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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities and Exchange Act of 1934
(Amendment No. 9)1
Seitel, Inc.
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(Name of Issuer)
Common Stock, $0.01 Par Value
------------------------------------------------
(Title of Class of Securities)
816074405
------------------------------------------------
(CUSIP Number)
Allison Bennington, Esq.
ValueAct Capital
435 Pacific Avenue, Fourth Floor
San Francisco, CA 94133
(415) 362-3700
------------------------------------------------
(Name, address and telephone number of Person
Authorized to Receive Notices and Communications)
Christopher G. Karras, Esq.
Dechert LLP
Cira Centre
2929 Arch Street
Philadelphia, PA 19104-2808
(215) 994-4000
August 27, 2006
------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of 240.13d.1(e), 240.13d.1(f) or 240.13d.1(g), check the
following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 240.13d.7 for other
parties to whom copies are to be sent.
1The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
This information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
-------------------------- -------------------------
CUSIP NO. 816074405 Page 2 of 17
-----------------------------------------------------------------------------
1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Master Fund, L.P.
-----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
-----------------------------------------------------------------------------
3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS (See Instructions)*
WC*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION British Virgin Islands
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 66,238,914**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
66,238,914**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
66,238,914**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.9%
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14. TYPE OF REPORTING PERSON
PN
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*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 816074405 Page 3 of 17
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Partners Co-Investors, L.P.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 0**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
0**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
PN
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*See Item 3
**See Item 2 and 5
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE
ATTESTATION.
SCHEDULE 13D
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CUSIP NO. 816074405 Page 4 of 17
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
VA Partners, L.L.C.
-----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
-----------------------------------------------------------------------------
3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 66,238,914**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
66,238,914**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
66,238,914**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.9%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
00 (LLC)
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*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 816074405 Page 5 of 17
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Management, L.P.
-----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
-----------------------------------------------------------------------------
3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 66,238,914**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
66,238,914**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
66,238,914**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.9%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
PN
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*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 816074405 Page 6 of 17
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Management, LLC
-----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
-----------------------------------------------------------------------------
3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 66,238,914**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
66,238,914**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
66,238,914**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.9%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
00 (LLC)
-----------------------------------------------------------------------------
*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 816074405 Page 7 of 17
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
Jeffrey W. Ubben
---------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
-----------------------------------------------------------------------------
3. SEC USE ONLY
---------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 66,238,914**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
66,238,914**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
66,238,914**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.9%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------------------
*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 816074405 Page 8 of 17
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
George F. Hamel, Jr.
---------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
-----------------------------------------------------------------------------
3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 66,238,914**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
66,238,914**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
66,238,914**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.9%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------------------
*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 816074405 Page 9 of 17
-----------------------------------------------------------------------------
1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
Peter H. Kamin
-----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
---------------------------------------------------------------------------
3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 66,238,914**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
66,238,914**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
66,238,914**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.9%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------------------
*See Item 3
**See Item 2 and 5
THE PURPOSE OF THIS AMENDMENT NO. 9 IS TO AMEND THE PURPOSE OF TRANSACTION
SECTION. IN ADDITION, THE OWNERSHIP PERCENTAGES OF THE REPORTING PERSONS HAVE
BEEN UPDATED TO REFLECT A CHANGE IN OWNERSHIP AMONG THE REPORTING PERSONS AND
NUMBER OF OUTSTANDING SHARES OF COMMON STOCK AS SET FORTH IN THE ISSUER'S
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006. THE INFORMATION BELOW
SUPPLEMENTS THE INFORMATION PREVIOUSLY PROVIDED.
ITEM 4. PURPOSE OF TRANSACTION
On August 27, 2006, the Reporting Persons sent a letter (the "Letter")
to Mr. Fred S. Zeidman, the Chairman of the Board of Directors of the Issuer,
expressing an interest in acquiring at a price of $3.65 per share all of the
outstanding shares of the Issuer not already owned by the Reporting Persons.
The Letter stated that the Reporting Persons are prepared to commence
negotiations on a definitive agreement immediately, with a view to executing
such agreement within three weeks. The Letter also stated that the Reporting
Persons' financing sources are also ready to commence their due diligence
with a view to providing full debt financing commitments within such three
week period. Further, the Letter stated that the proposed merger agreement
would include fiduciary protections, such as permitting the Company to
solicit superior alternative transactions for a period of 21 days after
execution of the merger agreement and, at any time prior to shareholder
approval of the transaction, to terminate the merger agreement to accept a
superior proposal. A copy of the Letter is attached as Exhibit B to this
report and is incorporated herein by reference.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
ValueAct Master Fund is the beneficial owner of 66,238,914 shares of
Common Stock (including 15,037,568 shares issuable upon exercise of
Purchase Warrants), representing approximately 38.9% of the Issuer's
outstanding Common Stock. ValueAct Co-Investors is the beneficial owner of
0 shares of Common Stock, representing 0% of the Issuer's outstanding
Common Stock. VA Partners, ValueAct Management L.P., ValueAct Management
LLC and the Managing Members may each be deemed the beneficial owner of an
aggregate of 66,238,914 shares of Common Stock (including 15,037,568 shares
issuable upon exercise of Purchase Warrants), representing approximately
38.9% of the Issuer's outstanding Common Stock. All percentages set forth
in this Schedule 13D assume that the Issuer has 170,381,230 outstanding
shares of Common Stock. This includes 155,343,662 outstanding shares as
reported in the Issuer's Form 10-Q for the quarter ended June 30, 2006 and
the issuance of an additional 15,037,568 shares upon the exercise of
15,037,568 Purchase Warrants beneficially owned by the Reporting Persons.
One Purchase Warrant represents the right to purchase one share of the
Issuer's Common Stock, at an exercise price of $.72 per share, exercisable
at any time during the period ending on 08/12/11.
Page 10 of 17
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
Other than as described elsewhere in this Report and as previously
reported, the Reporting Persons have no understandings, arrangements,
relationships or contracts relating to the Issuer's Common Stock which are
required to be described hereunder.
Item 7. Material to Be Filed as Exhibits
A) Joint Filing Agreement
B) Letter from Reporting Persons dated August 27, 2006 to the Issuer
Page 11 of 17
SIGNATURE
After reasonable inquiry and to the best of his knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below on this Schedule 13D hereby constitutes and appoints Jeffrey W. Ubben,
George F. Hamel, Jr. and Peter H. Kamin, and each of them, with full power to
act without the other, his or its true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him or it and in his
or its name, place and stead, in any and all capacities (until revoked in
writing) to sign any and all amendments to this Schedule 13D, and to file the
same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary fully to all intents and
purposes as he or it might or could do in person, thereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
ValueAct Capital Master Fund L.P., by
VA Partners, L.L.C., its General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: August 28, 2006 George F. Hamel, Jr., Managing Member
ValueAct Capital Partners Co-Investors L.P.,
by VA Partners, L.L.C., its General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: August 28, 2006 George F. Hamel, Jr., Managing Member
VA Partners, L.L.C.
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: August 28, 2006 George F. Hamel, Jr., Managing Member
ValueAct Capital Management, L.P., by
ValueAct Capital Management, LLC its
General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: August 28, 2006 George F. Hamel, Jr., Managing Member
Page 12 of 17
ValueAct Capital Management, LLC
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: August 28, 2006 George F. Hamel, Jr., Managing Member
By: /s/ Jeffrey W. Ubben
--------------------------------------
Dated: August 28, 2006 Jeffrey W. Ubben, Managing Member
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: August 28, 2006 George F. Hamel, Jr., Managing Member
By: /s/ Peter H. Kamin
--------------------------------------
Dated: August 28, 2006 Peter H. Kamin, Managing Member
Page 13 of 17
Exhibit A
JOINT FILING UNDERTAKING
The undersigned parties hereby agree that the Schedule 13D filed herewith
(and any amendments thereto) relating to the Common Stock of Seitel, Inc. is
being filed jointly on behalf of each of them with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act
of 1934, as amended.
ValueAct Capital Master Fund L.P., by
VA Partners, L.L.C., its General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: August 28, 2006 George F. Hamel, Jr., Managing Member
ValueAct Capital Partners Co-Investors L.P.,
by VA Partners, L.L.C., its General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: August 28, 2006 George F. Hamel, Jr., Managing Member
VA Partners, L.L.C.
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: August 28, 2006 George F. Hamel, Jr., Managing Member
ValueAct Capital Management, L.P.,
by, ValueAct Capital Management, LLC
its General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: August 28, 2006 George F. Hamel, Jr., Managing Member
ValueAct Capital Management, LLC
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: August 28, 2006 George F. Hamel, Jr., Managing Member
Page 14 of 17
By: /s/ Jeffrey W. Ubben
--------------------------------------
Dated: August 28, 2006 Jeffrey W. Ubben, Managing Member
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: August 28, 2006 George F. Hamel, Jr., Managing Member
By: /s/ Peter H. Kamin
--------------------------------------
Dated: August 28, 2006 Peter H. Kamin, Managing Member
Page 15 of 17
Exhibit B
LETTER
VAC
ValueAct Capital
CONFIDENTIAL
August 27, 2006
Mr. Fred S. Zeidman
Chairman of the Board
Seitel, Inc.
10811 S. Westview Circle Drive
Building C, Suite 100
Houston, TX 77043
Dear Fred,
ValueAct Capital Master Fund, L.P. ("ValueAct Capital") is pleased to
submit to the Board of Directors of Seitel, Inc. (the "Company") an offer
to acquire by merger 100% of the outstanding equity interests that it
does not already own for $3.65 per share in cash. We intend to finance
the transaction with a combination of an additional equity investment
from ValueAct Capital and third-party debt financing to be underwritten
by a group of investment banks.
As a result of our existing sizable minority investment and two board
seats, ValueAct Capital is thoroughly knowledgeable about the business
and its prospects and maintains a good relationship with Seitel's
management team. We believe this familiarity uniquely positions us to
complete the transaction expeditiously and should provide great certainty
of completion to the Seitel Inc. board of directors.
We are prepared to commence negotiations on a definitive agreement
immediately, with a view to executing such agreement within three weeks.
Our financing sources are also ready to commence their due diligence with
a view to providing full debt financing commitments within such three
week period.
Our proposed merger agreement would include customary fiduciary
protections, such as permitting the Company to solicit superior
alternative transactions for a period of 21 days after execution of the
merger agreement (the "Go Shop Period") and, at any time prior to
shareholder approval of the transaction, to terminate our merger
agreement to accept a superior proposal. If the Company terminates our
merger agreement to accept a superior proposal that was received during
the Go Shop Period, the Company would be required to pay a break up fee
equal to only 1% of the transaction value, plus reimbursement of actual
expenses. If the Company terminates our merger agreement to accept a
superior proposal received after the Go Shop Period, the Company would be
required to pay a break up fee of 3% of the transaction value, plus
reimbursement of actual expenses. Under this arrangement, the Company
Page 16 of 17
will be able to guarantee a high premium value for the Company without
foreclosing the possibility of obtaining an even greater value from a
third party.
ValueAct Capital does not require any limited partner, shareholder or
board approvals to consummate the transaction. Investment decisions are
made by the members of our general partner. We would not anticipate any
issues with receiving any regulatory approvals required to complete this
transaction.
Of course, no binding obligation shall arise with respect to the proposal
or any transaction unless and until definitive documentation has been
appropriately approved, executed and delivered by the parties.
Sincerely,
ValueAct Capital Master Fund, L.P.
By its General Partner, VA Partners, LLC
/s/ Peter H. Kamin
---------------------
Peter H. Kamin
Managing Member
Page 17 of 17