Fair value adjustment on convertible bonds
(Thomson Reuters ONE) -
Electromagnetic Geoservices ASA (EMGS) today announced that its functional
currency has changed from USD to NOK owing to certain changes that have been
implemented in the first quarter of 2011, one of which is the transfer of client
contracts from EMGS ASA to its subsidiaries. This has a significant impact on
the value of the conversion rights recorded in the balance sheet. The net effect
is a reduction in financial liability amounting to USD 23.2 million, and a
corresponding increase in EMGS's equity.
Background
In 2009, Fugro N.V. provided EMGS ASA a NOK 150 million secured convertible
loan, which is due on 2 January 2012, at the current conversion price of NOK
5.40. As the functional currency for EMGS was USD and the conversion price is in
NOK, the loan has been subject to a "fair value adjustment" according to IFRS
accounting rules. The value of this adjustment as per end 2010 was USD 30.7
million.
Effects
The change in functional currency gives the following effects:
- The fair value element of the NOK 150 million convertible bond (USD 30.7
million as per end 2010) is reclassified from debt to equity.
- In 2009, EMGS ASA also issued a USD 5 million convertible bond, which is due
18 May 2011, at a conversion price of USD 0.88. As the functional currency in
EMGS has changed to NOK, this loan will now be subject to a fair value
adjustment. The market value of the adjustment has been calculated to USD 7.5
million, which will be recorded as financial liability in the balance sheet.
- Net effect is a reduction in financial liability amounting to USD 23.2 million
and a corresponding increase in EMGS's equity.
The reporting currency for the EMGS Group will continue to be USD.
Contacts
Roar Bekker, EMGS chief executive officer, +47 22 01 14 00
Svein Knudsen, EMGS chief financial officer, +47 22 01 14 00
About EMGS
EMGS, the marine EM market leader, uses its proprietary electromagnetic (EM)
technology to support oil and gas companies in their search for offshore
hydrocarbons. EMGS supports each stage in the workflow, from survey design and
data acquisition to processing and interpretation. The company's services enable
integration of EM data with seismic and other geophysical and geological
information to give explorationists a clearer and more complete understanding of
the subsurface. This improves exploration efficiency, and reduces risks and the
finding costs per barrel.
EMGS has conducted more than 500 surveys to improve drilling success rates
across the world's mature and frontier offshore basins. The company operates on
a worldwide basis with main offices in Trondheim and Stavanger, Norway; Houston,
USA; and Kuala Lumpur, Malaysia. Please visitwww.emgs.com for more information.
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originality of the information contained therein.
Source: EMGS via Thomson Reuters ONE
[HUG#1489413]
Unternehmensinformation / Kurzprofil:
Datum: 16.02.2011 - 08:50 Uhr
Sprache: Deutsch
News-ID 51546
Anzahl Zeichen: 3587
contact information:
Town:
Trondheim
Kategorie:
Business News
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"Fair value adjustment on convertible bonds"
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