PGS Announces Offer to Exchange Any and All of Its 7.375% Senior Notes Due 2018 for a Combination of New 7.375% Senior Notes Due 2020 and Cash

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, HONG KONG OR JAPAN, OR ANY OTHER JURISDICTION IN WHICH THE RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL OR WOULD REQUIRE REGISTRATION OR OTHER MEASURES. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER OF ANY OF THE SECURITIES DESCRIBED HEREIN.

FOR IMMEDIATE RELEASE

For additional information, please contact:
Bård Stenberg
VP IR & Corporate Communications
+47 67 51 43 16

Petroleum Geo-Services ASA Announces Offer to Exchange ANY AND ALL OF its 7.375% Senior Notes due 2018 FOR A COMBINATION OF NEW 7.375% Senior Notes due 2020 AND CASH

Oslo, Norway, November 22, 2016 - Petroleum Geo-Services ASA (Oslo Stock Exchange: PGS) ("PGS" or the "Company") today announced that it has commenced an offer to exchange (the "Exchange Offer") any and all of its outstanding 7.375% Senior Notes due 2018 (the "Old Notes") for total exchange consideration per $1,000 principal amount of Old Notes comprising (i) $500 aggregate principal amount of new 7.375% Senior Notes due 2020 to be issued by the Company (the "New Notes") plus (ii) $475 in cash, as set forth in the table below.

Old Notes to be Exchanged

Outstanding
Principal Amount

CUSIP Numbers
and ISINs

Exchange
Consideration(1)

Consent
Payment(1)

Total Exchange
Consideration(1)(2)

7.375% Senior Notes due 2018

 

 
$450,000,000

 

 
144A: 716599AC9 / US716599AC95

 

Reg S: R69628AA4 / USR69628AA46
$500 principal amount of
New Notes and
$445 in cash
$30 in cash $500 principal amount of
New Notes and $475 in cash

____________________
(1)  For each $1,000 principal amount of Old Notes.
(2)  Includes the Consent Payment payable to eligible holders whose Old Notes are validly tendered and not validly withdrawn and as to which Consents to the Proposed Amendments are delivered on or prior to the Early Tender Date (as each such term is defined below).

The Exchange Offer is being made pursuant to the Exchange Offer and Consent Solicitation Memorandum dated November 22, 2016 (the "Exchange Offer Memorandum"). The Exchange Offer is scheduled to expire at 11:59 p.m., New York City time, on December 20, 2016, unless extended by the Company (such time and date, as the same may be extended, the "Expiration Date"). Eligible holders (as defined in the Exchange Offer Memorandum) who validly tender and do not validly withdraw their Old Notes by 11:59 p.m., New York City time, on December 6, 2016, unless extended by the Company (such date and time, as the same may be extended, the "Early Tender Date"), will be eligible to receive the total exchange consideration set forth in the table above. Eligible holders who validly tender and do not validly withdraw their Old Notes after the Early Tender Date but on or prior to the Expiration Date will be eligible to receive the Exchange Consideration set forth in the table above. Eligible holders may only withdraw their tendered Old Notes prior to 11:59 p.m., New York City time, on December 6, 2016, unless extended or earlier terminated (the "Withdrawal Deadline").

Eligible holders whose Old Notes are accepted for exchange in the Exchange Offer will also receive accrued and unpaid interest in cash in respect of such exchanged Old Notes from the last interest payment date to, but not including, the date of settlement pursuant to the terms described in the Exchange Offer Memorandum.

Concurrently with the Exchange Offer, the Company is soliciting consents (the "Consents") to certain proposed amendments (the "Proposed Amendments") to the indenture governing the Old Notes (the "Old Notes Indenture") on the terms and conditions set forth in the Exchange Offer Memorandum (the "Consent Solicitation"). The Proposed Amendments will eliminate substantially all of the restrictive covenants, all of the reporting covenants and certain of the events of default in the Old Notes Indenture, if adopted. In order to effect the Proposed Amendments, Consents must be received from holders representing not less than a majority in aggregate principal amount of the outstanding Old Notes (as determined in accordance with the Old Notes Indenture). Eligible holders who validly tender their Old Notes will be deemed to have consented to the Proposed Amendments. Eligible holders may not tender their Old Notes in the Exchange Offer without delivering Consents to the Proposed Amendments and may not deliver Consents to the Proposed Amendments without tendering their Old Notes in the Exchange Offer.

The consummation of the Exchange Offer is subject to satisfaction or waiver of certain conditions, including, among others, (a) the closing of the concurrent private placement of new shares on terms and conditions satisfactory to the Company in its sole discretion, (b) the effectiveness of certain proposed amendments to the Company's existing revolving credit facility as described in the Exchange Offer Memorandum and (c) the receipt of valid tenders of Old Notes, not withdrawn, and Consents, not revoked, of not less than 90% of the aggregate principal amount of outstanding Old Notes in the Exchange Offer. The private placement of new shares is subject to customary conditions, including approval thereof by an extraordinary general meeting of the Company, which is currently expected to be held in approximately three weeks and the receipt of valid tender of Old Notes of not less than 90% of the aggregate principal amount of outstanding Old Notes in the Exchange Offer. Prior to launching the Exchange Offer, the Company received commitments from eligible holders representing $251,660,000, or approximately 55.9%, of the aggregate principal amount of outstanding Old Notes to tender their Old Notes in the Exchange Offer.

The Company reserves the right, subject to applicable law and the terms set forth in the Exchange Offer Memorandum, to (i) extend the Early Tender Date, the Expiration Date or the Withdrawal Deadline, (ii) modify, extend or terminate the Exchange Offer and/or the Consent Solicitation or (iii) otherwise amend the Exchange Offer and/or the Consent Solicitation in any respect. In addition, the Company may, in its sole discretion, waive certain conditions to the Exchange Offer.

Background and Rationale

To maintain a robust financial position through the ongoing uncertainty, PGS has established a financial plan which seeks to strengthen its liquidity position even further by proactively addressing the December 2018 maturity of the Old Notes, de-leveraging the balance sheet and reducing interest costs. In November 2016, PGS successfully completed the first step of its financial plan through the extension of maturity of the existing revolving credit facility to September 18, 2020 and reduced the commitments thereunder to $400 million upon the effectiveness of the RCF Amendments and to $350 million from September 18, 2018 through the execution of an amendment agreement and extension request, each to be entered into in connection with the Exchange Offer. As a second step, PGS is seeking to address the 2018 maturity of the Old Notes through the Exchange Offer, the cash consideration for which will be financed from a portion of the proceeds raised in the concurrent private placement of new shares in the Company. The Exchange Offer is conditional upon the closing of the private placement.

Indicative Timetable

Date Calendar Date
Commencement Date  November 22, 2016
Early Tender Date  11:59 p.m., New York City time, on December 6, 2016, unless extended.
Withdrawal Deadline  11:59 p.m., New York City time, on December 6, 2016, unless extended or earlier terminated.
Expiration Date  11:59 p.m., New York City time, on December 20, 2016, unless extended.
Settlement Date  Three business days after the Expiration Date, unless extended, assuming all conditions to the Exchange Offer have been satisfied or waived, currently expected to be December 23, 2016.

The complete terms and conditions of the Exchange Offer and the Consent Solicitation are described in the Exchange Offer Memorandum, copies of which may be obtained by eligible holders by contacting Lucid Issuer Services Limited, the information agent for the Exchange Offer, at Tankerton Works, 12 Argyle Walk, London WC1H 8HA, United Kingdom or +44 (0)20 7704 0880 or pgs@lucid-is.com.

The Company has retained Arctic Securities AS, Barclays Bank PLC and J.P. Morgan Securities LLC as Lead Dealer Managers and ABN AMRO Securities (USA) LLC, DNB Markets, a part of DNB Bank ASA, Nordea Bank Danmark A/S and The Royal Bank of Scotland plc as Co-Managers for the Exchange Offer. Any questions concerning the terms and conditions of the Exchange Offer should be directed to the Lead Dealer Managers: Arctic Securities AS (Europe: +47 21 01 31 00;  US: +1 (212) 597 5555; arctic.credit.sales@arctic.com), Barclays Bank PLC (Europe: +44 (0) 20 3134 8515; US: +1 (212) 528-7581; US Toll Free: +1 (800) 438-3242; liability.management@barclays.com) and J.P. Morgan Securities LLC (Europe: +44 (0) 20 7134 2468; US Toll Free: + 1 (866) 834-4666; emea_lm@jpmorgan.com).

The New Notes have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") or the securities laws of any other jurisdiction and may not be offered or sold, directly or indirectly, in the United States, absent registration under or an exemption from, or in a transaction not subject to, the registration requirements of, the U.S. Securities Act. No public offering of the New Notes is being made in the United States or in any other jurisdiction. Accordingly, the Exchange Offer is only being made to, and Consents are only being solicited from, registered holders of Old Notes who are (i) "qualified institutional buyers" within the meaning of Rule 144A under the U.S. Securities Act and (ii) persons other than "U.S. persons" who are located outside the United States, as those terms are defined in Rule 902 of Regulation S under the U.S. Securities Act, and, if such holders are located in the European Economic Area, Qualified Investors (as such term is defined under Directive 2003/71/EC (as amended)) (collectively, the "eligible holders"). Only eligible holders of Old Notes who certify to the foregoing will be authorized to receive and review the Exchange Offer Memorandum and to participate in the Exchange Offer and the Consent Solicitation.

Arctic Securities AS, Barclays Bank PLC, J.P. Morgan Securities LLC, ABN AMRO Securities (USA) LLC, DNB Markets, a part of DNB Bank ASA, Nordea Bank Danmark A/S and The Royal Bank of Scotland plc (together, the "Dealer Managers") are each acting exclusively for the Company and for no-one else in connection with any transaction mentioned in this announcement and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to any such transaction and will not be responsible to any other person for providing the protections afforded to their respective clients, or for advising any such person on the contents of this announcement or in connection with any transaction referred to in this announcement. The contents of this announcement have not been verified by the Dealer Managers.

This announcement is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy the New Notes nor an offer to purchase Old Notes or a solicitation of Consents in the United States or any jurisdiction. The Exchange Offer is being made solely by, and pursuant to, the terms set forth in the Exchange Offer Memorandum. The Exchange Offer is not being made to persons in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction.

Forward-Looking Statements

This release contains certain forward-looking statements regarding the future events or the future financial performance of PGS. These statements reflect management's current views with respect to future events or financial performance, and are based on management's                  current assumptions and information currently available and are not guarantees of the Company's future performance. The timing of certain events and actual results could differ materially from those projected or contemplated by the forward-looking statements due to a number of factors including, but not limited to those inherent to operating in a highly regulated industry, strong competition, commercial and financial execution, economic conditions, among others.

About PGS

PGS is a leading marine seismic survey and data processing company operating in all of the major oil and natural gas offshore basins worldwide.

PGS' ordinary shares trade on the Oslo Stock Exchange under the symbol 'PGS'.

This information is subject to the disclosure requirements pursuant to section 5 -12 of the Norwegian Securities Trading Act.