Seitel (NASDAQ:SEIEQ)
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Seitel Reorganization Plan Confirmed By Bankruptcy Court
Seismic Data Leader to Repay 100% of Allowed Pre-Petition Claims in Cash;
Intends to Issue Common Stock and Warrants to Provide Existing Shareholders
Opportunity to Retain Substantial Equity Ownership
HOUSTON, March 18 /PRNewswire-FirstCall/ -- Seitel, Inc. (BULLETIN BOARD:
SEIEQ) today announced that the United States Bankruptcy Court, District of
Delaware, has confirmed Seitel's Chapter 11 plan of reorganization. As
previously reported,Seitel's amended plan, which was filed with the bankruptcy
court on February 6, 2004, was supported by Seitel's Official Committee of
Equity Security Holders, as well as Berkshire Hathaway Inc. and Ranch Capital
LLC, Seitel's largest creditors.
In addition to Berkshire and Ranch, the plan was accepted by the holders of more
than 99.6% of the shares of common stock who voted for the plan. Although there
can be no assurance, Seitel anticipates that the plan will become effective
prior to April 30, 2004 and that all payments to creditors under the plan will
be made by approximately mid-June 2004.
Bruce Galloway, managing partner of Galloway Capital Management and chairman of
the Official Committee of Equity Security Holders, said, "We believe this plan
is in the best interests of the company's constituents and improves the
viability of the company."
"We are very pleased that our reorganization plan was confirmed by the
bankruptcy court just six weeks after we filed our third amended plan. The
speed of these recent proceedings has enabled us to maintain the support of our
major customers, creditors, stockholders, and employees," said Fred S. Zeidman,
Chairman of the Board of Directors. "Six months ago, when our plan was first
being formulated,the Board and our executive management team focused on
returning Seitel to a leadership position in the seismic data industry. We
believe that we are now well-positioned to do so."
As previously reported, the plan provides for the cash payment of 100% of
Seitel's allowed pre-petition creditors' claims, together with all post-
petition, non-default rate interest. The plan further provides that each of
Seitel's common stockholders, as of a record date expected to be five days prior
to the effective date of the plan, will receive on the effective date shares of
reorganized Seitel's common stock and warrants to purchase additional shares of
reorganized common stock which, if exercised in full, will enable each holder to
retain a percentage interest in reorganized Seitel substantially equivalent to
such holder's percentage interest in Seitel immediately prior to the plan
effective date. Each warrant will represent 4.93 shares at an exercise price of
60 cents per share, if exercised in full, will result in aggregate gross
proceeds to Seitel of $75 million, which will be used to partially fund creditor
payments under the plan.
The Company intends that the warrants will be freely transferable and
exercisable until the 30th day after a registrationstatement relating to the
exercise of the warrants and the sale of underlying shares has been declared
effective by the Securities and Exchange Commission. A registration statement
covering these transactions was filed by Seitel with the SEC on March 10, 2004.
The warrants will not be issued unless and until the registration statement is
declared effective by the SEC. Each equity holder who does not exercise its
warrants, in full, will suffer approximately 83.13% dilution in its percentage
equity ownership of reorganized Seitel.
HBV, for itself and on behalf of certain affiliated funds and managed accounts,
has agreed to act as standby purchaser of up to $75 million worth of reorganized
Seitel's common stock not purchased by stockholders upon the exercise of their
warrants. HBV beneficially owns approximately 9.28% of Seitel's outstanding
common stock. As compensation for its standby purchase agreement, HBV will
receive additional warrants to purchase up to 9.10% of reorganized Seitel's
fully diluted common stock, subject to dilution upon the issuance of shares
under reorganized Seitel's 2004 omnibus stock option program contemplated by the
plan. The exercise price of HBV's compensation warrants will be 72 cents per
share and will expireseven years after their issuance. HBV's standby guaranty
assures that Seitel will receive $75 million in new equity capital proceeds,
before deducting certain expenses payable by Seitel. Mellon HBV has reserved
the right to designate a limited numberof large institutional participants in
the standby guaranty.
"If all shareholders exercise their warrants, they will retain their percentage
ownership in reorganized Seitel, subject to limited dilution," Zeidman said.
"Clearly our plan is to provide our shareholders, who have remained loyal to the
company throughout our reorganization process, an opportunity to retain their
percentage equity ownership and participate in the future growth and earnings
potential of the reorganized company," Zeidman said.
Payments to creditors under the plan will be funded utilizing (i) the net
proceeds from the exercise of the reorganized common stock purchase warrants
and/or the sale of shares under the standby purchase agreement, (ii) net
proceeds of not less than $180 million from our anticipated institutional
offering of new 10-year senior unsecured notes, and (iii) available cash and
equivalents of not less than $35 million.
Working capital will be funded with existing cash and a new revolving credit
facility which presently is being negotiated with Wells Fargo Foothill, Inc. and
is expected to provide a $30 million maximum commitment, subject to certain
borrowing base sublimits.
"When Seitel emerges from chapter 11 which we expect to occur in June 2004, we
believe we will be a stronger and more focused company," Zeidman said.
About Seitel
Seitel is a leading provider of seismic data and related geophysical services to
the oil and gas industry. Seitel's products and services are used by oil and
gascompanies to assist in the exploration, development and management of oil
and gas reserves. Seitel has ownership in an extensive library of proprietary
onshore and offshore seismic data that it has accumulated since 1982 and which
it offers for license to a wide range of oil and gas companies. Seitel has a
diversified customer base, which includes marketing to more than 1,300 customers
and license agreements with more than 1,000 customers. Seitel's library of 3D
seismic data is one of the largest available for licensing in the U.S. and
Canada. The company owns approximately 31,800 square miles of 3D seismic data,
primarily located in major North American oil and gas producing regions.
Seitel's customers utilize this data, in part, to assist their identification of
new geographical areas where subsurface conditions are favorable for oil and gas
exploration, to determine the size, depth and geophysical structure of
previously identified oil and gas fields and to optimize the development and
production of oil and gas reserves.
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
the failure of the plan to otherwise become effective, as well as other factors
detailed in the Disclosure Statement or 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. A registration
statement on Form S-1 (No. 333-113446) relating to Seitel's reorganized common
stock purchase warrants has been filed with the Securities and Exchange
Commission but has not yet become effective. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration statement
becomes effective. This press release shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws.
DATASOURCE: Seitel, Inc.
CONTACT: Leonard Goldstein of Seitel, Inc., +1-713-881-8900
Web site: http://www.seitel-inc.com/