Seitel plans to convert bankruptcy petition to voluntary; negotiating $20 million DIP

By Carlise Newman

Chicago, June 9 - Seitel Inc. said it hopes to convert the bankruptcy petitions filed by holders of its unsecured notes on June 6 to a voluntary filing within the 20-day period it has to respond. The company also said it is in negotiations to obtain $20 million in debtor-in-possession financing in the case of bankruptcy.

The bankruptcy petitions were filed by holders of $103 million principal amount of Seitel's $255 million of notes, or 40% of the total outstanding.

As reported on May 30, Seitel Inc. said it has hired Jefferies & Co. as its financial advisor and is continuing to seek options to implement a restructuring.

The company also said that during the last two weeks, $122 million principal amount or 48% of the notes have been acquired by a single purchaser who was not previously a noteholder. The purchaser has expressed interest in pursuing alternative approaches to a long-term restructuring of the company's debt and capital position, including a restructuring of the notes.

The Houston seismic information company said a restructuring could include negotiated agreements or transactions, court supervised reorganization, accessing public or private debt or equity markets or any combination.

Seitel also announced it has discontinued the standstill agreement among the company and the holders of its senior unsecured notes. The agreement expires on June 2, and its termination will trigger a default under the notes.

Seitel and the noteholders have been in negotiations since mid 2002, but no agreement has emerged on the terms for a restructuring.

The new purchaser did not join with the other holders in the recent bankruptcy filing, Seitel said. The company also said that the two largest historical holders of the unsecured notes (totaling $70 million in principal amount) have sold their notes to the purchaser and have terminated their positions on the unofficial steering committee of the holders of the notes.

The purchaser has approached Seitel and has expressed interest in pursuing a long-term restructuring of the company. Seitel described the discussions as productive.

Seitel also said that it has sufficient liquidity to operate its business, with $29 million in cash on hand and unused lines of credit available to its Canadian subsidiaries of $2 million. In addition, Seitel is engaged in negotiations to obtain $20 million of debtor-in-possession financing as a standby credit facility during any Chapter 11 proceedings.

Seitel said its board and management will decide on how to respond to the bankruptcy petition and said it expects to decide to convert the involuntary bankruptcy cases to a voluntary case over which it will have the exclusive right for a 120-day period to propose its own plan of reorganization.

Seitel said it will continue to operate its business as normal.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.