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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a)
AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
(Amendment No. 3)1
Seitel, Inc.
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(Name of Issuer)
Common Stock, $0.01 Par Value
------------------------------------------------
(Title of Class of Securities)
816074405
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(CUSIP Number)
George F. Hamel, Jr.
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)
October 13, 2004
------------------------------------------------
(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 Rule 240.13d-1(b)(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(b)
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.
The 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
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CUSIP NO. 816074405 Page 2 of 13
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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 II, 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
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4. SOURCE OF FUNDS*
WC*
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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 1,721,128**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
1,721,128**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,721,128**
-----------------------------------------------------------------------------
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)
1.1%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
PN
-----------------------------------------------------------------------------
*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 3 of 13
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Master Fund, 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
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4. SOURCE OF FUNDS*
WC*
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 16,750,435**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
16,750,435**
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
16,750,435**
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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)
11.1%
-----------------------------------------------------------------------------
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 13
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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.
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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*
WC*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 18,471,563**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
18,471,563**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,471,563**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.3%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
00 (LLC)
-----------------------------------------------------------------------------
*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 5 of 13
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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
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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) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 18,471,563**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
18,471,563**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,471,563**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.3%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------------------
*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 6 of 13
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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) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 18,471,563**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
18,471,563**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,471,563**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.3%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------------------
*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 7 of 13
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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 18,471,563**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
18,471,563**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,471,563**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
12.3%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------------------
*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.
THE PURPOSE OF THIS AMENDMENT NO. 3 TO SCHEDULE 13D IS TO AMEND THE
PURPOSE OF TRANSACTION SECTION OF REPORTS FILED BY THE REPORTING PERSONS.
THE INFORMATION BELOW SUPPLEMENTS THE INFORMATION PREVIOUSLY PROVIDED.
ITEM 1. SECURITY AND ISSUER.
This Schedule 13D relates to the Common Stock, $0.01 par
value per share (the "Common Stock"), of Seitel, Inc., a Delaware
corporation (the "Issuer"). The address of the principal executive
offices of the Issuer is 10811 South Westview Circle Drive, Suite 100,
Building C, Houston, TX 77043.
ITEM 4. PURPOSE OF TRANSACTION.
On October 13, 2004, the Reporting Persons sent a letter (the
"Letter") to Mr. Fred Zeidman, Chairman of the Board, Interim President
and Chief Executive Officer of the Issuer. In the Letter the Reporting
Persons have requested that the Issuer immediately name Peter H. Kamin,
one of the Reporting Persons, to fill the vacant seat on the Issuer's
Board of Directors (the "Board") made available by the resignation of
former CEO Mr. Randall Stilley; the Board immediately name Mr. Jay
Golding, a Houston entrepreneur, as an Advisory Director to the Board;
and that the Board be expanded at the soonest practical time to include
Mr. Golding; and the Board create an Executive Committee consisting of a
current member of the Board, Mr. Golding and Mr. Kamin. Among other
duties, the Executive Committee would immediately begin a search process
for a new Chief Executive Officer for the Issuer, and would meet weekly
in order to review and approve selected capital programs of the Issuer
until a new CEO has been identified and retained.
A copy of the Letter is attached as Exhibit B to this report and is
incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
A. Joint Filing Agreement
B. Letter from Reporting Persons dated October 13, 2004.
Page 8 of 13
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify 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 true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his 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 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 Partners II L.P., by
VA Partners, L.L.C., its General Partner
By: /s/ George F. Hamel, Jr.
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Dated: October 13, 2004 George F. Hamel, Jr., Managing Member
ValueAct Capital Master Fund L.P., by
VA Partners, L.L.C., its General Partner
By: /s/ George F. Hamel, Jr.
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Dated: October 13, 2004 George F. Hamel, Jr., Managing Member
VA Partners, L.L.C.
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: October 13, 2004 George F. Hamel, Jr., Managing Member
By: /s/ Jeffrey W. Ubben
--------------------------------------
Dated: October 13, 2004 Jeffrey W. Ubben, Managing Member
Page 9 of 13
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: October 13, 2004 George F. Hamel, Jr., Managing Member
By: /s/ Peter H. Kamin
--------------------------------------
Dated: October 13, 2004 Peter H. Kamin, Managing Member
Page 10 of 13
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 Partners II L.P., by
VA Partners, L.L.C., its General Partner
By: /s/ George F. Hamel, Jr.
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Dated: October 13, 2004 George F. Hamel, Jr., Managing Member
ValueAct Capital Master Fund L.P., by
VA Partners, L.L.C., its General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: October 13, 2004 George F. Hamel, Jr., Managing Member
VA Partners, L.L.C.
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: October 13, 2004 George F. Hamel, Jr., Managing Member
By: /s/ Jeffrey W. Ubben
--------------------------------------
Dated: October 13, 2004 Jeffrey W. Ubben, Managing Member
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: October 13, 2004 George F. Hamel, Jr., Managing Member
By: /s/ Peter H. Kamin
--------------------------------------
Dated: October 13, 2004 Peter H. Kamin, Managing Member
Page 11 of 13
Exhibit B
LETTER
VAC
VALUEACT CAPITAL
October 13, 2004
Mr. Fred Zeidman
Chairman, Interim President and CEO
Seitel, Inc.
10811 S. Westview Circle
Bldg. C, Ste. 100
Houston, TX 77043
Dear Fred:
This letter is a follow-up to the previous conversations that we at ValueAct
Capital have had with you and other representatives of the Seitel (the
"company") Board of Directors. To begin, we would like to again acknowledge
your work as Chairman of the Board in helping navigate Seitel, through a
circuitous path, to its present position as a standalone public company. We
do feel that the company today is largely separated from its controversial
history. Non-core oil production assets have been divested, cash flows have
been redirected to debt reduction, and some important first steps have been
made to institute internal controls. These actions have been important in
refocusing the business on the single core activity of building seismic data
libraries. Our belief in Seitel's positive direction has been supported by
our actions, as ValueAct Capital now owns more than 12% of the company.
However, we must admit to having been disappointed to learn in the press
release dated October 5, 2004 that Randall Stilley, the company's Chief
Executive Officer, had resigned to accept another position in the oil service
industry. We strongly believe that after his many months of employment, the
company's inability to deliver a concrete incentive option award provided
Stilley with no guarantee of participating in the rewards of any successes
under his tenure. It appears to us that he had little choice but to look out
for his own interests and consider other alternatives.
While we recognize that option grants at Seitel might be more complex in
their design given the nature of the bankruptcy and restructuring, we are
nevertheless disappointed that this was not addressed in a more aggressive
and effective manner. A more timely undertaking of installing management
incentives at the company might have enable it to have retained Mr.
Stilley.
Under Mr. Stilley's brief tenure, it appears to us that the company's
culture had begun to demonstrate the initial signs of critical
positive change. We understand that procedures have been adopted to
evaluate capital investment more critically, and that the historical
mismatch of cash and GAAP incentive award issues has been addressed. We
are hopeful that the continuity of these positive changes can be continued
by the company's Chief Financial Officer. However, a job of this
magnitude cannot be successfully accomplished for long by a single
individual. Thus, the most important immediate decision facing this board
is the recruitment of a new Chief Executive Officer.
Page 12 of 13
The importance of this decision is further magnified by the company's
significantly leveraged capital structure. The company's balance sheet
offers little margin for error if the company is to successfully execute on
its business plan. Strong leadership is particularly important for Seitel
at this moment in time.
As we have discussed, the principals of ValueAct Capital have extensive,
direct experience as positive, productive and creative members of public
company boards. In particular, we have direct experience in overseeing CEO
searches with successful outcomes. Additionally, we are also experienced in
developing incentive equity programs for senior management teams.
Based on our experiences, the present highly leveraged capital structure at
the company, the current void of permanent senior leadership, and the
positive dynamics of having a significant shareholder working alongside the
existing board members, we respectfully request that the Board of Seitel
consider the following:
- The company immediately names me to fill the vacant seat on the Board
made available by Mr. Stilley's resignation.
- The Board immediately name Mr. Jay Golding, a successful Houston
entrepreneur, as an Advisory Director to the Board; and that Mr. Golding
be added to the Board by way of an expansion of the Board at the soonest
practical time.
- The Board create an Executive Committee, and that a representative of
the current Seitel Board, Mr. Golding and I be appointed to serve on that
committee. Among other duties, this committee would immediately begin a
search process for the company's new Chief Executive Officer. We also ask
that the Executive Committee meet weekly in order to review and approve
selected capital programs at the company, until a new CEO has been
identified and retained.
At ValueAct Capital, we have worked hard to develop a successful track record
and positive reputation for sound decision making in our other investments
where we have joined boards. Our request above is not made lightly, but
rather has been carefully considered with the sole objective of preserving
and enhancing the value of Seitel for all shareholders. Our intention is to
do all that we can to continue to develop Seitel's sustainable profits and
free cash flows. We also believe that this proposal will be supported by many
of the company's other large investors.
Finally, I would like to communicate our respect and appreciation for the
time and energy you have personally invested in the company, working to
ensure that shareholders retain the opportunity to participate in the
company's further growth. We also strongly believe that the combination of
our sizable investment in the company, experience and reputation for positive
work in other similar situations, and the current state of management
uncertainty at Seitel, warrants our involvement as suggested above.
Feel free to contact me with any questions. I look forward to discussing
our request with you and the Board at your earliest convenience.
Sincerely,
Peter H. Kamin
Partner
Page 13 of 13
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