Seitel Reorganization Plan Confirmed By Bankruptcy Court
March 18 2004 - 4:29PM
PR Newswire (US)
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/
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