Wavefield asks shareholders to delay TGS Nopec merger UPDATE

Wavefield asks shareholders to delay TGS Nopec merger UPDATE

	Published : Mon, 19 Nov 2007 10:46 By : Agencies Print this Story

(Adds TGS CEO quotes)

OSLO (Thomson Financial) - The board of Norwegian seismic group Wavefield Inseis ASA said it is recommending that its shareholders delay the company's planned merger with fellow Norwegian group TGS-Nopec Geophysical.

Wavefield said that on Sunday evening it had not received a report examining the causes for a shortfall in TGS's third-quarter revenues which had had a 'significant negative effect' on Wavefield's share price.

As a result, Wavefield said its board was not in a position to assess and advise an extraordinary general meeting later today.

'The board of Wavefield Inseis is compelled to recommend to its shareholders ... to postpone the merger with TGS until it has been presented with reasonable evidence to the effect that the terms and conditions for completing the merger have been fulfilled,' Wavefield said in a statement.

TGS chief executive Hank Hamilton responded in a teleconference call, saying the merger should go ahead as soon as possible.

'Our feeling is that we have been through an extremely thorough process a couple of times and there is no reason for any delays. Our feeling is that the merger should go through as planned,' he said.

'If there are any delays there will be some economic consequences,' said Hamilton, who added his company's legal advice was that all conditions for the merger had been met.

'If the merger is terminated without good reason then that would not be legal,' he told the teleconference.

Earlier, TGS issued a statement saying there was nothing wrong with its third-quarter accounts.

TGS released a report prepared by PriceWaterhouseCoopers which it said was intended to address its third quarter revenue shortfall and the extent to which TGS could have been aware of the shortfall at the time of the EGM to approve the merger.

'The findings and conclusions ... support the facts that TGS performed all its obligations in accordance with its high corporate governance standards,' TGS said.

On October 25, TGS a reported a third-quarter pretax profit of 50.0 mln usd, down from 57.1 mln last year and below the 55 mln usd consensus forecast. The figure was hurt by productivity issues on two of its new 3D vessels, but the firm said it believed the market outlook was have ry strong'.

However, TGS said that vessel utilisation rates would be lower than normal.

The announcement of the merger in July was widely greeted by enthusiasm, with analysts saying the two groups were highly complementary.

TGS's Hamilton said he remained convinced the merger made sense.

'There is significant upside for the company when we get the merger completed,' he told the teleconference.

'The process has created stress in both organisations and has created a distraction. We would like to get back on track as soon as possible,' Hamilton added.

patrick.mcloughlin@thomson.com

pm/wj

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