Seitel says Ranch Capital will fund reorganization plan

By Carlise Newman

Chicago, July 9 - Seitel Inc. has reached an agreement in principle with Ranch Capital LLC for a reorganization of its capital structure, including all $255 million outstanding principal amount of Seitel's senior notes, which Ranch Capital previously purchased. Ranch has agreed to fund Seitel's proposed reorganization plan.

Ranch Capital is the successor to the noteholders that filed the involuntary bankruptcy petitions against the company. Ranch has agreed to extend the time to respond to the bankruptcy petition to July 21 to permit preparation of a proposed plan and disclosure statement to be filed with the Delaware Bankruptcy Court.

The proposed plan would pay in full all of the company's senior secured debt, totaling $12 million; pay cash equal to 71% of allowed unsecured claims which are owing or are guaranteed by entities that conduct Seitel's principal operations; pay cash equal to a percentage to be determined but not more than 71% of allowed unsecured claims; and distribute $10.2 million in cash to the holders of equity interests in Seitel.

The Houston-based seismic information company estimates that all allowed unsecured claims in all classes would total $265 million, including the $255 million of senior notes purchased by Ranch Capital.

Also under the plan, existing common stock would be canceled, and upon consummation of the plan, 100% of the new common stock of the company would be issued to Ranch Capital for its funding of the proposed plan.

As previously disclosed, the company's Canadian subsidiaries are not part of the bankruptcy proceedings.

The distribution of $10.2 million in cash to holders of equity interests in Seitel will represent 40 cents per share. The exact payout will depend on the amount which may become payable following the class action suit pending against the company, and is conditional on a positive vote of shareholders and confirmation of the plan. If the plan is not confirmed or shareholders vote against it and it was confirmed by the bankruptcy court despite the rejection no distribution would be made to existing shareholders.

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