PSD rejects "Best and Final" Seitel offerHi everyone,
Pulse Data's Board rejects "Best and Final" Seitel offer
10/3/2007
CALGARY, Oct. 3, 2007 (Canada NewsWire via COMTEX News Network) --
TSX: PSD
The Board of Directors of Pulse Data Inc. ("Pulse" or the "Company"), after reviewing and considering the amended and extended offer by 6818862 Canada Inc., an indirect wholly-owned subsidiary of Seitel, Inc. (the "Amended Offer"), to purchase all of the common shares of Pulse, unanimously recommends that shareholders reject the Amended Offer and not tender their shares of Pulse to the Amended Offer. Seitel has stated that the Amended Offer is its "best and final" offer.
REJECTION OF THE AMENDED OFFER:
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Pulse's Directors and senior management are unanimous in the view that Pulse's business plan of growing the seismic data library through strategic, high-quality seismic data acquisitions and participation surveys offers attractive growth potential and superior value for all shareholders.
The Board of Directors and management offer the following additional reasons for rejecting the Amended Offer:
1. THE AMENDED OFFER IS ACTUALLY ONLY $3.2625 PER SHARE:
Under the Amended Offer, the offer price of a nominal $3.30 per share continues to be reduced by Pulse's regular quarterly dividend that was declared on August 13, 2007, and that has already been paid to shareholders.
2. THE AMENDED OFFER DOES NOT TAKE INTO ACCOUNT PULSE'S GROWTH POTENTIAL
OR OFFER ANY CONTROL PREMIUM:
The Amended Offer does not take into account Pulse's growth potential and does not offer any control premium over the value of Pulse's shares before taking into account Pulse's growth potential.
In addition, the Amended Offer does not share with Pulse shareholders the significant synergies that should be realized by Seitel upon acquiring Pulse. These synergies would result from significant savings in general and administrative costs and in the greater market share the combined business would have. Pulse estimates that upon Seitel taking Pulse private and combining their seismic operations, Seitel should realize synergies, from the cost savings alone, with a Pulse share value in excess of $0.50 per share.
3. THE AMENDED OFFER DOES NOT REFLECT PULSE'S THREE CONSECUTIVE QUARTERS
OF RECORD DATA LIBRARY SALES OR THE RECENTLY INCREASED DIVIDEND:
In its news release on September 21, 2007, Pulse announced record quarterly seismic data library sales for the third consecutive quarter. As a result of its increased sustainable free cash flow, Pulse also announced a 33% increase in its annual dividend rate, from $0.15 per share to $0.20 per share.
The Amended Offer does not adequately reflect Pulse's three consecutive quarters of record seismic data library sales, nor the 33% increase in the annual dividend rate. Based upon the dividend-adjusted offer price of $3.2625 per share, the annual dividend of $0.20 per share represents an effective yield of approximately 6.1%. This is an attractive dividend yield for a Canadian publicly traded corporation, and it would be difficult for shareholders who accept the offer to replace it.
4. THE AMENDED OFFER DOES NOT OFFER A SIGNIFICANT PREMIUM TO MARKET
PRICE:
The dividend-adjusted offer price of $3.2625 per Pulse share represents only a 1.6% premium to the closing price of $3.21 per share on September 28, 2007, which was reached prior to the announcement of the Amended Offer, only a 6.3% premium to the volume-weighted average trading price of $3.07 per share for the 30 trading days prior to the date of the Amended Offer, and only a 9.8% premium to the volume-weighted average trading price of $2.97 per share for the 30 trading days prior to the date of the original Seitel offer.
5. THE PURPORTED PREMIUMS STATED BY SEITEL ARE OUTDATED AND MISLEADING:
In its news release of September 28, 2007 and the Notice of Variation and Extension dated September 28, 2007, Seitel continues to base its claimed premiums on the market price of Pulse shares before the offer made by Quantum Yield Inc. in June 2007. This price comparison is based upon price data that is now more than three months old. As previously pointed out by Pulse, this price comparison is outdated and misleading.
Seitel also continues to claim premiums to the price of the private placement of Pulse shares completed by Pulse in July 2007. As previously pointed out by Pulse, private placements are commonly issued at a discount to market price due to the statutory hold period applicable to the shares issued under the private placement. In addition, this price comparison is based upon price data that is now two months old. For both reasons, this price comparison is misleading.
6. SIGNIFICANT SHAREHOLDERS HAVE INDICATED THAT THEY DO NOT INTEND TO
TENDER TO THE AMENDED OFFER:
Significant shareholders and the directors, officers and certain consultants of Pulse, collectively representing in excess of 50% of the Company's outstanding shares (fully diluted), have again verbally indicated to the officers and directors of Pulse that they do not intend to tender their Pulse shares to the Amended Offer. The Amended Offer continues to be conditional upon at least 66-2/3% of the outstanding shares (fully diluted) being tendered to the Amended Offer. If the minimum tender condition is not waived by Seitel, then the Amended Offer will not succeed.
7. THE NEW PROVISION ADDED BY SEITEL DOES NOT PROVIDE PROTECTION TO
SHAREHOLDERS AGAINST A CREEPING TAKE-OVER BID BY SEITEL:
The Amended Offer provides that until such time as Pulse's Shareholder Rights Plan is cease-traded or is no longer applicable to the Amended Offer, Seitel will not waive the minimum tender condition of 66-2/3% of the outstanding shares (fully diluted) unless a majority of the outstanding shares (other than those owned by ValueAct, the parent company of Seitel) are tendered to the Amended Offer.
This new provision does not provide protection to shareholders against a creeping take-over bid by Seitel, since Seitel has not agreed that it will not bring another application to cease-trade the Shareholder Rights Plan which was overwhelmingly approved by the shareholders on September 21, 2007.
8. REFUSAL BY SEITEL TO NEGOTIATE AN ACCEPTABLE PRICE:
Pulse rejects Seitel's statement that it has refused to engage in substantive negotiations with Seitel. On the contrary, Pulse has made a number of overtures to Seitel to negotiate an acceptable transaction, which Seitel has either rejected or not followed up on each time.
CREEPING TAKE-OVER BIDS:
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Under a creeping take-over bid strategy, an offeror will attempt to acquire effective control of a target company through a series of minority shareholding purchases, enabling the offeror to establish a significant and effective control position without paying a significant premium to all shareholders.
If Seitel waives its minimum tender condition and acquires less than 50% of the outstanding Pulse shares (other than those owned by ValueAct), Seitel and ValueAct may be in a position to effectively control the Board of Directors of Pulse. Seitel and ValueAct would then have achieved a creeping take-over and be in a position to dictate Pulse's business plan, including their stated intention of eliminating the payment of quarterly dividends.
RECOMMENDATION:
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The Board of Directors of Pulse unanimously recommends that shareholders reject the Amended Offer and not tender their shares of Pulse to the Amended Offer. The Board's decision is unanimously supported by Pulse's senior management team.
On or before October 5, 2007 Pulse will mail to the shareholders its Directors' Circular responding to the Amended Offer. For shareholders contemplating tendering their shares, the Board of Directors recommends that shareholders not make a decision on the Amended Offer until such time as they have received and considered the Directors' Circular.
Pulse continues to engage Georgeson Shareholder Communications Canada Inc. to act as information agent with respect to the Amended Offer, to assist Pulse in informing shareholders as to the views of the Board of Directors with respect to the Amended Offer. Shareholders can contact Georgeson if they have any questions regarding the Amended Offer at:
<< Georgeson Shareholder Communications Canada Inc. 100 University Avenue 11th Floor, South Tower Toronto, Ontario M5J 2Y1 North American Toll Free Number: 1-888-605-7616 >>
TERRAPOINT UPDATE:
Over the past 7 months, following its original announcement on March 5, 2007, Pulse has diligently pursued a disposition of Terrapoint. The process included engaging Dundee Securities Corporation as financial advisors, establishing an electronic data room for potential purchasers, and soliciting expressions of interest from interested parties.
Although Pulse did not meet its target date of September 30, 2007 for completion of the disposition of Terrapoint, Pulse continues to pursue the disposition of Terrapoint. An expression of interest from an independent potential purchaser was received yesterday, which Pulse is currently reviewing.
The Board of Directors and management of Pulse remain committed to a business plan focused solely on the Company's core seismic data library business.
Disclaimer: Certain information contained herein may constitute forward-looking statements under applicable securities laws. Such statements are subject to known or unknown risks and uncertainties that may cause actual results to differ materially from those anticipated or implied in the forward-looking statements. Investors are encouraged to review the "Risk Factors" section of the Management's Discussion and Analysis in the Company's most recent Annual Report and interim reports for a discussion of risks that could affect the Company's operations and financial results. Forward-looking statements are based upon management's assumptions, expectations and estimates at the time that such statements are made. Pulse does not update forward-looking statements should circumstances change or management's assumptions, expectations or estimates change, unless required by law.
SOURCE: Pulse Data Inc.
Douglas Cutts, President and C.E.O., Tel: (403) 237-5559, Toll-free: 1-877-460-5559, E-mail: info@pulsedatainc.com, Please visit our website at www.pulsedatainc.com
GLTA,
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