ION Geophysical: Pump Up the Volume

HOUSTON (TheStreet) -- ION Geophysical (IO Quote) shares rallied Monday on above-average volume after the company said it has entered into a joint venture that will "significantly" enhance its financial position.

ION Geophysical late Friday announced that it has signed a term sheet to create a joint venture with Beijing's BGP that will provide land seismic products worldwide. As part of the transaction, ION will receive $175 million in cash proceeds from BGP, which will receive a 51% interest in the joint venture and an approximate 16.7% interest in ION.

Prior to the joint venture closing, ION will also receive up to $40 million of bridge financing arranged by BGP. At the transaction's closing, ION said it will refinance and reduce its long-term debt, and receive an expanded replacement revolving line of credit.

Overall, after closing ION said it expects to have over $100 million in liquidity from cash and spare capacity on its revolving line of credit.

Shares of ION Geophysical were surging by $1.16, or 32.8%, to $4.70. Earlier in the session, the stock touched an intraday high of $4.79. More than 1.7 million shares changed hands by 9:45 a.m. EDT Monday, compared to the stock's three-month average daily volume of 1.1 million, according to Yahoo! Finance.

ION Geophysical has a 107.5 million-share float with a short interest float of 2% as of Sept. 25, according to Yahoo! Finance. More than 12% of the company's shares are held by insiders with another 58% owned by institutions.

-- Written by Robert Holmes in New York.

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