EAGLE GEOPHYSICAL INC company history: the story so far

History

Eagle Geophysical went public in 1997, borrowed $100 million to fund vessel upgrades, missed its interest payment in 1999 and filed for Chapter 11 within months.

1997-1998: Going public and borrowing to grow

Eagle Geophysical was built by combining the onshore seismic business of Seitel, Inc. with the offshore seismic business of the Horizon Companies. Seismic work means mapping underground rock with sound waves to help find oil and gas. In June 1997 the company filed for an IPO of 5,880,000 shares, of which 4,000,000 came from the company and 1,880,000 from Seitel. The offer depended on Eagle also buying the 81% of Energy Research International it did not already own.

The IPO priced on 6 August 1997 at $17.00 a share, and Eagle began trading on the Nasdaq National Market as EGEO.

Growth in 1998 was paid for with debt rather than new shares. In June the company announced a $100 million private placement of unsecured senior notes to fund upgrades of two seismic vessels and repay short-term borrowings. These became 10.75% Senior Notes due 2008, and in October 1998 Eagle launched an exchange offer to swap them for publicly registered notes on identical terms. That same month it signed a letter of intent to buy the assets of Natural Resources Geophysical Corporation (NRG Services) of Calgary, including land seismic equipment and a data library, for cash and stock.

1999: Default and bankruptcy

The debt soon became unmanageable. On 15 July 1999 Eagle missed the $5,375,000 semi-annual interest payment on the notes. It had already hired CIBC World Markets to negotiate a restructuring.

The next quarterly report, in August, showed the scale of the damage. Quarterly revenue fell from $28.2 million to $17.9 million, and the net loss reached $57.6 million, including a $43.7 million restructuring and asset-impairment charge (a write-down of assets worth less than their recorded value). The working-capital deficit, the gap between short-term debts and short-term assets, stood at $156.1 million.

The 60-day grace period expired on 13 September 1999 with the payment still unmade, which was a formal event of default. On 29 September Eagle and 16 subsidiaries filed for Chapter 11 bankruptcy protection in Delaware, citing collapsed spending on seismic work by oil and gas explorers, along with its debt load. Nasdaq halted trading in the stock that day, and the company secured up to $15 million in debtor-in-possession financing, which is loans to fund a company during bankruptcy.

As of the latest beat, in October 1999, Eagle was in Chapter 11, with its shares halted and the default on the Senior Notes unresolved.

Written from the 9 story beats below (1997 to 6 Oct 1999), which come from the company's own announcements and filings.

Beat by beat

The events that changed the company's story, in plain English, each written against everything known about the company at the time. The dot shows whether it was good, bad or neutral for shareholders.

1999

6 Oct
Eagle Geophysical and 16 subsidiaries filed for Chapter 11 bankruptcy protection in Delaware on September 29, 1999, citing collapsed E&P seismic spending and its debt load; Nasdaq halted trading in its stock the same day, and the company secured up to $15 million in debtor-in-possession financing.
bankruptcy or receivership
15 Sept
The 60-day grace period expired September 13, 1999 without the missed interest payment being made, triggering a formal event of default on the $100 million Senior Notes.
other material event
16 Aug
The scale of the collapse became clear: quarterly revenue fell from $28.2 million to $17.9 million and the net loss ballooned to $57.6 million, driven by a $43.7 million restructuring and asset-impairment charge, leaving a $156.1 million working-capital deficit - the same distress behind the missed July 15 interest payment disclosed weeks earlier.
quarterly activities report
20 July
Missed the $5,375,000 semi-annual interest payment due July 15, 1999 on its $100 million 10.75% Senior Notes - a default under the notes' indenture unless cured within a 60-day grace period; had already retained CIBC World Markets to negotiate a debt restructuring.
other material event

1998

7 Oct
Launched a registered exchange offer, swapping the $100 million of privately-placed 10.75% Senior Notes due 2008 for publicly-registered notes on identical economic terms, with interest payable each January 15 and July 15.
securities registration
2 Oct
Signed a letter of intent to acquire the assets and operations of Natural Resources Geophysical Corporation (NRG Services) of Calgary - land seismic equipment, a data library, and assumption of related debt - for cash and stock, expected to close by November 30, 1998.
asset acquisition disposition
30 June
Announced a proposed $100 million private placement of unsecured senior notes (10-year maturity, rate not yet set) to fund upgrades of two seismic vessels and repay interim borrowings, expected to close mid-July 1998.
debt financing

1997

6 Aug
Priced its IPO at $17.00 per share (5,880,000 shares total), completing its transition to a public company on the Nasdaq National Market under the symbol EGEO.
securities registration
2 June
Filed to go public with an IPO of 5,880,000 shares (4,000,000 sold by the company, 1,880,000 by selling stockholder Seitel, Inc.), combining Seitel's onshore seismic subsidiary with the offshore seismic business of the Horizon Companies, conditioned on simultaneously acquiring the remaining 81% of Energy Research International it didn't already own.
securities registration