case, an ADS holder will receive no value for them. |
If the depositary makes rights available to ADS registered holders, it will exercise the rights and purchase the shares on your behalf. The depositary will then deposit the shares and deliver ADSs to the persons entitled to them. It will only exercise rights if you pay it the exercise price and any other charges the rights require you to pay. | |
U.S. securities laws may restrict transfers and cancellation of the ADSs represented by shares purchased upon exercise of rights. For example, you may not be able to trade these ADSs freely in the United States. In this case, the depositary may deliver restricted ADSs that have the same terms as the ADSs described in this section except for changes needed to put the necessary restrictions in place. |
• | Other Distributions. The depositary will send to ADS registered holders anything else CGG distributes on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, the depositary has a choice. It may decide to sell what CGG distributed and distribute the net proceeds, in the same way as it does with cash. Or, it may decide to hold what CGG distributed, in which case ADSs will also represent the newly distributed property. However, the depositary is not required to distribute any securities (other than ADSs) to ADS registered holders unless it receives satisfactory evidence from CGG that it is legal to make that distribution. The depositary may sell a portion of the distributed securities or property sufficient to pay its fees and expenses in connection with that distribution. |
How are ADSs issued? |
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How can ADS holders withdraw the deposited securities? |
How do ADS holders interchange between certificated ADSs and uncertificated ADSs? |
How do you vote? |
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Persons Depositing or | ||
Withdrawing Shares Must Pay: | For: | |
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) | • Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property | |
• Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates | ||
$.02 (or less) per ADS | • Any cash distribution to ADS registered holders | |
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs | • Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS registered holders | |
Registration or transfer fees | • Transfer and registration of shares on CGG’s share register to or from the name of the depositary or its agent when you deposit or withdraw shares | |
Expenses of the depositary | • Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement) | |
• Converting foreign currency to U.S. dollars | ||
Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes | • As necessary |
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If CGG: | Then: | |
• Changes the nominal or par value of CGG ordinary shares; • Reclassifies, splits up or consolidates any of the deposited securities; • Distributes securities on the shares that are not distributed to you; or • Recapitalizes, reorganizes, merges, liquidates, sells all or substantially all of its assets, or takes any similar action. | The cash, shares or other securities received by the depositary will become deposited securities. Each ADS will automatically represent its equal share of the new deposited securities. The depositary may, and will if CGG asks it to, distribute some or all of the cash, shares or other securities it received. It may also deliver new ADRs or ask you to surrender your outstanding ADRs in exchange for new ADRs identifying the new deposited securities. |
How may the deposit agreement be amended? |
How may the deposit agreement be terminated? |
• | are only obligated to take the actions specifically set forth in the deposit agreement without negligence or bad faith; |
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• | are not liable if CGG or it is prevented or delayed by law or circumstances beyond CGG’s control from performing CGG’s or its obligations under the deposit agreement; | |
• | are not liable if CGG or it exercises discretion permitted under the deposit agreement; | |
• | have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the deposit agreement on your behalf or on behalf of any other person; and | |
• | may rely upon any documents CGG or it believes in good faith to be genuine and to have been signed or presented by the proper person. |
• | payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the transfer of any shares or other deposited securities; | |
• | satisfactory proof of the identity and genuineness of any signature or other information it deems necessary; and | |
• | compliance with regulations it may establish, from time to time, consistent with the deposit agreement, including presentation of transfer documents. |
• | When temporary delays arise because: (i) the depositary has closed its transfer books or CGG has closed its transfer books; (ii) the transfer of shares is blocked to permit voting at a shareholders’ meeting; or (iii) CGG is paying a dividend on CGG’s shares. | |
• | When you owe money to pay fees, taxes and similar charges. | |
• | When it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of shares or other deposited securities. |
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Veritas |
CGG |
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Veritas |
CGG |
Veritas |
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CGG |
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Veritas |
• | the material facts as to the director’s or officer’s relationship or interest are disclosed and a majority of disinterested directors authorizes the transaction; | |
• | the material facts are disclosed as to the director’s or officer’s relationship or interest and the transaction is specifically approved in good faith by the stockholders; or | |
• | the transaction is fair to the corporation at the time that it is authorized by the board of directors, a committee of the board of directors or the stockholders. |
CGG |
Veritas |
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CGG |
Veritas |
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CGG |
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Veritas |
• | a brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of such stockholder, along with a representation that such stockholder will appear at such meeting in person or by proxy to present the proposal; | |
• | the name and record address of such stockholder; and | |
• | the class or series and number of shares of Veritas capital stock that are owned beneficially or of record of such stockholder. |
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CGG |
Veritas |
CGG |
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Veritas |
CGG |
Veritas |
CGG |
Veritas |
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CGG |
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Veritas |
CGG |
• | the company’s profits for the fiscal year, less | |
• | the company’s losses for the fiscal year, less | |
• | any required contribution to the company’s legal reserve fund under French law, plus | |
• | any additional profits that the company reported but did not distribute in its prior fiscal years, less | |
• | any loss carryforward from prior fiscal years, plus | |
• | any reserves available for distribution. |
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• | the profit of the company for the fiscal year, less | |
• | the aggregate amount of losses the company may have incurred prior to the last fiscal year, less | |
• | any required contribution to the company’s legal reserve fund under French law, plus | |
• | any additional profits the company reported but did not distribute during the last fiscal year. |
Veritas |
CGG |
Veritas |
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• | prior to the time that the 15% stockholder becomes such, either (1) the proposed business combination or (2) the transaction by which the 15% stockholder became a 15% stockholder is approved by the board of directors of the corporation; | |
• | if, upon consummation of the transaction that resulted in the stockholder becoming a 15% stockholder of the corporation, the 15% stockholder owns at least 85% of the outstanding voting stock of the corporation, without regard to those shares owned by the corporation’s directors who are also officers or by certain employee stock plans; or | |
• | if the transaction or business combination is approved by the board of directors of the corporation and, at an annual or special meeting, by the holders of at least 662/3% of the outstanding voting stock of the corporation not owned by the 15% stockholder. |
CGG |
• | any individual or legal entity acting alone or in concert that holds directly or indirectly between one-third and one-half of the shares or voting rights of a company and has increased its interest in the capital or voting rights of such company by more than 2% within less than 12 consecutive months; | |
• | any individual or legal entity acting alone or in concert that, as a result of a merger or asset contribution, comes to hold more than one-third of a company’s shares or voting rights, where such shares represent an essential part of the assets of the entity absorbed or contributed; or | |
• | any company holding more than one-third of the share capital or voting rights of a listed company, where such interest constitutes an essential part of the company’s assets and (i) a third party acquires “control” (as defined under the law applicable to such company) of the company; or (ii) a group of persons acting in concert acquires control of the company, unless one or more of those persons already exercised control over the company and remain predominant, and as long as the balance of respective interests is not altered significantly. |
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Veritas |
CGG |
Veritas |
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CGG |
• | inventory lists; | |
• | annual financial statements; | |
• | consolidated financial statements, if any; | |
• | reports of the board of directors and the statutory auditors; | |
• | proposed resolutions; | |
• | information regarding candidates for the board of directors; | |
• | the total overall compensation paid to the corporation’s 10 highest-paid employees; | |
• | the total amount of charitable deductions made by the corporation, certified by the statutory auditors; | |
• | minutes of shareholders meetings; | |
• | attendance sheets of shareholders meetings; | |
• | a list of transactions with related parties; | |
• | report on employment-related matters(bilan social); and | |
• | a list of the corporation’s directors and statutory auditors. |
• | the agenda for the meeting; | |
• | a table showing the results of operations for the last five years; | |
• | summary of the company’s financial situation over the last fiscal year; | |
• | the proposed resolutions to be presented at the meeting; | |
• | a proxy card and a form for voting by mail; and | |
• | a form for requesting documents at later meetings. |
Veritas |
• | an annual report on Form 10-K within 75 days after the end of each fiscal year; | |
• | quarterly reports on Form 10-Q within 40 days after the end of each of the first three quarters of the fiscal year; and |
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• | current reports on Form 8-K upon the occurrence of specified corporate events. |
• | an annual report containing audited financial statements; and | |
• | a proxy statement that complies with the requirements of the Exchange Act. |
CGG |
• | annual financial statements; | |
• | management report; | |
• | report of the statutory auditors on the annual financial statements; | |
• | the proposed allocation of the results submitted to the shareholders; and | |
• | the resolution on the allocation of the company’s results approved by the shareholders. |
• | consolidated financial statements; | |
• | group management report; and | |
• | report of the statutory auditors on the consolidated financial statements. |
• | attach to its annual financial statements an inventory of the securities listed in the corporate portfolio as of the close of the fiscal year and a table relating to the proposed allocation of the results to be voted by the general shareholders meeting; | |
• | publish annually in the BALO, within four months from the end of the fiscal year and at least 15 days prior to the annual ordinary shareholders meeting, the following documents: |
• | annual financial statements; | |
• | the proposed allocation of results; and | |
• | consolidated financial statements, if available; |
• | publish, within 45 days from the annual ordinary shareholders meeting, a separate BALO entry of the following documents: | |
• | approved annual financial statements; | |
• | the decision of the allocation of the result; and | |
• | consolidated accounts reviewed by the statutory auditors. |
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• | Publish in the BALO, within four months from the end of the first six months of each fiscal year, a table of activity and results relating to that period and a report on the period activity (along with the certification of the statutory auditors that those documents were made with good faith); and | |
• | Publish in the BALO, within 45 days from the end of each quarter, a breakdown per branch of activity of its quarterly turnover and, if applicable, its turnover for previous quarters, a comparison of those figures with the figures of the previous fiscal year, as well a consolidated statement of its net turnover. |
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CGG SEC Filings (File No. 001-14622) | Period and/or Date Filed or Date Furnished | |
Annual Report on Form 20-F | Fiscal year ended December 31, 2005, filed on May 9, 2006 | |
Reports on Form 6-K | Furnished on September 5, 2006, September 6, 2006, September 22, 2006, September 28, 2006 and November 15, 2006 | |
The financial statements of Exploration Resources as of and for the six months ended June 30, 2005 and the year ended December 31, 2004 in CGG’s prospectus filed pursuant to Rule 424(b) (File No. 333-134649) | Filed on July 3, 2006 | |
Veritas SEC Filings (File No. 001-7427) | Period and/or Date Filed | |
Annual Report on Form 10-K | Fiscal year ended July 31, 2006, filed on October 4, 2006 | |
Current Reports on Form 8-K | Filed on: September 5, 2006, October 4, 2006 and November 20, 2006 (which excludes current reports reporting information under Items 2.02 or 7.01 of Form 8-K and related exhibits, which are not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section) | |
Proxy Statement on Schedule 14A for Veritas’ 2006 Annual Meeting of Stockholders | Filed on October 28, 2005 |
CGG Tour Maine-Montparnasse 33, avenue du Maine BP 191 75755 Paris Cedex 15 | Veritas 10300 Town Park Drive Houston, Texas 77072 | |
+33 64 47 45 00 Attention: Investor Relations | (832) 351-8300 Attention: Investor Relations |
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Page | |||||
ARTICLE I THE MERGERS | A-2 | ||||
Section 1.1 The Mergers | A-2 | ||||
Section 1.2 Effective Times | A-2 | ||||
Section 1.3 Closing | A-2 | ||||
Section 1.4 Certificate of Incorporation; Bylaws | A-3 | ||||
Section 1.5 Directors and Officers of the Surviving Corporation and Certain Subsidiaries | A-3 | ||||
Section 1.6 Conversion of Capital Stock | A-3 | ||||
Section 1.7 Election Procedures | A-5 | ||||
Section 1.8 Stock Options | A-7 | ||||
Section 1.9 Dissenting Shares | A-8 | ||||
ARTICLE II EXCHANGE OF CERTIFICATES | A-8 | ||||
Section 2.1 Exchange of Certificates | A-8 | ||||
Section 2.2 Stock Transfer Books | A-11 | ||||
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY | A-11 | ||||
Section 3.1 Organization | A-12 | ||||
Section 3.2 Capitalization | A-12 | ||||
Section 3.3 Authorization; Validity of Agreement | A-14 | ||||
Section 3.4 No Violations; Consents and Approvals | A-14 | ||||
Section 3.5 SEC Reports and Financial Statements | A-15 | ||||
Section 3.6 Absence of Certain Changes | A-17 | ||||
Section 3.7 Absence of Undisclosed Liabilities | A-17 | ||||
Section 3.8 Disclosure Documents | A-18 | ||||
Section 3.9 Employee Benefit Plans; ERISA | A-18 | ||||
Section 3.10 Litigation; Compliance with Law | A-21 | ||||
Section 3.11 Intellectual Property | A-22 | ||||
Section 3.12 Material Contracts | A-23 | ||||
Section 3.13 Taxes | A-24 | ||||
Section 3.14 Environmental Matters | A-26 | ||||
Section 3.15 Company Assets; Company Vessels | A-26 | ||||
Section 3.16 Insurance | A-27 | ||||
Section 3.17 Labor Matters | A-27 | ||||
Section 3.18 Affiliate Transactions | A-28 | ||||
Section 3.19 Derivative Transactions and Hedging | A-28 | ||||
Section 3.20 Disclosure Controls and Procedures | A-28 | ||||
Section 3.21 Investment Company | A-29 | ||||
Section 3.22 OFAC | A-29 | ||||
Section 3.23 Rights Agreement | A-29 | ||||
Section 3.24 Required Vote by Company Stockholders | A-29 | ||||
Section 3.25 Recommendation of Company Board of Directors; Opinion of Financial Advisor | A-29 | ||||
Section 3.26 Brokers | A-29 | ||||
Section 3.27 No Other Representations or Warranties | A-29 |
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Page | |||||
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT, MERGER SUB I AND MERGER SUB II | A-30 | ||||
Section 4.1 Organization | A-30 | ||||
Section 4.2 Capitalization | A-30 | ||||
Section 4.3 Authorization; Validity of Agreement | A-31 | ||||
Section 4.4 No Violations; Consents and Approvals | A-32 | ||||
Section 4.5 SEC Reports and Financial Statements | A-32 | ||||
Section 4.6 Absence of Certain Changes | A-33 | ||||
Section 4.7 Absence of Undisclosed Liabilities | A-34 | ||||
Section 4.8 Disclosure Documents | A-34 | ||||
Section 4.9 Employee Benefit Plans; ERISA | A-34 | ||||
Section 4.10 Litigation; Compliance with Law | A-35 | ||||
Section 4.11 Intellectual Property | A-36 | ||||
Section 4.12 Material Contracts | A-37 | ||||
Section 4.13 Taxes | A-38 | ||||
Section 4.14 Parent Assets | A-39 | ||||
Section 4.15 Financing | A-39 | ||||
Section 4.16 Affiliate Transactions | A-39 | ||||
Section 4.17 Derivative Transactions and Hedging | A-40 | ||||
Section 4.18 Disclosure Controls and Procedures | A-40 | ||||
Section 4.19 Investment Company | A-40 | ||||
Section 4.20 OFAC | A-40 | ||||
Section 4.21 Recommendation of Parent Board of Directors | A-40 | ||||
Section 4.22 Required Vote by Parent Shareholders | A-40 | ||||
Section 4.23 Brokers | A-40 | ||||
Section 4.24 Ownership of Company Common Stock | A-40 | ||||
Section 4.25 Takeover Statutes | A-41 | ||||
Section 4.26 No Other Representations or Warranties | A-41 | ||||
ARTICLE V COVENANTS | A-41 | ||||
Section 5.1 Interim Operations of the Company | A-41 | ||||
Section 5.2 Interim Operations of Parent | A-45 | ||||
Section 5.3 Acquisition Proposals | A-46 | ||||
Section 5.4 Access to Information and Properties | A-51 | ||||
Section 5.5 Further Action; Reasonable Best Efforts | A-52 | ||||
Section 5.6 Disclosure Documents; Stockholders’ Meetings | A-53 | ||||
Section 5.7 Notification of Certain Matters | A-56 | ||||
Section 5.8 Directors’ and Officers’ Insurance and Indemnification | A-56 | ||||
Section 5.9 Publicity | A-57 | ||||
Section 5.10 Financing | A-57 | ||||
Section 5.11 Stock Exchange Listing | A-58 | ||||
Section 5.12 Employee Benefits | A-58 | ||||
Section 5.13 Appointment of Directors | A-59 | ||||
Section 5.14 Rights Agreement | A-59 | ||||
Section 5.15 Certain Tax Matters | A-59 |
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Section 5.16 Supplemental Indenture | A-60 | ||||
Section 5.17 ESPP | A-60 | ||||
Section 5.18 Investigation by Parties; No Other Representations or Warranties | A-61 | ||||
Section 5.19 Section 16 Matters | A-61 | ||||
Section 5.20 Affiliates Letter | A-62 | ||||
Section 5.21 Merger Subs | A-62 | ||||
ARTICLE VI CONDITIONS | A-62 | ||||
Section 6.1 Conditions to Each Party’s Obligation To Effect the Mergers | A-62 | ||||
Section 6.2 Conditions to the Obligation of the Company to Effect the Mergers | A-63 | ||||
Section 6.3 Conditions to Obligations of Parent, Merger Sub I and Merger Sub II to Effect the Mergers | A-64 | ||||
ARTICLE VII TERMINATION | A-65 | ||||
Section 7.1 Termination | A-65 | ||||
Section 7.2 Effect of Termination | A-67 | ||||
ARTICLE VIII MISCELLANEOUS | A-67 | ||||
Section 8.1 Fees and Expenses | A-67 | ||||
Section 8.2 Amendment; Waiver | A-68 | ||||
Section 8.3 Survival | A-69 | ||||
Section 8.4 Notices | A-69 | ||||
Section 8.5 Rules of Construction and Interpretation; Definitions | A-70 | ||||
Section 8.6 Headings; Schedules | A-74 | ||||
Section 8.7 Counterparts | A-74 | ||||
Section 8.8 Entire Agreement | A-74 | ||||
Section 8.9 Severability | A-74 | ||||
Section 8.10 Governing Law | A-74 | ||||
Section 8.11 Assignment | A-74 | ||||
Section 8.12 Parties in Interest | A-75 | ||||
Section 8.13 Specific Performance | A-75 | ||||
Section 8.14 Jurisdiction | A-75 | ||||
Section 8.15 Effectiveness | A-75 |
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Acceptable Confidentiality Agreement | A-71 | |||
Acquisition Agreement | A-47 | |||
Acquisition Proposal | A-50 | |||
Advisers Act | A-29 | |||
affiliates | A-43 | |||
Affiliates Letter | A-62 | |||
Aggregate Consideration | A-3 | |||
Amendment No. 2 | A-71 | |||
AMF | A-15 | |||
Antitrust Division | A-52 | |||
Applicable Jurisdiction | A-71 | |||
beneficial ownership | A-l | |||
Book-Entry Shares | A-4 | |||
Burdensome Condition | A-52 | |||
Business Day | A-71 | |||
Capital Budget | A-41 | |||
Cash Designated Shares | A-7 | |||
Cash Election Shares | A-5 | |||
Certificate | A-4 | |||
Certificates of Merger | A-2 | |||
CFIUS | A-65 | |||
Claim | A-56 | |||
Cleanup | A-71 | |||
Closing | A-2 | |||
Closing Date | A-3 | |||
Code | A-71 | |||
Commitment Letter | A-39 | |||
Company | A-1 | |||
Company Adverse Recommendation Change | A-46 | |||
Company Assets | A-26 | |||
Company Balance Sheet | A-16 | |||
Company Board | A-14 | |||
Company Charter | A-27 | |||
Company Common Stock | A-12 | |||
Company Convertible Debt | A-12 | |||
Company Directors | A-71 | |||
Company Disclosure Letter | A-l | |||
Company IP Rights | A-23 | |||
Company Material Contract | A-24 | |||
Company Notice | A-47 | |||
Company Notice of Change | A-48 | |||
Company Option | A-7 | |||
Company Option Plans | A-7 | |||
Company Permits | A-22 | |||
Company Plans | A-18 | |||
Company Preferred Stock | A-12 | |||
Company Required Vote | A-29 |
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Company Rights | A-13 | |||
Company Rights Agreement | A-13 | |||
Company SEC Documents | A-16 | |||
Company Series A Preferred Stock | A-12 | |||
Company Special Meeting | A-54 | |||
Company Stock Plans | A-7 | |||
Company Summary Plan Description | A-19 | |||
Company Vessels | A-27 | |||
Competition Laws | A-71 | |||
Confidentiality Agreement | A-51 | |||
Continuing Employees | A-58 | |||
Cut-off Time | A-12 | |||
Deemed Stock Amount | A-3 | |||
Deferred Share Units | A-12 | |||
Delayed Forms | A-15 | |||
Depositary | A-8 | |||
Derivative Transaction | A-71 | |||
DGCL | A-2 | |||
Dissenting Share | A-8 | |||
EC Merger Regulation | A-15 | |||
Election Deadline | A-6 | |||
Election Form | A-5 | |||
Election Form Record Date | A-5 | |||
Employment Agreement | A-20 | |||
Employment and Withholding Taxes | A-72 | |||
Environmental Claim | A-72 | |||
Environmental Laws | A-72 | |||
ERISA | A-18 | |||
ERISA Affiliate | A-18 | |||
ESPP | A-13 | |||
ESPP Options | A-13 | |||
ESPP Shares | A-13 | |||
Exchange Act | A-15 | |||
Exchange Agent | A-8 | |||
Exchange Fund | A-9 | |||
Exchange Ratio | A-4 | |||
Exon-Florio Act | A-15 | |||
Exon-Florio Amendment | A-65 | |||
Financing | A-72 | |||
First Merger | A-2 | |||
Foreign Plan | A-72 | |||
Form F-4 | A-34 | |||
Form F-6 | A-34 | |||
FTC | A-52 | |||
Governmental Entity | A-15 | |||
Hazardous Material | A-72 | |||
HSR Act | A-15 | |||
IFRS | A-33 | |||
Indemnified Parties | A-56 |
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Intellectual Property | A-22 | |||
Investment Company Act | A-29 | |||
IRS Ruling | A-l | |||
knowledge | A-72 | |||
Laws | A-15 | |||
Leased Real Property | A-72 | |||
Leases | A-72 | |||
Liens | A-72 | |||
Litigation | A-72 | |||
LTIP Plans | A-13 | |||
LTIP Shares | A-12 | |||
Mailing Date | A-5 | |||
Material Adverse Effect | A-63 | |||
Merger Consideration | A-3 | |||
Merger I Certificate of Merger | A-2 | |||
Merger I Effective Time | A-2 | |||
Merger I Surviving Corporation | A-2 | |||
Merger II Certificate of Merger | A-2 | |||
Merger II Effective Time | A-2 | |||
Merger Sub I | A-1 | |||
Merger Sub II | A-1 | |||
Mergers | A-2 | |||
No Election Shares | A-5 | |||
NYSE | A-4 | |||
Owned Real Property | A-73 | |||
Parent | A-1 | |||
Parent Adverse Recommendation Change | A-49 | |||
Parent Assets | A-39 | |||
Parent Balance Sheet | A-33 | |||
Parent Balance Sheet Date | A-33 | |||
Parent Board | A-40 | |||
Parent Depositary Share | A-4 | |||
Parent Disclosure Letter | A-30 | |||
Parent Investigation | A-51 | |||
Parent IP Rights | A-36 | |||
Parent Material Contract | A-37 | |||
Parent Necessary Corporate Documents | A-55 | |||
Parent Notice | A-49 | |||
Parent Notice of Change | A-50 | |||
Parent Options | A-30 | |||
Parent Ordinary Share | A-4 | |||
Parent Ordinary Shares | A-30 | |||
Parent Permits | A-36 | |||
Parent Plans | A-34 | |||
Parent SEC Documents | A-32 | |||
Parent Shareholder Approval | A-31 | |||
Parent Shareholders’ Meeting | A-55 | |||
Per Share Cash Consideration | A-4 | |||
Per Share Consideration | A-4 |
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Per Share Stock Consideration | A-4 | |||
Permitted Liens | A-73 | |||
Person | A-73 | |||
Proxy Statement | A-18 | |||
Qualifying Amendment | A-54 | |||
Real Property | A-73 | |||
Registered Company IP | A-23 | |||
Registered Parent IP | A-37 | |||
Release | A-73 | |||
Representatives | A-46 | |||
Return | A-73 | |||
Sarbanes-Oxley Act | A-16 | |||
SEC | A-15 | |||
Second Merger | A-2 | |||
Secretary of State | A-2 | |||
Securities Act | A-16 | |||
Severance Benefits | A-59 | |||
Severance Policy | A-l | |||
Significant Subsidiary | A-74 | |||
Skadden Arps | A-65 | |||
Specified Company SEC Documents | A-l | |||
Specified Parent SEC Documents | A-30 | |||
Stock Designated Shares | A-6 | |||
Stock Election Shares | A-5 | |||
Subsidiary | A-74 | |||
Superior Proposal | A-50 | |||
Surviving Corporation | A-2 | |||
Tax | A-74 | |||
Termination Date | A-65 | |||
Termination Fee | A-67 | |||
Total Cash Amount | A-4 | |||
Total Common Stock Amount | A-4 | |||
Total Stock Amount | A-4 | |||
Total Stock Consideration | A-4 | |||
US Continuing Employee | A-59 | |||
US GAAP | A-16 | |||
Valuation Period | A-4 | |||
VES Class A Shares | A-3 | |||
VES Shares | A-3 |
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“Aggregate Consideration”shall mean the sum of (x) the Total Stock Consideration and (y) the Total Cash Amount. | |
“Deemed Stock Amount”shall mean the Total Common Stock Amount;provided,however, that regardless of the actual number of shares of Company Common Stock outstanding immediately prior to the Merger I Effective Time, in no event shall the Deemed Stock Amount exceed the sum of |
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(i) 35,985,254, (ii) the aggregate number of shares of Company Common Stock, if any, issued by the Company after the Cut-off Time and prior to the date of this Agreement upon the exercise of the Company Options (outstanding as of the Cut-off Time and disclosed in Section 3.2(a) of the Company Disclosure Letter) in accordance with the terms of such Company Options and (iii) the aggregate number of shares of Company Common Stock, if any, issued by the Company after the date of this Agreement and prior to the Merger I Effective Time in accordance with Section 5.1(d). | |
“Exchange Ratio”shall mean the quotient, rounded to the nearest ten-thousandth, obtained by dividing the Per Share Consideration by the Final Parent Depositary Share Price. | |
“Final Parent Depositary Share Price”shall mean the average of the per share closing sale prices of Parent Depositary Shares on the New York Stock Exchange (the “NYSE”), as reported inThe Wall Street Journal, for the Valuation Period. | |
“Parent Depositary Share”means an American Depositary Share of Parent representing one-fifth (0.20) of a Parent Ordinary Share. | |
“Parent Ordinary Share”means an ordinary share, nominal value €2.00 per share, of Parent. | |
“Per Share Cash Consideration”shall mean cash in an amount of U.S. dollars equal to the value of the Per Share Consideration. | |
“Per Share Consideration”shall mean the quotient, rounded to the nearest ten-thousandth, obtained by dividing the Aggregate Consideration by the Total Common Stock Amount. | |
“Per Share Stock Consideration”shall mean a number of Parent Depositary Shares (which need not be a whole number) equal to the Exchange Ratio. | |
“Total Cash Amount”shall mean (x) the product obtained by multiplying (1) U.S. $75.00 by (2) 49.336% of the Deemed Stock Amount, minus (y) any cash distributions made by the Company (I) after the date of this Agreement or (II) with a record date after the date of this Agreement and on or before the Merger I Effective Time, subject to adjustment pursuant to Section 1.6(d). | |
“Total Common Stock Amount”shall mean the total number of shares of Company Common Stock outstanding immediately prior to the Merger I Effective Time. | |
“Total Stock Amount”shall mean the product obtained by multiplying (x) 2.2501 by (y) 50.664% of the Deemed Stock Amount, subject to adjustment pursuant to Section 1.6(d). | |
“Total Stock Consideration”shall mean the product obtained by multiplying (x) the Total Stock Amount by (y) the Final Parent Depositary Share Price. | |
“Valuation Period”shall mean the twenty consecutive trading days during which the Parent Depositary Shares are traded on the NYSE ending on the third calendar day immediately prior to the Merger I Effective Time, or if such calendar day is not a trading day, then ending on the trading day immediately preceding such calendar day. |
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(i) Cash Election Shares More Than Total Cash Amount. If the aggregate cash amount that would be paid upon the conversion of the Cash Election Shares pursuant to the First Merger is greater than the Total Cash Amount, then: |
(1) all Stock Election Shares and No Election Shares shall be converted into the right to receive the Per Share Stock Consideration, | |
(2) the Exchange Agent shall then select from among the Cash Election Shares, by a pro rata selection process, a sufficient number of shares (“Stock Designated Shares”) such that the aggregate cash amount that will be paid pursuant to the First Merger equals as closely as practicable the Total Cash Amount, and all Stock Designated Shares shall be converted into the right to receive the Per Share Stock Consideration, and | |
(3) the Cash Election Shares that are not Stock Designated Shares will be converted into the right to receive the Per Share Cash Consideration. |
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(ii) Cash Election Shares Less Than Total Cash Amount. If the aggregate cash amount that would be paid upon conversion of the Cash Election Shares pursuant to the First Merger is less than the Total Cash Amount, then: |
(1) all Cash Election Shares shall be converted into the right to receive the Per Share Cash Consideration, | |
(2) the Exchange Agent shall then select first from among the No Election Shares and then (if necessary) from among the Stock Election Shares, in each case by a pro rata selection process, a sufficient number of shares (“Cash Designated Shares”) such that the aggregate cash amount that will be paid pursuant to the First Merger equals as closely as practicable the Total Cash Amount, and all Cash Designated Shares shall be converted into the right to receive the Per Share Cash Consideration, and | |
(3) the Stock Election Shares and the No Election shares that are not Cash Designated Shares shall be converted into the right to receive the Per Share Stock Consideration. |
(iii) Cash Election Shares Equal to Total Cash Amount. If the aggregate cash amount that would be paid upon conversion of the Cash Election Shares pursuant to the First Merger is equal to the Total Cash Amount, then subparagraphs (i) and (ii) above shall not apply and all Cash Election Shares shall be converted into the right to receive the Per Share Cash Consideration and all Stock Election Shares and No Election Shares shall be converted into the right to receive the Per Share Stock Consideration. |
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(i) the Company Plan or a written description of any Company Plan not in writing; | |
(ii) the most recent annual report and accounts or Internal Revenue Service Form 5500 Series with respect to each Company Plan for the last three Company Plan years ending prior to the date of this Agreement for which such a report was filed, including all related reports required therewith; |
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(iii) the most recent Summary Plan Description of the Company (the “Company Summary Plan Description”), together with all Summaries of Material Modification issued with respect to such Company Summary Plan Description with respect thereto, and where there is no Summary Plan Description, all written communications with members of the Company Plan which are of current effect and which summarize the benefits provided in such Company Plan (other thanday-to-day communications with individual Plan members); | |
(iv) if the Company Plan or any obligations thereunder are funded through a trust or any other funding vehicle, the trust or other funding agreement and the latest financial statements thereof (including the accounts for the Company Plan), any actuarial valuation or other actuarial report in relation to the Company Plan prepared or received within the last six Company Plan years ending prior to the date of this Agreement (and whether prepared for the Company or for the trustees or managers of the relevant Company Plan), and details of any agreement (whether made in writing or otherwise and whether or not legally binding) for the funding of such a plan; | |
(v) all contracts relating to the Company Plan with respect to which the Company or any ERISA Affiliate may have any material liability, including insurance contracts, investment management agreements, subscription and participation agreements and record keeping agreements; | |
(vi) the most recent determination letter received from the Internal Revenue Service with respect to each Company Plan intended to qualify under section 401(a) of the Code and in relation to any Company Plan established in the United Kingdom, evidence of its status as a registered scheme together with confirmation as to whether or not it is contracted out of the Second State pension; and | |
(vii) all reports, statements, annual information returns, investment information summaries or other returns, filings and material communications between the Company or any ERISA Affiliate of the Company or, if in the Company’s possession, the trustees of any Company Plan with any governmental agency with respect to such Company Plan since September 1, 2003. |
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(i) the Company, or one of its Subsidiaries, is the sole and exclusive owner of, or possesses adequate licenses or other rights to use, all Intellectual Property used in the present conduct of the businesses of the Company and its Subsidiaries, (“Company IP Rights”) free and clear of all security interests (except Permitted Liens) including but not limited to liens, charges, mortgages, title retention agreements or title defects; | |
(ii) to the Company’s knowledge, no consent, co-existence or settlement agreements, judgments, or court orders limit or restrict the Company’s or any of its Subsidiary’s ownership rights in and to any Intellectual Property owned by them; | |
(iii) the conduct of the business of the Company and its Subsidiaries as presently conducted does not, to the knowledge of the Company, infringe or misappropriate any third Person’s Intellectual Property; or | |
(iv) to the knowledge of the Company, no third Person is infringing or misappropriating any Intellectual Property, owned by the Company or its Subsidiaries, and to the knowledge of the Company there is no litigation pending or threatened in writing by or against the Company or any of its Subsidiaries, nor, to the knowledge of the Company, has the Company or any of its Subsidiaries received any written charge, claim, complaint, demand, letter or notice, that asserts a claim (a) alleging that any or all of the Company IP Rights infringe or misappropriate any third party’s Intellectual Property, or (b) challenging the ownership, use, validity, or enforceability of any Company IP Right. |
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(i) Parent, or one of its Subsidiaries, is the sole and exclusive owner of, or possesses adequate licenses or other rights to use all Intellectual Property used in the present conduct of the businesses of Parent and its Subsidiaries, (“Parent IP Rights”) free and clear of all security interests (except Permitted Liens) including but not limited to liens, charges, mortgages, title retention agreements or title defects; | |
(ii) to Parent’s knowledge, no consent, co-existence or settlement agreements, judgments, or court orders limit or restrict Parent’s or any of its Subsidiary’s ownership rights in and to any Intellectual Property owned by them; | |
(iii) the conduct of the business of Parent and its Subsidiaries as presently conducted does not, to the knowledge of Parent, infringe or misappropriate any third Person’s Intellectual Property; or |
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(iv) to the knowledge of Parent, no third Person is infringing or misappropriating any Intellectual Property, owned by Parent or its Subsidiaries, and to the knowledge of Parent there is no litigation pending or threatened in writing by or against Parent or any of its Subsidiaries, nor, to the knowledge of Parent, has Parent or any of its Subsidiaries received any written charge, claim, complaint, demand, letter or notice, that asserts a claim (a) alleging that any or all of Parent IP Rights infringe or misappropriate any third party’s Intellectual Property, or (b) challenging the ownership, use, validity, or enforceability of any Parent IP Right. |
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(a) the business of the Company and its Subsidiaries shall be conducted only in the ordinary course substantially consistent with past practices, and the Company shall use reasonable best efforts to preserve intact its business organization and goodwill and the business organization and goodwill of its Subsidiaries and to keep available the services of their current officers and key employees and preserve and maintain existing relations with key customers, suppliers, officers, employees and creditors; | |
(b) the Company shall not, nor shall it permit any of its Subsidiaries to, (i) enter into any new line of business, or (ii) incur or commit to any capital expenditures, or any obligations or liabilities in connection with any capital expenditures other than capital expenditures and obligations or liabilities incurred or committed to in an amount not greater in the aggregate than, and during the same time period set forth in, the Company’s current capital budget reviewed by the Company Board in August 2006, the amount of which has been furnished to Parent prior to the date of this Agreement (the “Capital Budget”), and excluding capital expenditures to repair lost or damaged property or equipment in the ordinary course of business substantially consistent with past practice;provided,however, if the Closing Date has not occurred on or prior to January 15, 2006 but is reasonably expected to occur within the succeeding 60 days, then the Company shall prepare and provide to Parent a revised capital budget for the remainder of the Company’s fiscal year which describes and reprioritizes the capital expenditures and commitments intended to be made in the remainder of the fiscal year based on the then current facts and circumstances for the Company and the potential impact on the combined company. The Company and Parent agree to work in good faith to reasonably agree on the revised plan taking into account what is prudent and appropriate for the business of the Company; and if Parent objects to the aggregate amount of such spending the Company will endeavor to revise the plan in accordance with the reasonable objections from Parent except (i) to the extent that the Company Board determines in good faith that to make such revisions would be reasonably likely to adversely effect the Company’s competitive position, future operating results, the safety of its employees or its compliance with Law, (ii) to the extent the proposed spending or commitments are consistent with past practice and prudent operation of the business of the Company or (iii) where permitting Parent to participate in the spending decision would violate or prejudice the rights of its customers or contravene any Law or binding agreement entered into prior to the date of this Agreement. If a revised plan is agreed among the Company and Parent, the Company |
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shall not spend or make commitments for capital spending in excess of the amounts set forth in the revised plan, subject to the right to make emergency expenditures and commitments to the extent that unforeseen circumstances require it; | |
(c) the Company shall not, nor shall it permit any of its Subsidiaries to, amend its certificate of incorporation or bylaws or similar organizational documents; | |
(d) the Company shall not, nor shall it permit any of its Subsidiaries (other than direct or indirect wholly owned Subsidiaries) to, declare, set aside or pay any dividend or other distribution, whether payable in cash, stock or any other property or right, with respect to its capital stock or other equity interests; and the Company shall not, nor shall it permit any of its Subsidiaries to (i) adjust, split, combine or reclassify any capital stock or other equity interests or issue, grant, sell, transfer, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class or of any other such securities or agreements of the Company or any of its Subsidiaries, other than issuances (A) of shares of Company Common Stock pursuant to the Convertible Company Debt, the Company Options, the ESPP Options, Deferred Share Units and awards under the LTIP Plan, in each case outstanding on the date of this Agreement or, with respect to Company Options, issued in accordance with the proviso to this clause (i), (B) by a wholly owned Subsidiary of the Company of such Subsidiary’s capital stock or other equity interests to the Company or any other wholly owned Subsidiary of the Company, (C) of the LTIP Shares pursuant to LTIP awards made prior to the date of this Agreement in accordance with the terms in effect on the date of this Agreement, or (D) pursuant to the Company Rights or the Company Rights Agreement in effect on the date of this Agreement, provided that if the First Merger shall not have been consummated on or prior to December 31, 2006, the parties recognize that the Company may need to grant Company Options to employees in such amounts, and on such terms and conditions, as shall be reasonably acceptable to Parent, or (ii) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or any other securities or agreements of the type described in clause (i) of this Section 5.1(d), except as (1) required by the terms of any capital stock of, or other equity interests in, the Company or any of its Subsidiaries outstanding on the date of this Agreement and described in Section 5.1(d)(ii)(1) of the Company Disclosure Letter, (2) contemplated by any Company Plan existing on the date of this Agreement and described in Section 5.1(d)(ii)(2) of the Company Disclosure Letter or (3) contemplated by any employment agreement of the Company existing on the date of this Agreement and described in Section 5.1(d)(ii)(3) of the Company Disclosure Letter; | |
(e) the Company shall not, nor shall it permit any of its Subsidiaries to, (i) except for normal increases in the ordinary course of business consistent with past practice (or, with respect to employees, in connection with promotions on a basis consistent with past practice), grant any increase in the compensation or benefits payable or to become payable by the Company or any of its Subsidiaries to any former or current director, officer or employee of the Company or any of its Subsidiaries, (ii) except as required to comply with applicable Law or any agreement in existence on the date of this Agreement or as expressly provided in this Agreement, adopt, enter into, amend or otherwise increase, or accelerate the payment or vesting of the amounts, benefits or rights payable or accrued or to become payable or accrued under any bonus, incentive compensation, deferred compensation, severance, termination, change in control, retention, hospitalization or other medical, life, disability, insurance or other welfare, profit sharing, stock option, stock appreciation right, restricted stock or other equity based, pension, retirement or other employee compensation or benefit plan, program agreement or arrangement except such amendments, if any, as may reasonably be required by Law or be advisable in order to minimize liability for any additional Taxes that might be imposed under Section 409A of the Code in the absence of such an amendment;provided,however, that the cost associated with such amendment is reasonably acceptable to Parent or (iii) enter into or amend any employment agreement or, except in accordance with existing contracts or agreements, grant any severance or termination pay to any officer, director or employee of the Company or any of |
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its Subsidiaries, except, in the case of clauses (ii) and (iii), for employment agreements or arrangements with new hires in the ordinary course of business substantially consistent with past practice; | |
(f) the Company shall not, nor shall it permit any of its Subsidiaries to, change its methods of accounting in effect at July 31, 2005, except changes in accordance with US GAAP as concurred to by the Company’s independent auditors or as disclosed in the Specified Company SEC Disclosure; | |
(g) the Company shall not, nor shall it permit any of its Subsidiaries to, acquire by merging or consolidating with, by purchasing an equity interest in or a portion of the assets of, or by any other manner, any Person or other business organization, division or business of such Person or other than in the ordinary course of business substantially consistent with past practices any material assets;provided,however, that the foregoing shall not be deemed to prohibit a merger involving only one of the Company’s wholly owned Subsidiaries, on the one hand, and another of the Company’s wholly owned Subsidiaries on the other hand or the acquisition of assets to the extent permitted by Section 5.1(b); | |
(h) the Company shall not, nor shall it permit any of its Subsidiaries to, sell, lease, exchange, transfer or otherwise dispose of, or agree to sell, lease, exchange, transfer or otherwise dispose of, any of the Company Assets, except for (A) the licensing of data or commercial software in the ordinary course of business substantially consistent with past practice, (B) any sale, lease or disposition pursuant to agreements existing on the date of this Agreement and entered into in the ordinary course of business or disclosed in Section 5.1(h) of the Company Disclosure Letter, (C) sales of surplus or obsolete equipment in the ordinary course of business substantially consistent with past practice or (D) any sale, lease or disposition in an arms length transaction, for not materially less than fair market value and not in excess of $1.0 million individually or $25.0 million in the aggregate; | |
(i) the Company shall not, nor shall it permit any of its Subsidiaries to, mortgage, pledge, hypothecate, grant any security interest in, or otherwise subject to any other Lien other than Permitted Liens, any of the Company Assets; | |
(j) the Company shall not, nor shall it permit any of its Subsidiaries to, (i) except as set forth in clause (ii) below, pay, discharge or satisfy any material claims (including claims of stockholders), liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise) where such payment, discharge or satisfaction would require any material payment except for the payment, discharge or satisfaction of liabilities or obligations in accordance with the terms of the Company Material Contracts as in effect on the date of this Agreement or entered into after the date of this Agreement in the ordinary course of business substantially consistent with past practice and not in violation of this Agreement, in each case to which the Company or any of its Subsidiaries is a party, or (ii) compromise, settle, grant any waiver or release relating to any Litigation, other than settlements or compromises of litigation where the amount paid or to be paid does not exceed $1.0 million for any individual claim or series of related claims, or $10.0 million in the aggregate for all claims; | |
(k) the Company shall not, nor shall it permit any of its Subsidiaries to, engage in any transaction with (except pursuant to agreements in effect at the time of this Agreement insofar as such agreements are disclosed in Section 3.18 of the Company Disclosure Letter), or enter into any agreement, arrangement, or understanding, directly or indirectly, with any of the Company’s affiliates;provided, that for the avoidance of doubt, for purposes of this clause (k), the term “affiliates” shall not include any employees of the Company or any of its Subsidiaries, other than the directors and executive officers thereof and employees who share the same household with such directors and executive officers; | |
(l) other than as required by Law, the Company shall not, nor shall it permit any of its Subsidiaries to, change any Tax method of accounting, make or change any material Tax election, |
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amend any material Return or settle or compromise any material Tax liability other than in the ordinary course of business substantially consistent with past practice; | |
(m) the Company shall not, nor shall it permit any of its Subsidiaries to, take any action that would reasonably be expected to result in (i) any of the conditions to the Mergers set forth in Article VI not being satisfied, or (ii) a Material Adverse Effect on the Company; | |
(n) the Company shall not, nor shall it permit any of its Subsidiaries to, adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the First Merger) or any agreement relating to an Acquisition Proposal, except for Acceptable Confidentiality Agreements and except as permitted in Section 5.1(g); | |
(o) the Company shall not, nor shall it permit any of its Subsidiaries to, (i) incur or assume any long-term debt, or except in the ordinary course of business substantially consistent with past practice and in no event exceeding $10.0 million in the aggregate, incur or assume any short-term indebtedness, (ii) modify any material indebtedness or other liability to increase the Company’s (or any of its Subsidiaries’) obligations with respect thereto, (iii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person (other than a wholly owned Subsidiary of the Company), except in the ordinary course of business and substantially consistent with past practice and in no event exceeding $10 million in the aggregate, (iv) make any loans, advances or capital contributions to, or investments in, any other Person (other than to wholly owned Subsidiaries of the Company, or by such Subsidiaries to the Company, or customary loans or advances to employees substantially consistent with past practice or short-term investments of cash in the ordinary course of business in accordance with the Company’s cash management procedures), or (v) enter into any material commitment or transaction, except in the ordinary course of business and substantially consistent with past practice and in no event exceeding $5 million in the aggregate;provided,however, that the restrictions in this Section 5.1(o) shall not prohibit the incurrence of any long-term debt or short-term indebtedness or other liability or obligation by the Company that is owed to any wholly owned Subsidiary of the Company or by any Subsidiary of the Company that is owed to the Company or another wholly owned Subsidiary of the Company;providedfurther,however, that the limitations in this Section 5.1(o) shall not apply to (w) letters of credit issued in the ordinary course of business by the Company’s lenders in favor of any customer of the Company or its Subsidiaries in connection with any services to be performed by the Company or any of its Subsidiaries, (x) surety or performance bonds issued at the request of the Company or any of its Subsidiaries issued by third Persons in favor of any customer of the Company or its Subsidiaries in connection with any services to be performed by the Company or any of its Subsidiaries, (y) guarantees by the Company or any of its Subsidiaries, whether or not secured by cash deposit, of the obligations described in clause (x) above and (z) capital expenditures permitted by Section 5.1(b); | |
(p) the Company shall not, nor shall it permit any of its Subsidiaries to, enter into any agreement, understanding or commitment that expressly limits the ability of the Company or any Subsidiary of the Company, or would limit the ability of the Surviving Corporation or any Affiliate of the Surviving Corporation after the Merger II Effective Time, to compete in or conduct any line of business or compete with any Person or in any geographic area or during any period of time, in each case, if such limitation is or is reasonably likely to be material to the Company and its Subsidiaries, taken as a whole, or, following the Merger II Effective Time, to the Surviving Corporation and its Affiliates, taken as a whole; | |
(q) the Company shall not, nor shall it permit any of its Subsidiaries to, enter into any material joint venture, partnership or other similar arrangement or materially amend or modify in an adverse manner the terms of (or waive any material rights under) any existing material joint venture, partnership or other similar arrangement (other than any such action between its wholly owned Subsidiaries); |
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(r) the Company shall not, nor shall it permit any of its Subsidiaries to, terminate any Company Material Contract to which it is a party or waive or assign any of its rights or claims under any Company Material Contract in a manner that is materially adverse to the Company or, except in the ordinary course of business substantially consistent with past practice, modify or amend in any material respect any Company Material Contract; and | |
(s) the Company shall not, nor shall it permit any of its Subsidiaries to, enter into an agreement, contract, commitment or arrangement to do any of the foregoing. |
(a) the business of Parent and its Subsidiaries shall be conducted only in the ordinary course substantially consistent with past practices;provided,however, that the foregoing shall not be deemed (i) to prohibit Parent or any of its Subsidiaries from engaging in any acquisition or divestiture transaction that would not reasonably be expected to materially impair, delay or prevent the consummation of the transactions contemplated by this Agreement or (ii) to prohibit Parent from taking any action in response to an unsolicited proposal to acquire directly or indirectly all or any substantial portion of the assets or equity of Parent or any of its Subsidiaries; | |
(b) Parent shall not, nor shall it permit any Subsidiary of Parent that is not wholly owned by Parent to, declare, set aside or pay any extraordinary, special or other dividend or distribution, whether payable in cash, stock or any other property or right, with respect to its capital stock or other equity interests; | |
(c) Parent shall not issue, grant, sell, transfer or distribute to any employee of Parent or any of its Subsidiaries any options, warrants, calls, commitments or rights of any kind to acquire any Parent Ordinary Shares, other than in the ordinary course of business substantially consistent with past practices; | |
(d) Parent will not, and will not permit any of its Subsidiaries to, redeem, purchase or otherwise acquire directly or indirectly any of Parent’s capital stock, except for repurchases, redemptions or acquisitions (i) required by the terms of Parent’s capital stock or any securities outstanding on the date of this Agreement, (ii) contemplated by any Parent Plan existing on the date of this Agreement or (iii) pursuant to arrangements described in Section 5.2 of the Parent Disclosure Letter; | |
(e) Parent shall not change its methods of accounting in effect at December 31, 2005, except in accordance with changes in IFRS or applicable Law as concurred to by Parent’s independent auditors; | |
(f) Parent shall not amend its articles of association or by-laws in a manner that adversely affects the terms of the Parent Ordinary Shares; | |
(g) Parent shall not adopt or enter into a plan of complete or partial liquidation or dissolution; | |
(h) Parent shall not take any action that would reasonably be expected to result in (i) any of the conditions to the Mergers set forth in Article VI not being satisfied or (ii) a Material Adverse Effect on Parent; | |
(i) Parent shall not, nor shall it permit any of its Subsidiaries to, make any material change to any Tax method of accounting, make or change any material Tax election, amend any material Return or settle or compromise any material Tax liability, except where such action would not have a material effect on the Tax position of Parent and its Subsidiaries taken as a whole; and |
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(j) Parent shall not enter into an agreement, contract, commitment or arrangement to do any of the foregoing. |
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(i) any projections, forecasts or other estimates, plans or budgets of future revenues, expenses or expenditures, future results of operations (or any component thereof), future cash flows (or any component thereof) or future financial condition (or any component thereof) of such other party or any of its Subsidiaries or the future business, operations or affairs of such other party or any of its Subsidiaries heretofore or hereafter delivered to or made available to the other parties hereto or their respective representatives or affiliates; or | |
(ii) any other information, statement or documents heretofore or hereafter delivered to or made available to the other parties hereto or their respective representatives or affiliates, except to the extent and as expressly covered by a representation and warranty contained in Article III or IV of this Agreement. |
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(a) (i) This Agreement shall have been adopted by the Required Company Vote in accordance with the DGCL and (ii) the Parent Shareholder Approval shall have been obtained in accordance with applicable French Law; | |
(b) No statute, rule, order, decree or regulation shall have been enacted or promulgated, and no action shall have been taken, by any Governmental Entity of competent jurisdiction which |
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temporarily, preliminarily or permanently restrains, precludes, enjoins or otherwise prohibits the consummation of either Merger or makes consummation of either Merger illegal; | |
(c) (i) The waiting period (and any extension thereof) applicable to the consummation of the Mergers under the HSR Act shall have expired or been terminated and (ii) all required approvals by the European Commission applicable to the Mergers under applicable Competition Laws, including the EC Merger Regulation, shall have been obtained or any applicable waiting period thereunder shall have been terminated or shall have expired; | |
(d) Other than filing the Certificates of Merger in accordance with the DGCL and excluding those specified in foregoing paragraph (c), all authorizations, consents, waiting periods and approvals of all Governmental Entities in the Applicable Jurisdictions required to be obtained under applicable Law prior to consummation of the Mergers shall have been obtained or satisfied; | |
(e) The Form F-4 and Form F-6 shall have been declared effective, and no stop order suspending the effectiveness of the Form F-4 or Form F-6 shall be in effect and no proceedings for such purpose shall be pending before or threatened by the SEC; and the approval (visa) of the “note d’information” by the AMF relating to the Parent Ordinary Shares to be issued at the Merger I Effective Time as part of the transactions contemplated by this Agreement shall have been obtained; and | |
(f) The Parent Depositary Shares (and, if required, the underlying shares of Parent Ordinary Shares) issuable to the stockholders of the Company pursuant to the First Merger and to the holders of the Company Convertible Debt shall have been authorized for listing on the NYSE, subject to official notice of issuance, and the AMF and the Euronext Paris SA shall have approved the listing of the Parent Ordinary Shares to be issued at the Merger I Effective Time as part of the transactions contemplated by this Agreement. |
(a) (i) The representations and warranties of each of Parent, Merger Sub I and Merger Sub II set forth in Sections 4.2(a) and (b) and 4.3 shall be true and correct both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date); and (ii) the representations and warranties of each of Parent, Merger Sub I and Merger Sub II set forth in this Agreement (other than the representations and warranties set forth in Sections 4.2(a) and (b) and 4.3) shall be true and correct both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” set forth therein) individually or in the aggregate has not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on Parent. The Company shall have received a certificate signed on behalf of Parent by each of two senior executive officers of Parent to the foregoing effect; | |
(b) Each of Parent, Merger Sub I and Merger Sub II shall have performed or complied with in all material respects each of its obligations under this Agreement required to be performed or complied with by it on or prior to the Closing Date pursuant to the terms of this Agreement, and the Company shall have received a certificate signed on behalf of Parent by each of two senior executive officers of Parent to the foregoing effect; | |
(c) There shall not be pending any suit, action or proceeding by any Governmental Entity seeking to restrain, preclude, enjoin or prohibit the Mergers or any of the other transactions contemplated by this Agreement; |
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(d) The Company shall have received the opinion of Vinson & Elkins L.L.P., counsel to the Company, in form and substance reasonably satisfactory to the Company, dated the Closing Date, rendered on the basis of facts, representations and assumptions set forth in such opinion and the certificates obtained from officers of Parent, Merger Sub I, Merger Sub II and the Company, all of which are consistent with the state of facts existing as of the Merger I Effective Time, to the effect that (i) the Mergers will qualify as a reorganization within the meaning of Section 368(a) of the Code and (ii) each transfer of Company Common Stock to Parent pursuant to the First Merger and in accordance with Treasury Regulation Section 1.367(a)-3(d) will not be subject to Section 367(a)(1) of the Code or the Company has received the IRS Ruling. In rendering the opinion described in this Section 6.2(d), Vinson & Elkins L.L.P. shall have received and may rely upon the certificates and representations referred to in Section 5.15(f) hereof and any rulings received by the parties from the IRS with respect to the Mergers (and any representations of the Company, Parent, Merger Sub I or Merger Sub II made in connection therewith). The opinion may further assume that all applicable reporting requirements have been satisfied and that any “five-percent transferee shareholder” with respect to Parent within the meaning of Treasure Regulation 1.367(a)-3(c)(5)(ii) will in a timely and effective manner file the agreement described in Treasure Regulation 1.367(a)-3(c)(1)(iii)(B); and | |
(e) Parent shall have deposited or caused to be deposited in the Exchange Fund cash and Parent Depositary Shares in an amount sufficient to permit payment of the aggregate Merger Consideration payable pursuant to Section 1.6. |
(a) (i) The representations and warranties of the Company set forth in Sections 3.2(a) and (b) and 3.3 shall be true and correct both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date);provided that for purposes of this clause (i), the representations and warranties of the Company set forth in Section 3.2(a) shall not be deemed untrue and incorrect due to the failure, if any, of the Company to disclose the existence as of the Cut-off Time of up to 3,000 shares in the aggregate of any combination of Company Common Stock and/or options or rights to acquire shares of Company Common Stock, and (ii) the representations and warranties of the Company set forth in this Agreement (other than the representations and warranties set forth in Sections 3.2(a) and (b) and 3.3) shall be true and correct both when made and at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” set forth therein) individually or in the aggregate has not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on the Company. Parent shall have received a certificate signed on behalf of the Company by each of two senior executive officers of the Company to the foregoing effect; | |
(b) The Company shall have performed or complied with in all material respects each of its obligations under this Agreement required to be performed or complied with by it at or prior to the Closing Date pursuant to the terms of this Agreement, and Parent shall have received a certificate signed on behalf of the Company by each of two senior executive officers of the Company to the foregoing effect; | |
(c) There shall not be pending any suit, action or proceeding by any Governmental Entity seeking to (i) prohibit or limit in any respect the ownership or operation by the Company, Parent, |
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Merger Sub I or Merger Sub II or any of their respective affiliates of any portion of the business or assets of the Company and its Subsidiaries or to require any such Person to dispose of or hold separate any portion of the business or assets of the Company and its Subsidiaries as a result of the Mergers or any of the other transactions contemplated by this Agreement, in any such case which would constitute a Burdensome Condition, or (ii) restrain, preclude, enjoin or prohibit the Mergers or any of the other transactions contemplated by this Agreement; | |
(d) Parent shall have received the opinion of Skadden, Arps, Slate, Meagher & Flom LLP (“Skadden Arps”), counsel to Parent, in form and substance reasonably satisfactory to Parent, dated the Closing Date, rendered on the basis of facts, representations and assumptions set forth in such opinion and the certificates obtained from officers of Parent, Merger Sub I, Merger Sub II and the Company, all of which are consistent with the state of facts existing as of the Merger I Effective Time, to the effect that the Mergers will qualify as a reorganization within the meaning of Section 368(a) of the Code. In rendering the opinion described in this Section 6.3(d), Skadden Arps shall have received and may rely upon the certificates and representations referred to in Section 5.15(f) hereof; | |
(e) Each of the approvals described in Section 6.1(c) and (d) shall have been obtained without the imposition of any condition or restriction which constitutes a Burdensome Condition; and | |
(f) At or prior to the Merger I Effective Time, the Committee on Foreign Investment in the United States (“CFIUS”) shall have notified Parent in writing that it has determined not to investigate the transactions contemplated by this Agreement (including the Mergers) pursuant to the powers vested in it by Section 5021 of the Omnibus Trade and Competitiveness Act of 1988, which amended Section 721 of the Defense Production Act of 1950 (“Exon-Florio Amendment”) or, in the event that CFIUS has undertaken such an investigation, CFIUS has terminated such investigation or the President of the United States has determined not to take any action or, in the event that CFIUS or the President of the United States has requested Parent to modify the transactions contemplated by this Agreement (including the Mergers) or otherwise enter into any other commitment to protect the National Security of the United States, as determined by the Exon Florio Amendment, such modification or commitment would not reasonably be expected to constitute a Burdensome Condition. |
(a) By the mutual consent of Parent and the Company in a written instrument; | |
(b) By either the Company or Parent upon written notice to the other, if: |
(i) the Mergers shall not have been consummated on or before April 15, 2007 (the “Termination Date”);provided,however that the right to terminate this Agreement pursuant to this Section 7.1(b)(i) shall not be available to a party whose failure to fulfill any material obligation under this Agreement has been the cause of, or resulted in, the failure of the Mergers to have been consummated on or before such date; | |
(ii) any Governmental Entity having jurisdiction over any party hereto shall have issued a statute, rule, order, decree or regulation or taken any other action, in each case permanently restraining, enjoining or otherwise prohibiting consummation of either Merger or making consummation of either Merger illegal and such statute, rule, order, decree, regulation or other |
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action shall have become final and nonappealable;provided,however, that the right to terminate pursuant to this Section 7.1(b)(ii) shall not be available to any party whose failure to fulfill any material obligation under this Agreement has been the cause of or resulted in such action or who is then in material breach of Section 5.5 with respect to such action; | |
(iii) the stockholders of the Company fail to adopt this Agreement by the Company Required Vote at the Company Special Meeting;provided that the Company shall not be entitled to terminate this Agreement pursuant to this Section 7.1(b)(iii) if it has (x) breached any of its obligations under Section 5.3 and an Acquisition Proposal with respect to the Company has been publicly proposed by any Person (other than Parent or any of its affiliates) or any Person publicly has announced its intention (whether or not conditional) to make an Acquisition Proposal with respect to the Company or an Acquisition Proposal with respect to the Company or such intention has otherwise become known to the Company’s stockholders generally (other than as a result of disclosure by Parent, any of its Subsidiaries or any of their respective Representatives) or (y) breached any of its obligations under Section 5.6(c); or | |
(iv) the Parent Shareholder Approval shall not have been obtained in accordance with applicable French Law at the Parent Shareholders’ Meeting;provided that Parent shall not be entitled to terminate this Agreement pursuant to this Section 7.1(b)(iv) if it has (x) breached any of its obligations under Section 5.3 and an Acquisition Proposal with respect to Parent has been publicly proposed by any Person (other than the Company or any of its affiliates) or any Person publicly has announced its intention (whether or not conditional) to make an Acquisition Proposal with respect to Parent or an Acquisition Proposal with respect to Parent or such intention has otherwise become known to Parent’s stockholders generally (other than as a result of disclosure by the Company, any of its Subsidiaries or any of their respective Representatives) or (y) breached any of its obligations under Section 5.6(d); |
(c) by the Company, if Parent shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform (i) would give rise to the failure of a condition set forth in Section 6.2(a) or (b), and (ii) is incapable of being cured by Parent or is not cured by Parent within 45 days following receipt of written notice from the Company of such breach or failure to perform; | |
(d) by Parent, if the Company shall have breached or failed to perform in any material respect any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform (i) would give rise to the failure of a condition set forth in Section 6.3(a) or (b), and (ii) is incapable of being cured by the Company or is not cured by the Company within 45 days following receipt of written notice from Parent of such breach or failure to perform; | |
(e) By Parent, (i) if the Company, or the Company Board or any committee thereof, as the case may be, shall have entered into any agreement with respect to any Acquisition Proposal with respect to the Company other than the Mergers or an Acceptable Confidentiality Agreement as permitted by Section 5.3, or (ii) if a Company Adverse Recommendation Change shall have occurred or the Company Board or any committee thereof shall have resolved to make a Company Adverse Recommendation Change; | |
(f) By the Company, (i) if Parent, or the Parent Board or any committee thereof, as the case may be, shall have entered into any agreement with respect to any Acquisition Proposal with respect to Parent other than the Mergers or an Acceptable Confidentiality Agreement as permitted by Section 5.3, or (ii) if a Parent Change in Recommendation shall have occurred or the Board of Directors of Parent or any committee thereof shall have resolved to make a Parent Change in Recommendation; and | |
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than any action permitted to be taken under Section 5.3), which action (x) is in breach or violation of any of Parent’s material obligations under this Agreement and (y) results in any of the conditions to the Mergers set forth in Section 6.1 not being satisfied;provided that (i) for purposes of this clause (g), the term “Acquisition Proposal” shall have the meaning assigned to such term in Section 5.3(i), except that all references to “15%” therein shall be deemed to be references to “40%,” (ii) Parent shall not be permitted to terminate this Agreement pursuant to this Section 7.1(g) if, prior to the time such unsolicited hostile Acquisition Proposal with respect to Parent was made, Parent was in breach of any of its obligations under Section 5.3, and (iii) simultaneously with its termination pursuant to this Section 7.1(g), Parent shall pay to the Company the Termination Fee provided under Section 8.1(g). |
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Veritas DGC Inc. | |
10300 Town Park Drive | |
Houston, Texas 77072 | |
Telephone: 832-351-8300 | |
Facsimile: 832-351-8701 | |
Attention: Thierry Pilenko |
Veritas DGC Inc. | |
10300 Town Park Drive | |
Houston, Texas 77072 | |
Telephone: 832-351-8300 | |
Facsimile: 832-351-8792 | |
Attention: Larry Worden |
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Vinson & Elkins L.L.P. | |
1001 Fannin Street, Suite 2300 | |
Houston, Texas 77002-6760 | |
Telephone: 713-758-2222 | |
Facsimile: 713-758-2346 |
Attention: | Jeffery B. Floyd |
W. Matthew Strock |
CGG | |
Tour Maine Montparnasse | |
33 avenue du Maine | |
75755 Paris cedex 15 | |
France | |
Facsimile: 33 1 64 47 34 29 | |
Attention: Thierry Le Roux |
Skadden, Arps, Slate, Meagher & Flom LLP | |
Four Times Square | |
New York, NY 10036 | |
Telephone: 212-735-3000 | |
Facsimile: 212-735-2000 |
Attention: | Peter Allan Atkins |
Frank Ed Bayouth II |
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(i) “Acceptable Confidentiality Agreement” means a confidentiality agreement on terms no less favorable to the Company or Parent, as the case may be, than the Confidentiality Agreement. | |
(ii) “Applicable Jurisdiction” means any jurisdiction (i) where either party or any of its Subsidiaries has any significant assets or conducts any significant business or (ii) where consummation of either of the Mergers without first obtaining or satisfying any authorization, consent, waiting period or approval of any Governmental Entity in such jurisdiction which is required to be obtained under applicable Law prior to consummation of such Merger would constitute a criminal offense; | |
(iii) “Business Day” means any day other than Saturday and Sunday and any day on which banks are not required or authorized to close in the State of Delaware or New York. | |
(iv) “Cleanup” means all actions required to: (i) clean up, remove, treat or remediate Hazardous Materials in the indoor or outdoor environment; (ii) prevent the Release of Hazardous Materials so that they do not migrate, endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (iii) perform pre-remedial studies and investigations and post-remedial monitoring and care; or (iv) respond to any government requests for information or documents in any way relating to cleanup, removal, treatment or remediation or potential cleanup, removal, treatment or remediation of Hazardous Materials in the indoor or outdoor environment. | |
(v) “Code” means the Internal Revenue Code of 1986, as amended. | |
(vi) “Company Directors” means up to five individuals currently serving on the Company Board who shall be designated by Parent with the concurrence of the Company, such concurrence not to be unreasonably withheld, to become members of the Parent Board as of the Merger I Effective Time pursuant to Section 5.13. | |
(vii) “Competition Laws” means Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization, lessening of competition or restraint of trade and includes the HSR Act and the Competition Act (Canada). | |
(viii) “Derivative Transaction” means any swap transaction, option, warrant, forward purchase or sale transaction, futures transaction, cap transaction, floor transaction or collar transaction relating to one or more currencies, commodities, bonds, equity securities, loans, interest rates, catastrophe events, weather-related events, credit-related events or conditions or any indexes, or any other similar transaction (including any option with respect to any of these transactions) or combination of any of |
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these transactions, including collateralized mortgage obligations or other similar instruments or any debt or equity instruments evidencing or embedding any such types of transactions, and any related credit support, collateral or other similar arrangements related to such transactions. | |
(ix) “Employment and Withholding Taxes” means any federal, state, provincial, local, foreign or other employment, unemployment, insurance, social security, disability, workers’ compensation, payroll, health care or other similar Tax and all Taxes required to be withheld by or on behalf of each of the Company and any of its Subsidiaries in connection with amounts paid or owing to any employee, independent contractor, creditor or other party, in each case, on or in respect of the business or assets thereof. | |
(x) “Environmental Claim” means any claim, demand, suit, action, cause of action, proceeding, investigation or written notice to the Company or any of its Subsidiaries by any Person or entity alleging any potential liability (including potential liability for investigatory costs, cleanup costs, governmental response costs, natural resource damages, personal injuries, or penalties) arising out of, based on, or resulting from (i) the presence, or Release into the environment, of any Hazardous Material at any location for which the Company or its Subsidiaries may bear responsibility or liability, or (ii) circumstances forming the basis of any violation, or alleged violation, of any applicable Environmental Law. | |
(xi) “Environmental Laws” means all Laws, including common law, relating to pollution, Cleanup, restoration or protection of the environment (including ambient air, surface water, groundwater, land surface or subsurface strata and natural resources) or to the protection of flora or fauna or their habitat or to human or public health, including Laws relating to emissions, discharges, Releases or threatened Releases of Hazardous Materials, or otherwise relating to the treatment, storage, disposal, transport or handling of Hazardous Materials, including the Comprehensive Environmental Response, Compensation, and Liability Act and the Resource Conservation and Recovery Act. | |
(xii) “Financing” means debt financing in the amounts set forth in the Commitment Letter and on terms not less favorable to the borrower than those set forth in the Commitment Letter. | |
(xiii) “Foreign Plan” means, with respect to any Person, each benefit plan, arrangement or agreement that is a governmental or nongovernmental and/or industrial or non-industrial retirement, welfare or other benefit plan, program, agreement or arrangement respecting the operations of such Person outside of the United States for the benefit of any current or former employee, officer or director of such Person or any of its Subsidiaries. | |
(xiv) “Hazardous Material” means (i) chemicals, pollutants, contaminants, wastes, toxic and hazardous substances, and oil and petroleum products, (ii) any substance that is or contains asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum or petroleum-derived substances or wastes, radon gas or related materials, lead or lead-based paint or materials, (iii) any substance that requires investigation, removal or remediation under any Environmental Law, or is defined, listed, regulated or identified as hazardous, toxic or otherwise actionable or dangerous under any Environmental Laws, or (iv) any substance that is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or otherwise hazardous. | |
(xv) “knowledge” means, with respect to the Company, the actual knowledge of the individuals listed in Section 8.5(e) of the Company Disclosure Letter and, with respect to Parent, the actual knowledge of the individuals listed in Section 8.5(e) of the Parent Disclosure Letter. | |
(xvi) “Leased Real Property” means all interests in real property pursuant to the Leases. | |
(xvii) “Leases” means the real property leases, subleases, licenses and use or occupancy agreements pursuant to which the Company or any of its Subsidiaries is the lessee, sublessee, licensee, user, operator or occupant of real property, or interests therein. |
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(xviii) “Liens” means any mortgage, pledge, deed of trust, hypothecation, right of others, claim, security interest, encumbrance, burden, title defect, title retention agreement, lease, sublease, license, occupancy agreement, easement, covenant, condition, encroachment, voting trust agreement, interest, option, right of first offer, negotiation or refusal, proxy, lien, charge or other restrictions or limitations of any nature whatsoever. | |
(xix) “Litigation” means any action, claim, suit, proceeding, citation, summons, subpoena, inquiry or investigation of any nature, civil, criminal or regulatory, in law or in equity, by or before any Governmental Entity or arbitrator (including worker’s compensation claims). | |
(xx) “Material Adverse Effect” means, with respect to Parent or the Company, as the case may be, a material adverse effect on (i) the business, results of operations or condition (financial or other) of such party and its Subsidiaries taken as a whole, except to the extent arising or resulting from or caused by, any of the following, which shall be excluded from consideration (A) any change in Laws of general applicability or interpretations thereof by courts or Governmental Entities, (B) changes attributable to or resulting from changes in general industry conditions or general economic conditions, except to the extent any such change affects such party to a greater extent than other companies that are similarly situated in such party’s industry generally, (C) changes and effects attributable to the announcement or pendency of this Agreement or the Mergers or the other transactions contemplated hereby, (D) the failure of such party to meet internal or analysts’ expectations or projections (it being understood, however, that the underlying circumstances giving rise to such failure may be taken into account unless otherwise excluded pursuant to this paragraph), and (E) compliance by such party with the terms of this Agreement or the Mergers or the other transactions contemplated herein;provided that the exception contained in this subsection (E) shall not apply to Sections 3.4 or 4.4, or (ii) the ability of such party and its Subsidiaries to consummate the transactions contemplated hereby. | |
(xxi) “Owned Real Property” means the real property, and interests in real property, owned by the Company and its Subsidiaries. | |
(xxii) “Permitted Liens” “means (i) Liens reserved against or identified in the Company Balance Sheet or the Parent Balance Sheet, as the case may be, to the extent so reserved or reflected or described in the notes thereto, (ii) Liens for Taxes not yet due and payable, (iii) Liens existing pursuant to credit facilities of the Company and its Subsidiaries or the Parent and its Subsidiaries, as the case may be and in each case in effect as of the date of this Agreement and (iv) those Liens that, individually or in the aggregate with all other Permitted Liens, do not, and are not reasonably likely to, materially interfere with the use or value of the properties or assets of the Company and its Subsidiaries or Parent and its Subsidiaries, as the case may be and in each case taken as a whole as currently used, or otherwise individually or in the aggregate have or result in a Material Adverse Effect on the Company or Parent, as the case may be. | |
(xxiii) “Person” means any natural person, firm, individual, partnership, joint venture, business trust, trust, association, corporation, company, limited liability company, unincorporated entity or Governmental Entity. | |
(xxiv) “Real Property” means the Owned Real Property and the Leased Real Property. | |
(xxv) “Release” means any releasing, disposing, discharging, injecting, spilling, leaking, pumping, dumping, emitting, escaping, emptying, dispersal, leaching, migration, transporting or placing of Hazardous Materials, including into or upon, any land, soil, surface water, ground water or air, or otherwise entering into the environment. | |
(xxvi) “Return” means any return, estimated tax return, report, declaration, form, claim for refund or information statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. |
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(xxvii) “Significant Subsidiary” means (i) with respect to any Person (including the Company), any other Person that is a significant subsidiary as such term is defined in Rule 1-02(w) of Regulation S-X of the SEC and (ii) with respect to the Company, any Subsidiary that holds or has any rights with respect to any assets which are critical to the business of the Company and its Subsidiaries, taken as a whole. | |
(xxviii) “Subsidiary” means with respect to any Person, any other Person of which (i) such Person is directly or indirectly the controlling general partner or (ii) 50% or more of the securities or other interests having by their terms ordinary voting power for the election of directors or others performing similar functions are directly or indirectly owned by such Person. | |
(xxix) “Tax” means any federal, state, provincial, local, foreign or other tax, import, duty or other governmental charge or assessment or deficiencies thereof, including income, alternative, minimum, accumulated earnings, personal holding company, franchise, capital stock, net worth, capital, profits, windfall profits, gross receipts, value added, sales, use, excise, custom duties, transfer, conveyance, mortgage, registration, stamp, documentary, recording, premium, severance, environmental, real and personal property, ad valorem, intangibles, rent, occupancy, license, occupational, employment, unemployment insurance, social security, disability, workers’ compensation, payroll, health care, withholding, estimated or other similar tax and including all interest and penalties thereon and additions to tax. |
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PARENT |
By: | /s/ ROBERT BRUNCK |
Name: Robert Brunck |
Title: | Chairman and Chief Executive Officer |
THE COMPANY |
By: | /s/ THIERRY PILENKO |
Name: Thierry Pilenko |
Title: | Chairman and Chief Executive Officer |
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Veritas DGC Inc.
September 4, 2006
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September 4, 2006
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Very truly yours, | |
CREDIT SUISSE SECURITIES (USA) LLC |
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1251 Avenue of the Americas | Telephone 212-403-3500 |
New York, NY 10020 | Facsimile 212-403-3501 |
www.rothschild.com |
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Very truly yours, | |
ROTHSCHILD INC. |
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1. | Transaction Overview |
1.1. Companies Involved in the Merger |
1.1.1. Compagnie Générale de Géophysique |
1.1.2. Veritas DGC Inc. |
1.2. The Merger |
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2. | Overview of Lehman Brothers |
3. | Independent Expertise Assignments Carried Out by Lehman Brothers as per Title VI of Book II of the AMF General Regulations Over the Past 12 months |
4. | Statement of Independence |
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5. | Membership to an Association of Independent Experts Recognized by the AMF |
6. | Fee |
7. | Overview of Diligences |
7.1. Scope of Work |
• | Review of the assignment | |
• | Identification of risks associated with the assignment | |
• | Collection of financial data and other relevant information | |
• | Meeting with CGG management and their financial advisors, Credit Suisse and Rothschild | |
• | Review of research reports on the companies, their trading comparables and the industry | |
• | Legal review (the Merger Agreement and attached disclosure letters, the Registration Statement on Form F-4 filed with the U.S. Securities and Exchange Commission on October 16, 2006 (the “Registration Statement”), and the draftnote d’opération) | |
• | Share price analysis | |
• | Review of precedent transactions involving the share capital of the companies | |
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• | Comparable company analysis | |
• | Precedent transaction analysis | |
• | Discounted cash flow analysis (business plan, free cash flows, discount rate, sensitivities) | |
• | Drafting of the valuation report | |
• | Review of working documents and expert report by Lehman Brothers’ Fairness Opinion Committee | |
• | Presentation of our conclusions to the CGG board of directors | |
7.2. Timing |
• | Kick-off meeting: October 10, 2006 | |
• | Review of CGG and Veritas business plans: October 20, 2006 | |
• | Meeting with Credit Suisse, financial advisor to CGG, to perform a critical analysis of their valuation: October 27, 2006 | |
• | Meeting with Rothschild, financial advisor to CGG, to perform a critical analysis of their valuation: October 31, 2006 | |
• | Presentation to Lehman Brothers’ Fairness Opinion Committee: November 7, 2006 | |
• | Presentation of our conclusions to the CGG board of directors: November 9, 2006 | |
7.3. List of Interviewees |
• | Thierry Le Roux, Group President and Chief Financial Officer | |
• | Stéphane-Paul Frydman, Controller, Treasurer and deputy Chief Financial Officer | |
• | Béatrice Place-Faget, Vice President, Corporate Legal Affairs | |
• | Representatives from Credit Suisse and Rothschild, financial advisors to CGG | |
7.4. Sources of Information |
• | CGG 2006E-2011E business plan prepared by CGG management | |
• | Veritas 2006E-2011E business plan prepared by CGG management | |
• | Certain historical accounting and legal information on Veritas received by CGG during its due diligence | |
• | Legal documentation (the Merger Agreement and attached disclosure letters, the Registration Statement, and the draftnote d’opération) | |
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• | Historical financial information on CGG and Veritas available on the websites of the AMF and SEC as of November 8, 2006 | |
• | Research reports and information on precedent transactions available on the websites of Thomson One Banker, Factiva, Mergermarket and the websites of the relevant companies as of November 8, 2006 | |
• | Market data for the calculation of the discount rate (including beta, risk-free rate, risk premium): Barra for historical betas, Bloomberg for risk-free rate and Lehman Brothers Equity Strategy for the risk premium | |
7.5. Lehman Brothers’ Team |
• | Two senior bankers with a banking experience of between eight and twelve years, combining both valuation expertise and oil and gas services industry knowledge | |
• | Four junior bankers with a banking experience of between one and seven years | |
8. | Valuation of CGG and Veritas |
8.1. Valuation of CGG |
8.1.1. Rejected Valuation Methods |
8.1.1.1. Book Value of Shareholders’ Equity |
8.1.1.2. Net Asset Value |
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8.1.1.3. Target Prices of Research Analysts |
8.1.1.4. Dividend Discount Model |
8.1.1.5. Precedent Transactions Involving the Share Capital of the Company |
8.1.1.6. Precedent Transaction Analysis |
8.1.2. Selected Valuation Methods |
8.1.2.1. Share Price |
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Weighted | Premium/ | Premium/ | |||||||||||||||||||
Average | Discount | Weighted | Discount | ||||||||||||||||||
Price of | Implied by | Average | Implied by | ||||||||||||||||||
CGG Ordinary | Last Closing | Price of | Last Closing | ||||||||||||||||||
Shares(1) | Price (%)(2) | CGG ADSs(1) | Price (%)(2) | ||||||||||||||||||
Last closing price as of November 8, 2006 | €143.10 | — | $ | 36.34 | — | ||||||||||||||||
1-month average | €129.38 | 10.6 | % | $ | 31.72 | 14.6 | % | ||||||||||||||
3-month average | €125.10 | 14.4 | % | $ | 31.29 | 16.1 | % | ||||||||||||||
6-month average | €128.33 | 11.5 | % | $ | 32.32 | 12.5 | % | ||||||||||||||
12-month average | €116.27 | 23.1 | % | $ | 28.28 | 28.5 | % | ||||||||||||||
52-week high | €158.20 | (9.5 | )% | $ | 40.50 | (10.3 | )% | ||||||||||||||
52-week low | €65.43 | 118.7 | % | $ | 16.70 | 117.6 | % | ||||||||||||||
6-month high | €158.20 | (9.5 | )% | $ | 40.50 | (10.3 | )% | ||||||||||||||
6-month low | €111.90 | 27.9 | % | $ | 28.65 | 26.8 | % | ||||||||||||||
(1) | Based on CGG ordinary shares price on Euronext of€143.10 and CGG ADSs price on the NYSE of $36.34 as of November 8, 2006 |
(2) | Averages weighted by volumes traded. |
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8.1.2.2. Comparable Company Analysis |
Selection of Comparable Companies |
• | Geophysical service supply, which includes seismic data collection and processing, mainly in land and marine areas. Seismic companies can provide seismic data to their clients (mainly oil and gas companies) according to two work modes, and so two commercial approaches: |
• | The first approach consists of working exclusively for a single client (exclusive contract). | |
• | The second approach is to operate on a “non-exclusive” basis, also known as “multi-client”. In this case, the provider of geophysical services (the contractor) offers multi-client surveys which allow adjacent holders of exploration licenses to jointly participate in a survey encompassing a larger area, thus decreasing the survey cost per client. These surveys remain the property of the contractor who usually tries to anticipate the future needs of oil and gas companies in order to sell the data collected to the maximum possible number of clients. In this case, the contractor offers a user’s license for the data. | |
• | Seismic equipment manufacturing and selling, particularly geophysical equipment used to acquire land and marine seismic data (i.e.,land and marine reservoir recording devices). |
• | Petroleum Geo-Services (Norway) (“PGS”): PGS is one of the global leaders in geophysics, an activity on which the group has re-focused since early 2006, following the sale of its oil production business. With a fleet of 12 seismic vessels, PGS is a major player in land seismic acquisition in North America. | |
• | TGS-NOPEC (Norway) (“TGS-NOPEC”): TGS-NOPEC is focused on providing multi-client geoscience data in North America. The company does not own a seismic fleet (all vessels are chartered) but provides a global coverage and is present both in land and marine activities. | |
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• | Input/ Output (United States) (“Input/ Output”): Input/ Output does not own any vessels, but develops its own technology of data collection and treatment (GX Technology and Concept Systems) and is present mainly in America, in both land and marine activities. | |
• | Fugro (Netherlands) (“Fugro”): Fugro is focused on seismic data collection and processing for the oil and gas industry, but also for the mining industry and the construction industry, especially for big infrastructure projects. Fugro collects data both in land and marine areas, as well as from the air, and develops part of its own technology internally. The company owns a fleet of 6 seismic vessels and 40 helicopters or planes designed for imaging collection. | |
Financial Data and Trading Multiples |
• | EBITDA adjusted for MCA multiple: Given the different size or lack of multi-client library business in each company included in our comparable company sample, EBITDA needs to be adjusted for the true cost of these libraries. Seismic companies capitalize their multi-client library at acquisition and write down subsequently over different periods of time. In effect, this cost is excluded from EBITDA calculation, hence overstating EBITDA. Thus, the multiple of EBITDA after MCA is one way of adjusting for comparability across the peer group of comparable companies. Its deficiency is due to duration of amortization period, because amortization expense is booked after the initial cash cost has been incurred, but for CGG and Veritas yearly amortization expenses have been relatively consistent with the level of multi-client capital expenditures. | |
• | Price to earnings ratio, which is considered as a growth indicator and as a value of that growth by the market. | |
For each selected comparable company, the EBITDA adjusted for MCA multiples correspond to the ratio of (i) the enterprise value (sum of the market capitalization based on the November 8, 2006 closing share price adjusted for the impact of securities giving access to the capital, of the last available net debt and of the last available book value of minority interests less the last available book value of investment in associates) to (ii) the EBITDA estimates adjusted for MCA from a selection of analyst reports for calendar years 2006 and 2007. | |
For each selected comparable company, the price to earnings ratio corresponds to the ratio of (i) the market capitalization based on the November 8, 2006 closing share price adjusted for the impact of securities giving access to the capital to (ii) the net income estimates from a selection of analyst reports for calendar years 2006 and 2007. | |
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Trading Multiples of Selected Comparable Companies | ||||||||||||||||||||||||
Market | EV/ EBITDA | Price to | ||||||||||||||||||||||
Capitalisation as | Enterprise | After MCA | Earnings Ratio | |||||||||||||||||||||
of November 8, 2006 | Value | |||||||||||||||||||||||
($m) | ($m) | 2006E | 2007E | 2006E | 2007E | |||||||||||||||||||
PGS | 3,690 | 4,137 | 8.5 | x | 6.5 | x | 14.8 | x | 10.7x | |||||||||||||||
TGS — NOPEC | 1,975 | 1,831 | 8.7 | x | 7.1 | x | 14.1 | x | 11.2x | |||||||||||||||
Input/ Output | 991 | 1,056 | n.a. | n.a. | 39.8 | x | 24.5x | |||||||||||||||||
Fugro | 3,254 | 3,703 | 10.2 | x | 8.9 | x | 18.2 | x | 15.5x | |||||||||||||||
Average | 9.1 | x | 7.5 | x | 21.7 | x | 15.5x | |||||||||||||||||
Median | 8.7 | x | 7.1 | x | 16.5 | x | 13.4x |
Value per CGG ADS |
8.1.2.3. Discounted Cash Flow Analysis |
Business Plan |
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• | Services: |
• | Land: |
• | Strong growth between 2006 and 2008, moderate growth from 2009 onwards | |
• | Improvement of the operating margin in 2006, followed by a slight decrease and a stabilization afterwards |
• | Offshore: |
• | Strong growth of contract revenue in 2006 and 2007, which then remain stable from 2008 onwards | |
• | Growth in multi-client revenue in 2006, which then remain stable in absolute terms until 2011 | |
• | Strong improvement of the operating margin in 2006, which then stabilizes |
• | Processing: |
• | Strong revenue growth in 2006 and 2007, followed by softening of the trend over the business plan period | |
• | Operating margin improves over the period under review |
• | Products (Sercel): |
• | Strong growth in 2006, moderate growth from 2007 onwards | |
• | Improvement of the operating margin in 2006, which then stabilizes |
• | Stable industrial capital expenditures over the business plan period and slight increase in multi-client library investments | |
• | Improved working capital terms in 2006, and sustainability of 2006 levels over the business plan period |
• | Meeting with CGG’s Chief Financial Officer and deputy Chief Financial Officer who discussed the revenue growth and margin rates of each business segment, as well as the main underlying assumptions regarding capital expenditures and changes in working capital | |
• | Comparing the business plan provided and estimates from equity research for revenue, EBITDA adjusted for MCA and net income forecasts | |
• | Analyzing the historical growth in capital expenditures in exploration and production by the oil and gas sector |
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Discount Rate |
• | Risk free rate: 4.6% — Source: 10 year U.S. Treasury bonds as of November 8, 2006 | |
• | Market risk premium: 4.9% — Source: Lehman Brothers Equity Strategy | |
• | Levered beta: 1.37 |
• | Unlevered beta of 1.18 corresponding to average of selected comparable companies, to which a premium has been applied to account for higher historical volatility of the CGG stock as compared to peers | |
• | Target debt to market capitalization ratio of 25%, based on ratios of selected comparable companies |
Terminal Value and Perpetuity Growth Rate |
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Value per CGG ADS |
Perpetual Growth Rate | ||||||||||||||||
3.0 % | 3.5 % | 4.0 % | ||||||||||||||
9.5 | % | $ | 39.52 | $ | 42.25 | $ | 45.47 | |||||||||
WACC | 10.0 | % | $ | 36.44 | $ | 38.73 | $ | 41.41 | ||||||||
10.5 | % | $ | 33.78 | $ | 35.72 | $ | 37.97 |
8.1.3. Conclusion on CGG valuation |
Premium/ | ||||||||||||||||
Discount Implied | ||||||||||||||||
by Last Closing | ||||||||||||||||
ADS Price of | ||||||||||||||||
$36,34(1) | ||||||||||||||||
Low | High | Low | High | |||||||||||||
Share price over the last 6 months | $ | 28.65 | $ | 40.50 | 26.8 | % | (10.3 | )% | ||||||||
Comparable company analysis | $ | 28.46 | $ | 46.34 | 27.7 | % | (21.6 | )% | ||||||||
DCF | $ | 33.78 | $ | 45.47 | 7.6 | % | (20.1 | )% |
(1) | Price of the CGG ADSs on the NYSE as of November 8, 2006. |
8.2. Valuation of Veritas |
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8.2.1. Rejected Valuation Methods |
8.2.1.1. Book Value of Shareholders’ Equity |
8.2.1.2. Net Asset Value |
8.2.1.3. Target Prices of Research Analysts |
8.2.1.4. Dividend Discount Model |
8.2.1.5. Precedent Transactions Involving the Share Capital of the Company |
8.2.1.6. Share Price |
8.2.2. Selected Valuation Methods |
8.2.2.1. Comparable Company Analysis |
Calculation of the Diluted Number of Shares |
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Value per Veritas Share |
8.2.2.2. Precedent Transaction Analysis |
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Multiples of Precedent Transactions | ||||||||||||
Enterprise Value/ Last | ||||||||||||
Enterprise Value | 12-Month EBITDA | |||||||||||
Date | Acquiror | Target | ($m) | After MCA | ||||||||
4/20/2006 | Schlumberger | WesternGeco | 8,019 | 14.6x | ||||||||
2/13/2006 | Arcapita | Roxar | 200 | 13.9x | ||||||||
8/29/2005 | CGG | Exploration Resources | 442 | 15.3x | ||||||||
9/1/2004 | CGG(1) | PGS Geophysical Business | 900 | 15.9x | ||||||||
8/12/2004 | National — Oilwell | Varco International | 2,820 | 12.4x | ||||||||
2/20/2002 | BJ Services | OSCA | 458 | 17.0x | ||||||||
11/26/2001 | Veritas DGC(1) | PGS | 2,979 | 12.5x | ||||||||
3/22/2000 | Tuboscope | Varco International | 738 | 8.4x | ||||||||
5/10/1998 | Baker Hughes | Western Atlas | 6,144 | 9.7x | ||||||||
3/4/1998 | EVI | Weatherford Enterra | 2,791 | 8.7x | ||||||||
Average | 12.4x | |||||||||||
Median | 12.5x |
(1) | Transactions not completed. |
8.2.2.3. Discounted Cash Flow Analysis |
Business Plan |
• | Multi-clients: |
• | Land: |
• | Stable revenue in 2007, followed by a slight revenue growth from 2007 onwards | |
• | Improvement of the gross margin in the short term, stabilization thereafter | |
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• | Offshore: |
• | Strong revenue growth in 2007, stabilization thereafter and then slight decrease by the end of the business plan period | |
• | Slight improvement of the gross margin in 2007, stable thereafter | |
• | Contracts: |
• | Land: |
• | Stable revenue over the business plan period | |
• | Constant gross margin over the business plan period | |
• | Offshore: |
• | Strong revenue growth in 2007 and 2008, stabilization from 2009 onwards | |
• | Improvement of the gross margin in the short term, stabilization thereafter | |
• | Multi-client amortization: Constant as a percentage of multi-client revenue over the business plan period | |
• | R & D and SG&A: Constant as a percentage of revenue over the business plan period | |
• | Strong increase in industrial capital expenditure in 2007 to finance an additional seismic vessel to be delivered in Q1 2007, then in line with historical levels | |
• | Multi-client library investments in line with historical levels | |
• | Slight improvement of working capital management over the business plan period | |
• | Meeting with CGG’s Chief Financial Officer and deputy Chief Financial Officer who discussed the revenue growth and margin rates of each business segment of Veritas, as well as the main underlying assumptions regarding capital expenditures and changes in working capital | |
• | Comparison between the business plan provided and estimates from research analysts for revenue, EBITDA adjusted for MCA and net income forecasts | |
• | Analysis of the historical growth in capital expenditures in exploration and production by the oil and gas sector | |
Discount Rate |
• | Risk free rate: 4.6% — Source: 10 year U.S. Treasury bonds as of November 8, 2006 | |
• | Market risk premium: 4.9% — Source: Lehman Brothers Equity Strategy | |
• | Levered beta: 1.31 | |
• | Unlevered beta of 1.13 corresponding to average of selected comparable companies |
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• | Target debt to market capitalization ratio of 25%, based on ratios of selected comparable companies |
Terminal Value and Perpetuity Growth Rate |
Value per Veritas Share |
Perpetual Growth Rate | ||||||||||||||||
3.0 % | 3.5 % | 4.0 % | ||||||||||||||
9.0 | % | $ | 68.14 | $ | 72.40 | $ | 77.51 | |||||||||
WACC | 9.5 | % | $ | 63.61 | $ | 67.15 | $ | 71.33 | ||||||||
10.0 | % | $ | 59.72 | $ | 62.70 | $ | 66.18 |
Synergies Expected from the Merger |
• | Having one public company (CGG-Veritas) instead of two once Veritas common stock is deregistered with the SEC and delisted from the NYSE | |
• | The redeployment of support resources towards operations | |
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• | The rationalization of operating facilities | |
• | A better utilization of vessels with less transit time between regions | |
• | Additional revenue potential through the combined multi-client libraries | |
8.2.3. Conclusion on Veritas Valuation |
Premium/Discount | ||||||||||||||||
Implied by | ||||||||||||||||
Consideration of | ||||||||||||||||
$78.43(1) | ||||||||||||||||
Low | High | Low | High | |||||||||||||
Comparable company analysis | $ | 42.63 | $ | 61.22 | 84.0 | % | 28.1 | % | ||||||||
Precedent transaction analysis | $ | 54.25 | $ | 70.57 | 44.6 | % | 11.1 | % | ||||||||
DCF without synergies | $ | 59.72 | $ | 77.51 | 31.3 | % | 1.2 | % | ||||||||
DCF with synergies | $ | 68.17 | $ | 87.02 | 15.0 | % | (9.9 | )% |
(1) | Consideration based on $37.00 plus 1.14 CGG ADS at $36.34 as of November 8, 2006. |
9. | Review of Valuation Analyses Performed by CGG’s Financial Advisors |
9.1. Review of Valuation Analyses of CGG |
• | Book value of shareholders’ equity | |
• | Net asset value | |
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• | Target prices of research analysts | |
• | Dividend discount model | |
• | Precedent transactions involving the share capital of the company | |
• | Share price | |
• | Comparable company analysis | |
• | Precedent transaction analysis | |
• | Discounted cash flow analysis | |
9.1.1. Valuation Methods not Selected by Credit Suisse |
9.1.2. Valuation Methods Selected by Credit Suisse |
9.1.2.1. Comparable Company Analysis |
Differences of Assessment |
• | Fugro is a diversified group, present in both the geophysical services and seismic surveys markets, and on other oil services markets (drilling for hydrocarbons exploration, engineering as well as consultancy). However, its seismic business represents an important part of its revenues (50% in 2005). | |
• | Fugro’s main clients are oil and gas companies, as are CGG and Veritas clients | |
• | Fugro’s market capitalization is of a similar size to that of CGG and Veritas | |
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9.1.2.2. Precedent Transaction Analysis |
9.1.2.3. Discounted Cash Flow Analysis |
• | Unlevered free cash flows derived from the CGG business plan | |
• | A discount rate equal to between 10.0% and 11.0% | |
• | A perpetuity growth rate equal to between 3.5% and 4.5% | |
Differences of Assessment |
• | Different assumptions for the discount rate (mid-range of 10.5% for Credit Suisse compared to 10.0% in our analysis) | |
• | Different assumptions for the perpetuity growth rate (mid-range of 4.0% for Credit Suisse compared to 3.5% in our analysis) | |
9.2. Review of Valuation Analyses of Veritas |
• | Book value of shareholders’ equity | |
• | Net asset value | |
• | Target prices of research analysts | |
• | Dividend discount model | |
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• | Precedent transactions involving the share capital of the company | |
• | Share price | |
• | Comparable company analysis | |
• | Precedent transaction analysis | |
• | Discounted cash flow analysis | |
9.2.1. Valuation Methods not Selected by Credit Suisse and Rothschild |
9.2.2. Valuation Methods Selected by Credit Suisse and Rothschild |
9.2.2.1. Comparable Company Analysis |
Differences of Assessment |
• | $6.70 per Veritas share between the analysis of Credit Suisse and our analysis | |
• | $4.79 per Veritas share between the analysis of Rothschild and our analysis | |
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• | Seitel is significantly smaller than Veritas | |
• | Seitel’s shares are traded OTC in the United States, hence the market capitalization does not constitute in our opinion a relevant reference metric | |
• | only a limited number of research analysts follow the stock, the available financial forecasts do not allow us to compute a relevant consensus | |
• | The financial estimates for the calendar years 2006 and 2007 we selected are based on a selection of analysts’ estimates published after the Merger was announced, while research estimates used by CGG’s financial advisors were published before the Merger announcement. | |
• | Veritas financial statements for the fiscal year ending July 31, 2006 are included in our analysis of calendar year 2006 multiples. CGG’s financial advisors did not have access to such financial information at the time of their analysis. However, this difference does not significantly impact the values obtained. | |
9.2.2.2. Precedent Transaction Analysis |
Differences of Assessment |
• | $0.79 per Veritas share between the analysis of Credit Suisse and our analysis | |
• | $5.14 per Veritas share between the analysis of Rothschild and our analysis | |
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• | Seabulk International’s acquisition by Seacor (March 2005), Seabulk principal business being the services and assistance of maritime transport for petroleum and chemical products | |
• | Coflexip’s acquisition by Technip (July 2001), Coflexip’s main activity being the provision of products and solutions for the installation of subsea oil and gas fields | |
• | Camco International’s acquisition by Schlumberger (June 1998), Camco International being specialized in activities relating to exploration/drilling of oil and gas | |
• | Dresser Industries’ acquisition by Halliburton Company (February 1998), Dresser’s main activity being the provision of products and services related to drilling | |
• | Roxar’s acquisition by Arcapita (February 2006): Although smaller, this transaction is recent and therefore captures valuation levels related to the current phase of the cycle. In addition, Roxar is active in segments close to Veritas and targets the same type of clients | |
• | Exploration Resources’ acquisition by CGG (August 2005): Although smaller, this transaction involves two players of the seismic industry | |
• | CGG’s tentative acquisition of the seismic activities of PGS (September 2004): Although not completed, this transaction offers an indication of value level between two players of the seismic industry | |
• | Seabulk International’s acquisition by Seacor (March 2005)(see above) | |
• | Subsea 7’s acquisition by Siem Offshore (November 2004), Subsea 7 being specialized in the installation of subsea equipments in deep water. | |
• | Coflexip’s acquisition by Technip (July 2001)(see above) | |
• | Roxar’s acquisition by Arcapita (February 2006)(see above) | |
• | Varco International’s acquisition by Tuboscope (May 2000): Since we selected as comparable transaction the acquisition of Varco International in 2004, we decided to also select this preceding transaction | |
• | Western Altlas’ acquisition by Baker Hugues (May 1998), the target being one of the main players of the seismic industry | |
• | Weatherford Enterra’s acquisition by EVI (May 1998), Weatherford Enterra being active in markets offering similarities with the seismic industry | |
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9.2.2.4. Discounted Cash Flow Analysis |
• | Unlevered free cash flows derived from the Veritas business plan | |
• | A discount rate equal to between 9.0% and 10.0% | |
• | A perpetuity growth rate equal to between 3.0% and 4.0% | |
• | Selected the unlevered free cash flows derived from the Veritas business plan | |
• | Selected a discount rate equal to between 10.0% and 12.0% | |
• | Calculated a terminal value based on an EBITDA adjusted for MCA multiple equal to between 10.0x and 12.0x, a range based on the analysis of precedent comparable transactions as well as comparable traded companies | |
Differences of Assessment |
• | $0.08 per Veritas share between the analysis of Credit Suisse and our analysis before synergies, and $0.23 per Veritas share after synergies. | |
• | $2.80 per Veritas share between the analysis of Rothschild and our analysis before synergies, and $1.28 per Veritas share after synergies. | |
• | The different assumptions on the discount period: Rothschild has calendarized and discounted the unlevered free cash flows up to December 31, 2010 and has determined the terminal value at this date, while Credit Suisse and Lehman Brothers have used the unlevered free cash flows on a fiscal year basis up to July 31, 2011 and have determined the terminal value at this date | |
• | The mid range assumption on the discount factor (11.0% for Rothschild compared to 9.5% for Credit Suisse and Lehman Brothers) | |
• | The methodologies and the assumptions selected for the calculation of the terminal value: Rothschild determined the terminal value based on a EBITDA adjusted for MCA multiple and selected as its main assumption a multiple of 11,0x | |
• | The difference between the normative tax rate used by Credit Suisse on one hand, and Rothschild and Lehman Brothers on the other hand | |
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10. | Conclusion on the Fairness, from a Financial Standpoint, of the Consideration to be Paid by CGG in the Merger |
Lehman Brothers Europe Limited |
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(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of § 251 of this title. | |
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to § § 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except: |
a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof; | |
b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders; | |
c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or | |
d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph. |
(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation. |
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(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or | |
(2) If the merger or consolidation was approved pursuant to § 228 or § 253 of this title, then either a constituent corporation before the effective date of the merger or consolidation or the surviving or resulting corporation within 10 days thereafter shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given, provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the |
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effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given. |
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Item 20. | Indemnification of Directors and Officers |
Item 21. | Exhibits and Financial Statement Schedules |
Item 22. | Undertakings |
(1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) to include any prospectus required by Section 10(a)(3) of the Securities Act; | |
(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; | |
(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
(2) that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; | |
(3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; and | |
(4) to file a post-effective amendment to the registration statement to include any financial statements required by Item 8.A. of Form 20-F at the start of any delayed or throughout a continuous offering. |
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(2) The registrant undertakes that every prospectus: (i) that is filed pursuant to paragraph (1) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Exchange Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
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Compagnie Générale de Géophysique |
By: | /s/ Robert Brunck |
Name: Robert Brunck |
Title: | Chairman and Chief Executive Officer |
* Chairman of the Board and Chief Executive Officer (Principal executive officer) | * Director | |
/s/ Thierry Le Roux Group President and Chief Financial Officer (Principal financial and accounting officer) | * Director | |
* Director | * Director | |
* Director | * Director | |
Director | * Director | |
* Director | * Authorized United States Representative | |
* By:/s/ Thierry Le Roux |
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Exhibit No. | Description | |||
2 | .1 | Agreement and Plan of Merger, dated as of September 4, 2006, by and among CGG, Volnay Acquisition Co. I, Volnay Acquisition Co. II and Veritas DGC Inc. (included as Annex A to the proxy statement/ prospectus forming a part of this registration statement). | ||
4 | .1 | Form of Amended and Restated Deposit Agreement, dated as of , 2006 among CGG, The Bank of New York as Depositary, and the Owners and Holders of American Depositary Shares issued thereunder (incorporated by reference to Exhibit 1-1 to the Registration Statement on Form F-6 (filed by CGG with the Commission on October 16, 2006). | ||
5 | .1 | Opinion of Béatrice Place-Faget regarding the legality of the securities being registered. | ||
8 | .1 | Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding certain U.S. federal income tax matters. | ||
23 | .1 | Consent of Ernst & Young & Autres and Mazars & Guérard. | ||
23 | .2 | Consent of Ernst & Young AS. | ||
23 | .3 | Consent of Ernst & Young. | ||
23 | .4 | Consent of PricewaterhouseCoopers LLP. | ||
23 | .5 | Consent of Béatrice Place-Faget (included in Exhibit 5.1). | ||
23 | .6 | Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit 8.1). | ||
24 | .1 | Powers of Attorney (included as part of the signature pages of the Registration Statement (SEC File No. 333-126556) filed by CGG with the Commission on October 17, 2006). | ||
99 | .1 | Consent of Goldman, Sachs & Co. | ||
99 | .2* | Consent of Credit Suisse Securities (USA) LLC. | ||
99 | .3 | Consent of Rothschild Inc. | ||
99 | .4 | Consent of Lehman Brothers | ||
99 | .5 | Form of Proxy for Holders of Veritas Common Stock. | ||
99 | .6 | Form of Election. | ||
99 | .7 | Form of Notice of Guaranteed Delivery. |
* | Previously filed. |