Seitel (NASDAQ:SEIEQ)
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Seitel Announces Agreement for Proposed Amended Reorganization Plan
HOUSTON, Jan. 9 /PRNewswire-FirstCall/ -- Seitel, Inc. (BULLETIN BOARD: SEIEQ)
("Seitel" or the "Company") announced today that it signed a standby funding
commitment letter with HBV Mellon Alternative Strategies LLC ("Mellon") whereby
Mellon has committed to purchase up to $75 million of reorganized Seitel's
common stock in the event such stock is not purchased by Seitel's shareholders
through the exercise of warrants to be issued to such shareholders under
Seitel's proposed amended chapter 11 plan of reorganization. The Mellon
commitment was obtained with the assistance and support of the Official
Committee of Equity Holders of Seitel appointed in the bankruptcy case. The
Company expects to file with the bankruptcy court an amended reorganization plan
and a related amended disclosure statement in mid-January, a Bankruptcy Court
hearing to approve the disclosure statement is presently scheduled for January
30, 2004, and a confirmation hearing on the reorganization plan is presently
scheduled for March 9, 2004.
Effectiveness of the Mellon standby funding commitment letter is subject to
approval of the bankruptcy court, which will be sought at the January 30, 2004
hearing, and consummation of the transactions contemplated thereby is subject to
certain conditions, including the negotiation and execution of definitive
documentation, confirmation by the bankruptcy court of the amended plan, the
absence of material adverse changes, the receipt of requisite regulatory
approvals, consummation of certain other financing transactions sufficient to
make all payments required under the amended plan, as well as other customary
conditions.
Under Seitel's proposed amended plan, which is subject to various conditions to
effectiveness, including confirmation by the bankruptcy court, Seitel's
pre-petition creditors would receive payment of 100% of their claims in cash,
together with all post-petition interest. Each of Seitel's equity holders, as
of a record date expected to be two days prior to the effective date of the
proposed amended plan, would have the right to receive an equivalent number of
shares of reorganized Seitel's common stock and warrants entitling the holder
thereof to purchase such number of shares of reorganized Seitel common stock to
retain its percentage equity ownership in Seitel (subject to adjustment and
dilution as set forth below). The warrants would have an exercise price of 60
cents per share, subject to adjustment for certain recapitalization events. The
aggregate exercise price of the warrants would be $75 million. The Company
intends that the warrants will be freely transferable and exercisable for 30
days following the effective date of the proposed amended plan. Each equity
holder who does not exercise its warrants would, as a result, suffer
approximately 83.4% dilution in its percentage equity ownership of reorganized
Seitel not including the additional warrants to be issued to Mellon as described
below.
Mellon has agreed to act as a standby purchaser for up to $75 million (or 83.4%)
of the shares of reorganized Seitel's common stock not purchased by equity
holders upon exercise of the warrants. Mellon presently owns approximately 8%
of Seitel's outstanding common stock. As compensation for its standby
commitment, Mellon will be issued additional warrants to acquire up to 10% of
the fully diluted shares of common stock of reorganized Seitel. The exercise
price of Mellon's additional warrants would be 72 cents per share, subject to
adjustment for certain recapitalization events, and would expire on the seventh
anniversary of their issuance.
The funding of all payments of claims under the proposed amended plan would be
provided from a portion of Seitel's existing cash balances, and not less than
$180 million in proceeds of a high yield debt placement. Financial advisors
working with Seitel, without any commitment, have expressed confidence in their
ability to complete the required high yield debt placement. The Company also
anticipates entering into a new revolving credit facility to supplement its
working capital needs following the effective date of the amended plan and is
engaged in preliminary discussions with certain lending sources.
There can be no assurance that the amended plan will be confirmed by the
Bankruptcy Court or will become effective or the timing thereof.
This press release does not constitute an offer to sell or the solicitation of
an offer to buy any securities of the Company. The securities may not be
offered or sold in the United States absent registration under the Securities
Act of 1933, as amended (the "Securities Act"), or an applicable exemption from
such registration. There shall not be any sale of these securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction.
ABOUT SEITEL
Seitel markets its proprietary seismic information/technology to more than 400
petroleum companies, licensing data from its library and creating new seismic
surveys under multi-client projects. Statements in this release about the
future outlook related to Seitel involve known and unknown risks and
uncertainties, which may cause the Company's actual results to differ materially
from expected results. While the Company believes its forecasting assumptions
are reasonable, there are factors that are hard to predict and influenced by
economic and other conditions that are beyond the Company's control. Among the
other important factors which could cause actual results to differ materially
from those in the forward-looking statements are potential changes in the terms
of the proposed amended plan of reorganization, the failure of the Company's
Board of Directors to approve such terms, the failure of the Company to file an
amended plan of reorganization, the failure of the Bankruptcy Court to confirm
the amended plan, or the failure of the amended plan to otherwise become
effective, as well as other factors detailed in Seitel's filings with the
Securities and Exchange Commission, including its most recent Form 10-K Annual
Report, a copy of which may be obtained from the Company without charge.
DATASOURCE: Seitel, Inc.
CONTACT: Seitel, Inc., +1-713-881-8900
Web site: http://www.seitel-inc.com/